Existing law, the Joint Exercise of Powers Act, authorizes 2 or more public agencies, if authorized by their legislative or other governing bodies, to enter into an agreement to jointly exercise any power common to the contracting parties, as provided. That act requires, among other things, that the agreement state the purpose of the agreement or power to be exercised and provide for the method by which the purpose will be accomplished or the manner in which the power will be exercised.

This bill would authorize a public agency with the authority to provide retail electric services to enter into a joint powers agreement with one or more public agencies with jurisdiction within the Coachella Valley Service Area, as defined, to jointly exercise the authority to provide retail electric services notwithstanding an inability of a party to the joint powers agreement to exercise that power independently.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Coachella Valley Service Area, as defined.

Existing law, the Joint Exercise of Powers Act, authorizes 2 or more public agencies, if authorized by their legislative or other governing bodies, to enter into an agreement to jointly exercise any power common to the contracting parties, as provided. That act requires, among other things, that the agreement state the purpose of the agreement or power to be exercised and provide for the method by which the purpose will be accomplished or the manner in which the power will be exercised.

This bill would authorize a public agency with the authority to provide retail electric services to enter into a joint powers agreement with one or more public agencies with jurisdiction within the Coachella Valley Service Area, as defined, to jointly exercise the authority to provide retail electric services notwithstanding an inability of a party to the joint powers agreement to exercise that power independently.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Coachella Valley Service Area, as defined.

The Joint Exercise of Powers Act, under a provision that has become inoperative, authorized an entity created by a joint powers agreement between an irrigation district and a city and having the power to acquire, construct, maintain, or operate facilities and property for supplying water for specified purposes to issue revenue bonds to pay the costs of acquiring, constructing, improving, or financing these facilities.

This bill would repeal this provision.

 THIRD READING  

Bill No: AB 3198

Author: Garcia (D), et al.

Amended: 4/16/24 in Assembly

Vote: 21

SENATE LOCAL GOVERNMENT COMMITTEE: 7-0, 7/3/24

AYES: Durazo, Seyarto, Dahle, Glazer, Skinner, Wahab, Wiener

ASSEMBLY FLOOR: 65-0, 5/9/24 (Consent) - See last page for vote

SUBJECT: Joint powers agreements: retail electric services

SOURCE: Author

DIGEST:

This bill allows a public agency with the authority to provide retail electric services to enter into a joint powers authority with one or more public agencies with jurisdiction within the Coachella Valley Service Area to jointly exercise the authority to provide retail electric services.

ANALYSIS:

Existing law:

1. Authorizes, under the Joint Exercise of Powers Act, two or more public agencies to use their powers in common if they sign a joint powers agreement. Such an agreement may create a new, separate government called a joint powers agency or joint powers authority (JPA). Agencies that may exercise joint powers include federal agencies, state departments, counties, cities, special districts, school districts, federally recognized Indian tribes, and even other JPAs.
2. Authorizes public agencies to use the JPA law and the related Marks-Roos Local Bond Pooling Act to form bond pools to finance public works, working capital, insurance needs, and other public benefit projects. Bond pooling saves money on interest rates and finance charges, and allows smaller local agencies to enter the bond market. Because a JPA is an entity separate from its members, bonds issued by JPAs do not have to be approved by voters.
3. Enacts the Cortese-Knox-Hertzberg Local Government Reorganization Act (the Act) delegates the Legislature’s power to control the boundaries of cities and special districts to local agency formation commissions (LAFCOs). The courts call LAFCOs the Legislature’s watchdog over local boundary changes. Each county has a LAFCO.

This bill allows a public agency with the authority to provide retail electric services to enter into a JPA with one or more public agencies with jurisdiction within the Coachella Valley Service Area to jointly exercise the authority to provide retail electric services notwithstanding an inability of a party to the joint powers agreement to exercise that power independently.

Background

Imperial Irrigation District. Established by a vote of the people in 1911, Imperial Irrigation District (IID) is one of the nation’s largest irrigation districts. IID entered the electric power business in 1936 in conjunction with the construction of the All-American Canal. Congress authorized construction of the All-American Canal to the Coachella Valley. However, in negotiating repayment contracts with the United States, it was necessary that both the water and power rights of IID and the Coachella Valley Water District (CVWD) be determined.

According to the terms of a 1934 agreement between Imperial and CVWD, IID was given first rights to water delivered through the All-American Canal and a 99-year lease on any power rights CVWD had on the canal. As rental for power rights, IID agreed to pay CVWD a percentage of the net proceeds from its power system and CVWD in turn authorized IID to provide power service to the Coachella Valley. Currently, IID’s district boundaries encompass all of Imperial County. IID also provides electrical service to parts of San Diego County, as well as the cities of Indio, Coachella, Desert Mirage and La Quinta in the Coachella Valley, located in Riverside County.

IID’s Board of Directors has five elected members from geographic divisions within the district’s jurisdiction boundary, which is limited to Imperial County. Since the IID’s jurisdictional boundary does not extend into Riverside County, Riverside County registered voters cannot serve on IID’s Board of Directors, nor vote in IID elections.

LAFCO study. Prior legislation has been introduced to provide Riverside County residents with representation on the IID board. In September 2021, AB 1021 (Mayes) would have required the LAFCOs in Imperial and Riverside Counties to conduct a study of governance options for the IID electrical service area. That same year, the Budget Act (SB 170, Skinner, Chapter 240, Statutes of 2021) appropriated $500,000 from the State General Fund for the Imperial and Riverside LAFCOs to complete a study of IID's electric service in the Coachella Valley. Ultimately, Governor Newsom vetoed AB 1021 due in part to its ambitious timeline for completing a study. This left the Riverside and Imperial LAFCOs with flexibility for completing the study the budget funded.

The Imperial and Riverside LAFCOs published their study of governance options for the IID electrical service area on November 30, 2023. The scope of the study was to evaluate potential alternative electrical service governance structures concerning IID’s extended electrical service territory in the Coachella Valley. Among the options considered, the study identified creating a JPA to be best option because it provides maximum flexibility and ability for local control.

Comments

1. Purpose of the bill. According to the author, “AB 3198 (Garcia) would remove legal barriers in current statutes to authorize entities in the Coachella Valley electrical service area to become members of a future JPA pertaining to providing electricity. IID’s 100 year agreement to provide power in the Coachella Valley is coming to an end in 2033. Should Coachella Valley stakeholders support the formation of a JPA to help address issues related to electric power service in the eastern Coachella Valley, the County of Riverside and CVWD would be excluded from participating due to legal barriers in current state law. The language of this bill was vetted and voted in favor of by local stakeholders at the Coachella Valley Energy Commission. The Coachella Valley Energy Commission is made up of representatives from the Imperial Irrigation District, Tribal Nations, City of La Quinta, City of Coachella, City of Indio, the County of Imperial, the County of Riverside, and the Coachella Valley Water District.”
2. The power of teamwork overcomes all. The beauty of the Joint Exercise of Powers Act is its flexibility: local agencies can come together to form an agreement of their own design to carry out any power common to each of its members. Agreements specify a JPA’s mission, structure, governing board, each member’s financial obligations, and provisions for members to enter and exit the JPA, among other items. As such, local agencies do not need legislative authority for a JPA unless it requires powers not common to all its members, or when statutory certainty and specificity is preferable to the agreement’s details. In the case of AB 3198, not all of the local agencies in the CVEC have the power to generate and distribute electricity. Without legislation, Riverside County and CVWD do not believe they would have the legal authority to join the JPA. Not having these agencies participate in the JPA could mean certain communities do not have representation on the JPA, which has been a central issue in the debate over IID providing electric service in the area.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 7/8/24)

Coachella Valley Water District
County of Riverside
Imperial Irrigation District

OPPOSITION: (Verified 7/8/24)

None received

ASSEMBLY FLOOR: 65-0, 5/9/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Vince Fong, Friedman, Gallagher, Garcia, Gipson, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Sanchez, Santiago, Soria, Ta, Valencia, Villapudua, Waldron, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Bains, Cervantes, Megan Dahle, Flora, Gabriel, Grayson, Haney, Low, Mathis, Stephanie Nguyen, Petrie-Norris, Luz Rivas, Schiavo, Ting, Wallis

Prepared by: Jonathan Peterson / L. GOV. / (916) 651-4119

7/31/24 15:30:57

**** END ****

SENATE COMMITTEE ON LOCAL GOVERNMENT

Senator María Elena Durazo, Chair

2023 - 2024 Regular

Joint powers agreements: retail electric services

Allows a public agency with the authority to provide retail electric services to enter into a joint powers authority with one or more public agencies with jurisdiction within the Coachella Valley Service Area to jointly exercise the authority to provide retail electric services.

Background

Joint Exercise of Powers Act. The Joint Exercise of Powers Act allows two or more public agencies to use their powers in common if they sign a joint powers agreement. Each public agency must independently possess the authority to perform the activity that is to be performed jointly pursuant to a joint powers agreement. Sometimes an agreement creates a new, separate government called a joint powers authority (JPA). Public agencies can also use the JPA law and the related Marks-Roos Local Bond Pooling Act to form bond pools to finance public works, working capital, insurance needs, and other public benefit projects. JPAs can issue one large Marks-Roos Act bond and then loan the capital to local agencies, thus creating a “bond pool.” Bond pooling saves money on interest rates and finance charges. It also lets smaller local agencies enter the bond market. Because JPAs are entities separate from its members, and are not bound by the same limitations on debt issuance, voters need not approve bonds JPAs issue.

Local agency formation commissions. The Cortese-Knox-Hertzberg Local Government Reorganization Act (the Act) delegates the Legislature’s power to control the boundaries of cities and special districts to local agency formation commissions (LAFCOs). The courts call LAFCOs the Legislature’s watchdog over local boundary changes. Each county has a LAFCO.

Irrigation districts. California’s 93 irrigation districts function under a collection of statutes known as the Irrigation District Law that describe their governance structure and authority. In general, these districts are governed by a five-member board of directors, with each member representing a division within the district.

In most cases, registered voters are eligible to vote in district elections, but directors (also referred to as board members) must be voters, landowners, and residents in the division of the district they represent. This landowner requirement reflects the historical role of irrigation districts to exclusively provide irrigation water to agricultural land. However, as California's population has grown, more and more residential and commercial development is encroaching on agricultural land. In response to this growth, many irrigation districts began providing retail water service to residential customers that live within their jurisdictions in the absence of traditional retail water suppliers in the area, or providing electricity services.

Recognizing this trend, the Legislature has taken steps in the past few decades to allow registered voters who do not own land to be directors in some districts. Specifically, the Legislature deleted the landowner qualification for board members of irrigation districts that provide electricity (SB 1939, Alarcón, 2000) and removed the landowner requirement for irrigation districts that provide 3,000 or more acre-feet of water to residential customers or that have more than 3,000 customers (AB 159, Salinas, 2006).

Imperial Irrigation District. Established by a vote of the people in 1911, Imperial Irrigation District (IID) is one of the nation’s largest irrigation districts, providing water to 520,000 acres of land utilizing more than 3,000 miles of canals. IID possesses rights to 2.6 million acre-feet of water from the Colorado River, which is 60 percent of the 4.4 million acre feet allocated to California. IID entered the electric power business in 1936 in conjunction with the construction of the All-American Canal. Congress authorized construction of the All-American Canal to the Coachella Valley. However, in negotiating repayment contracts with the United States, it was necessary that both the water and power rights of IID and the Coachella Valley Water District (CVWD) be determined.

According to the terms of a 1934 agreement between Imperial and CVWD, IID was given first rights to water delivered through the All-American Canal and a 99-year lease on any power rights CVWD had on the canal. As rental for power rights, IID agreed to pay CVWD a percentage of the net proceeds from its power system and CVWD in turn authorized IID to provide power service to the Coachella Valley. Currently, IID’s district boundaries encompass all of Imperial County. IID also provides electrical service to parts of San Diego County, as well as the cities of Indio, Coachella, Desert Mirage and La Quinta in the Coachella Valley, located in Riverside County.

IID’s Board of Directors has five elected members from geographic divisions within the district’s jurisdiction boundary, which is limited to Imperial County. Since the IID’s jurisdictional boundary does not extend into Riverside County, Riverside County registered voters cannot serve on IID’s Board of Directors, nor vote in IID elections.

Prior legislation has been introduced to provide Riverside County residents with representation on the IID board. Most recently, AB 854 (Mayes, 2019) would have increased the IID Board membership from five to 11 board members, and required the six additional Board members to be eligible voters and residents of Riverside County. AB 854 died in the Assembly Appropriations Committee. In September 2021, AB 1021 (Mayes) would have required the LAFCOs in Imperial and Riverside Counties to conduct a study of governance options for the IID electrical service area. That same year, the Budget Act (SB 170, Skinner) appropriated $500,000 from the State General Fund for the Imperial and Riverside LAFCOs to complete a study of IID's electric service in the Coachella Valley. Ultimately, Governor Newsom vetoed AB 1021 due in part to its ambitious timeline for completing a study. This left the Riverside and Imperial LAFCOs with flexibility for completing the study the budget funded.

Coachella Valley Energy Commission. On June 1st, 2021, the IID board adopted resolution 25-2021 to “protect Imperial Valley’s water rights from legislative attempts to alter the governance of the IID board by establishing the Coachella Valley Energy Commission as a mutually beneficial and more effective alternative to AB 1021…” The resolution directed IID to produce for the board’s consideration a draft memorandum of understanding and a set of bylaws for the creation of a Coachella Valley Energy Commission to deliberate and advise on issues, services, projects, and policies of interest and benefit to IID’s Coachella Valley energy ratepayers. The Commission was formed for one year initially, but has since been extended by the IID board. The resolution establishes the Commission’s membership as including the five current IID directors and members appointed from: the Cities of Coachella, Indio, and La Quinta; Cove Communities Services Commission; Salton Community Services District; a Coachella Valley tribal reservation; unincorporated Riverside County, and two at-large members selected by the IID board.

LAFCO study. The Imperial and Riverside LAFCOs published their study of governance options for the IID electrical service area on November 30, 2023.^[1] The scope of the study was to evaluate potential alternative electrical service governance structures concerning IID’s extended electrical service territory in the Coachella Valley. According to the study, “IID currently serves approximately 159,000 residential, commercial, and industrial customers. Of this, about 61,900 customers, or 39 percent, reside within IID’s current jurisdictional boundary. The remaining customers, approximately 97,100 customers, or 61 percent, reside in the Coachella Valley, outside of IID’s legal jurisdictional boundary and their political divisions for IID Board of Director elections. Population projections prepared by IID and the Southern California Association of Governments (SCAG) indicate that growth in the Coachella Valley service territory is expected to outpace population growth in Imperial County.”

The study identified a number of different governance options including:

• Maintaining the status quo;
• Annexing the Coachella Valley electrical service territory into IID;
• Creating a new sub-board of directors to provide oversight on all electrical service provisions related to Coachella Valley;
• Establishing a JPA with IID;
• Selling or disposing assets to an investor-owned utility;
• Forming a new publicly owned utility;
• Forming a vertically integrated publicly owned utility; and
• Creating a community choice aggregator.

Among the options considered, the study identified creating a JPA to be best option because, “this alternative option provides maximum flexibility and allows members to establish different degrees of local control based on each party’s ambition to pursue an alternative electrical service and governance structure.”

While the LAFCO study recommended the formation of a JPA, not all local agencies involved have the authority to generate and distribute electricity, including the County of Riverside and Coachella Valley Water District, meaning they cannot join a JPA to generate and distribute electricity. The author wants to ensure that all relevant public agencies have the authority to join a JPA if one is created.

Proposed Law

Assembly Bill 3198 allows a public agency with the authority to provide retail electric services to enter into a JPA with one or more public agencies with jurisdiction within the Coachella Valley Service Area to jointly exercise the authority to provide retail electric services notwithstanding an inability of a party to the joint powers agreement to exercise that power independently.

The measure also defines its terms.

Comments

1. Purpose of the bill. According to the author, “AB 3198 (Garcia) would remove legal barriers in current statutes to authorize entities in the Coachella Valley electrical service area to become members of a future JPA pertaining to providing electricity. IID’s 100 year agreement to provide power in the Coachella Valley is coming to an end in 2033. Should Coachella Valley stakeholders support the formation of a JPA to help address issues related to electric power service in the eastern Coachella Valley, the County of Riverside and CVWD would be excluded from participating due to legal barriers in current state law. The language of this bill was vetted and voted in favor of by local stakeholders at the Coachella Valley Energy Commission. The Coachella Valley Energy Commission is made up of representatives from the Imperial Irrigation District, Tribal Nations, City of La Quinta, City of Coachella, City of Indio, the County of Imperial, the County of Riverside, and the Coachella Valley Water District.”

2. The power of teamwork overcomes all. The beauty of the Joint Exercise of Powers Act is its flexibility: local agencies can come together to form an agreement of their own design to carry out any power common to each of its members. Agreements specify a JPA’s mission, structure, governing board, each member’s financial obligations, and provisions for members to enter and exit the JPA, among other items. As such, local agencies do not need legislative authority for a JPA unless it requires powers not common to all its members, or when statutory certainty and specificity is preferable to the agreement’s details. In the case of AB 3198, not all of the local agencies in the CVEC have the power to generate and distribute electricity. Without legislation, Riverside County and CVWD do not believe they would have the legal authority to join the JPA. Not having these agencies participate in the JPA could mean certain communities do not have representation on the JPA, which has been a central issue in the debate over IID providing electric service in the area.

3. Community involvement. AB 3198 does little more than enable all the public agencies in the Coachella Valley Service Area to jointly exercise the authority to provide retail electric services. However, the measure does not mandate the JPA’s creation, nor does it specify the steps these agencies must take to acquire infrastructure from IID. Additionally, a new JPA would have to engage with community groups to ensure it can be set up effectively. For example, Leadership Counsel for Justice and Accountability recommends the Legislature formalize public participation and representation of stakeholders, cities, and unincorporated communities in the formation process and governance of the JPA. Does AB 3198 provide sufficient direction once these agencies decide whether or not to form a JPA?

4. Related legislation. The Legislature is considering various measures dealing with JPAs:

• AB 2293 (Mathis) allows nonprofits formed to provide health care services to join a joint powers authority or enter into a joint powers agreement with one or more public agencies. The measure is also scheduled for the Committee’s July 3^rd hearing.
• AB 2593 (McCarty), which the Committee approved on a vote of 7-0 at its June 5^th hearing, allows the County of Sacramento and any cities in the county with populations of at least 50,000 to create a joint powers authority to assist the homeless population, coordinate their homelessness response, and develop and manage a comprehensive strategy to address homelessness. The measure is currently pending in the Senate Housing Committee.
• AB 2735 (Blanca Rubio) allows private water corporations to have the same authority as mutual water companies to enter into a risk-pooling joint powers authority or agreement. The measure is also scheduled for the Committee’s July 3^rd hearing.

5. Special legislation. Section 16 of Article Four of the California Constitution prohibits special legislation when a general law can apply. AB 3198 contains findings and declarations explaining the need for legislation that addresses the unique circumstances facing electrical service in the Coachella Valley Service Area.

Assembly Actions

Assembly Local Government Committee: 9-0
Assembly Floor: 65-0

Support and Opposition

(6/28/24)

Support: Coachella Valley Water District
County of Riverside
Imperial Irrigation District

Opposition: None submitted.

-- END --

1. https://lafco.org/wp-content/uploads/documents/alternative-governance--electricity-services-study-imperial-irrigation-district/Alternative%20Governance%20Electricity%20Services%20Study-Imperial%20Irrigation%20District%20w-Appendices.pdf ↑

Date of Hearing: May 1, 2024

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Juan Carrillo, Chair

ABPCA Bill Id:AB 3198 (

Author:Garcia) – As Amended Ver:April 16, 2024

SUBJECT: Joint powers agreements: retail electric services.

SUMMARY: Authorizes public agencies within the Coachella Valley Service area to enter into a joint powers agreement (JPA) to provide retail electric service, as specified. Specifically, this bill:

1. Defines “Coachella Valley Service Area” to mean the territory within the Imperial Irrigation District’s (IID’s) sphere of influence (SPOI) within the County of Riverside as determined by the Local Agency Formation Commission (LAFCO) of the County of Riverside as set forth in Resolution No. 2020-10-3 adopted on April 23, 2020 and the land within the exterior boundaries of the Torres Martinez Reservation.
   
2. Specifies that a public agency with the authority to provide retail electric services may enter into a JPA with one or more public agencies with jurisdiction within the Coachella Valley Service Area to jointly exercise the authority to provide retail electric services notwithstanding an inability of a party to the JPA to exercise that power independently.
3. Finds and declares that a special statute is necessary and that a general statute cannot be made applicable because of the unique circumstances facing electrical service in the Coachella Valley Service Area.

FISCAL EFFECT: None.

COMMENTS:

1. Bill Summary and Author’s Statement. This bill authorizes public agencies within the Coachella Valley Service area to enter into a JPA to provide retail electric service, as specified. This bill defines the “Coachella Valley Service Area” to mean the territory within IID’s SOI within the County of Riverside as determined by the LAFCO of the County of Riverside as set forth in Resolution No. 2020-10-3 adopted on April 23, 2020 and the land within the exterior boundaries of the Torres Martinez Reservation. This bill is sponsored by the author.

According to the author, “AB 3198 (Garcia) would remove legal barriers in current statutes to authorize the County of Riverside, IID, CVWD, and local cities to become members of a future JPA.

“IID’s 100 year agreement to provide power in the Coachella Valley is coming to an end in 2033. Should Coachella Valley stakeholders support the formation of a JPA to help address issues related to electric power service in the eastern Coachella Valley, the County of Riverside and CVWD would be excluded from participating due to legal barriers in current state law.”

“The language of this bill was vetted and voted in favor of by local stakeholders at the Coachella Valley Energy Commission. The Coachella Valley Energy Commission is made up of representatives from the Imperial Irrigation District, Tribal Nations, City of La Quinta, City of Coachella, City of Indio, the County of Imperial, the County of Riverside, and the Coachella Valley Water District.”

1. Joint Powers Agencies. JPA Law allows two or more public agencies to use their powers in common if they sign an agreement. Sometimes an agreement creates a new, separate public entity called a joint powers agency or joint powers authority. Entities that can exercise joint powers include federal agencies, state departments, counties, cities, special districts, school districts, federally recognized tribal governments, and even other joint powers authorities.
2. Local Government Boundaries. The Legislature has the authority to create, dissolve, or otherwise modify the boundaries and services of local governments. Beginning in 1963, the Legislature delegated the ongoing responsibility to control the boundaries of cities, county service areas, and most special districts to LAFCOs in each county. The responsibilities and authority of LAFCOs have been modified in subsequent legislation, including a major revision of the LAFCO statutes in the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 [AB 2838 (Hertzberg), Chapter 761, Statutes of 2000]. The courts often refer to LAFCOs as the Legislature’s watchdog over boundary changes.

Local governments can only exercise their powers and provide services where LAFCO allows them to. LAFCOs’ boundary decisions must be consistent with SOIs that LAFCOs adopt to show the future boundaries and service areas of the cities and special districts. Before LAFCOs can adopt their SOIs, they must prepare Municipal Service Reviews (MSRs) which analyze population growth, public facilities, and service demands. LAFCOs may also conduct special studies of local governments.

1. Imperial Irrigation District. Established by a vote of the people in 1911, IID is one of the nation’s largest irrigation districts. IID entered the electric power business in 1936 in conjunction with the construction of the All-American Canal. IID anticipated that hydroelectric power generated from five falling water drops on the All-American Canal would enable them to set power rates considerably lower than the competition at that time. However, in negotiating repayment contracts with the United States, it was necessary that both the water and power rights of IID and the Coachella Valley Water District (CVWD) be determined.
   

According to the terms of a 1934 agreement between IID and CVWD, IID was given first rights to water delivered through the All-American Canal and a 99-year lease on any power rights Coachella had on the canal. As rental for power rights, IID agreed to pay CVWD a percentage of the net proceeds from its power system and Coachella in turn authorized IID to provide power service to the Coachella Valley. Currently, IID’s district boundaries encompass all of Imperial County. IID also provides electrical service to parts of San Diego County, as well as the cities of Indio, Indian Wells, Coachella, Rancho Mirage, Palm Desert, and La Quinta in the Coachella Valley, and other areas located in Riverside County.

1. IID Board Representation. IID’s Board of Directors is comprised of five officials who are elected by registered voters from geographic divisions within the district’s jurisdiction boundary, which is limited to Imperial County. Since the IID’s jurisdictional boundary does not extend into Riverside County, Riverside County registered voters are ineligible to serve on IID’s Board of Directors, nor are they eligible to vote in IID elections. Prior legislation has been introduced to provide Riverside County residents with representation on the IID board.

Most recently, AB 854 (Mayes) from 2019 would have increased the IID Board membership from five to 11 board members and required the six additional Board members to be eligible voters and residents of Riverside County. AB 854 died in the Assembly Appropriations Committee. Additionally, in September 2021, Assembly Bill 1021 (Mayes) was introduced and ultimately vetoed. AB 1021 would have required the LAFCOs in Imperial and Riverside Counties to conduct a study of governance options for the IID electrical service area. However, because state funding was included as part of the 2021 Budget Act, the study referenced in AB 1021 was allowed to proceed.

The Governor’s stated in a veto message for AB 1021 that, “This bill would require the Imperial and Riverside County local agency formation commissions to conduct and publish a study by no later than July 1, 2022 of options for providing electrical service to the Imperial Irrigation District's electrical service area and alternative governance structures that would extend voting rights to voters who reside within the electrical service area to provide for proportional representation on the governing board.

“The 2021 Budget Act included $500,000 from the General Fund to finance such a study. Imperial Irrigation District's electric service in the Coachella Valley is part of a 99-year lease that will reach its full term in 2033. It is valuable to invest the proper resources, time, and stakeholder engagement into studying the complex impacts of the Imperial Irrigation District's impending electrical service agreement expiration. This study should include any options to ensure that the local communities currently served may continue to receive energy service, as well as opportunities to give energy customers a voice.

“For these reasons, I am concerned with the short timeline set forth in the bill to complete the study. However, I do expect that the study funded in this year's Budget Act will be completed in a timely manner to inform continued discussions.”

1. Recent LAFCO Study. The Imperial and Riverside LAFCOs published a study on November 30, 2023, titles Alternative Governance and Electrical Services Study – Imperial Irrigation District. The scope of the study was to evaluate potential alternative electrical service governance structures for stakeholders’ consideration, specifically concerning IID’s extended electrical service territory in the Coachella Valley. According to the study, “IID currently serves approximately 159,000 residential, commercial, and industrial customers. Of this, about 61,900 customers, or 39 percent, reside within IID’s current jurisdictional boundary. The remaining customers, approximately 97,100 customers, or 61 percent, reside in the Coachella Valley, outside of IID’s legal jurisdictional boundary and their political divisions for IID Board of Director elections. Population projections prepared by IID and the Southern California Association of Governments (SCAG) indicate that growth in the Coachella Valley service territory is expected to outpace population growth in Imperial County.”

The study noted a number of different governance options including:

• 1. Maintaining the status quo.
     
  2. Annex the Coachella Valley electrical service territory into IID.
     
  3. Create a new sub-board of directors to provide oversight on all electrical service provisions related to Coachella Valley.
     
  4. Establish a Joint Powers Authority with IID.
     
  5. Sale or disposition of assets to an investor-owned utility.
     
  6. Form a new publicly owned utility.
     
  7. Form a vertically integrated publicly owned utility.
     
  8. Create a community choice aggregation.

This bill would allow for certain public agencies to enter into a JPA. The study noted that the establishment of a joint powers authority, “Offers the greatest amount of flexibility and provides membership the option of either pursuing specific roles and responsibilities, or creating a fully integrated entity (generation, transmission, and distribution) that would be responsible for all electrical service provisions.”

1. Previous Legislation. AB 1021 (Mayes) of 2021 would have required the LAFCOs in Imperial and Riverside Counties to conduct a study of governance options for the IID electrical service area. AB 1021 was vetoed by the Governor.
   

AB 2629 (Mayes) of 2020 would have required the State Energy Resources Conservation and Development Commission to study options to extend representation on the board of directors of IID to residents within the energy service area of IID but outside its jurisdictional boundaries. The report would have been due to the Legislature by June 30, 2022. AB 2629 was never heard in the Assembly.

AB 854 (Mayes) of 2019 would have increased the IID Board membership from five to 11 board members and required the six additional Board members to be eligible voters and residents of Riverside County. AB 854 died in the Assembly Appropriations Committee.

AB 2564 (Garcia) of 2008 would have prohibited IID from discriminating against electrical ratepayers residing outside its boundaries and required an election to determine whether a separate electric utility should be formed. AB 2564 was never heard in the Assembly Local Government Committee.

AB 1456 (Benoit) of 2003 declared the intent of the Legislature to address the use of revenues received by IID from sales of electrical power to customers outside that district and to address governance issues relating to the electric power operations of that district. AB 1456 was never heard in the Assembly.

1. Arguments in Support. According to IID, “In November 2023, the Imperial County and Riverside County Local Agency Formation Commissions collaborated on a joint study titled ‘Alternative Governance and Electrical Services Study - IID.’ This comprehensive study assessed alternative governance structures for electrical services within IID's extended territory in the Coachella Valley. The study identified the formation of a Joint Powers Authority (JPA) as one of the top two preferred options. However, legal barriers in current state law prevent certain local agencies from participating in such a JPA.
   

“As a result, the Coachella Valley Energy Commission (CVEC), established in 2021 to address governance and electrical service needs in the region, engaged in productive discussions with Assemblymember Garcia that resulted in the introduction of AB 3198. Over the past two months, discussions have taken place at the local level with impacted stakeholders. The amended version of AB 3198 from April 16, 2024 reflects the consensus language formally approved by CVEC during its last meeting.”

1. Arguments in Opposition. None on file.
   

REGISTERED SUPPORT / OPPOSITION:

Support

Coachella Valley Water District

Imperial Irrigation District

Opposition

None on file

Analysis Prepared by: Jimmy MacDonald / L. GOV. / (916) 319-3958