BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 906|
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THIRD READING
Bill No: AB 906
Author: Hill (D)
Amended: 6/18/09 in Senate
Vote: 27 - Urgency
SENATE LOCAL GOVERNMENT COMMITTEE : 5-0, 6/17/09
AYES: Wiggins, Cox, Aanestad, Kehoe, Wolk
ASSEMBLY FLOOR : 73-0, 5/14/09 (Consent) - See last page
for vote
SUBJECT : Conflict of interest: remote interest in a
contract
SOURCE : City of Simi Valley
DIGEST : This bill revises the definition of "remote
interest" in the existing conflict of interest statute
pertaining to government officials in order to allow a
government entity to enter into a contract with an
investor-owned utility, if the purpose of the contract is
to provide energy efficiency, as specified.
ANALYSIS : Existing law makes it a crime for a public
official to have a financial interest in a contract made by
that official or by the governing board on which the member
sits. Contracts that violate this prohibition are void and
unenforceable. A willful violation can result in a fine or
prison time, plus a lifetime ban on holding public office.
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However, state law says that an official is not interested
in a contract if the person has only a remote interest.
The official must publicly disclose the interest and the
agency must approve the contract without that official's
vote. State law defines 15 situations that qualify as
remote interests.
In 2008, the California Public Utilities Commission adopted
the California Long-term Energy Efficiency Strategic Plan
to push the investor-owned utilities towards aggressive
energy efficiency goals. In response, utility companies
filed applications seeking the Public Utilities
Commission's authorization for $3.7 billion in energy
efficiency programs in 2009-11. Utilities work with
builders, farmers, and local governments to achieve energy
efficiencies.
This bill adds a 16th item to list of remote interests that
are exempt from the statute that prohibits economic
conflicts of interest.
This new remote interest applies to a contract between an
investor-owned utility that the Public Utilities Commission
regulates and a state, county, district, judicial district,
or city body or board where the contract requires the
utility to provide energy efficiency rebates or other
programs that encourage energy efficiency that benefit the
public.
To qualify for this new remote interest that involves a
person who is an officer or employee of an investor-owned
utility that is regulated by the Public Utilities
Commission, the following conditions must apply:
1. The contract is funded by utility consumers pursuant to
the Public Utilities Commission's regulations.
2. The contract provides no individual benefit to the
person that is not also available to the public.
3. The person has recused himself/herself from
participating in making the contract on behalf of the
public agency.
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4. The contract implements a program authorized by the
Public Utilities Commission.
Comments
Southern California Edison, an investor-owned utility
regulated by the Public Utilities Commission, developed a
Local Government Partnership portfolio to reward cities for
participating in its energy saving activities. Edison
proposed to contract with the City of Simi Valley (Ventura
County) to conserve energy by installing efficient
lighting, improving heating, ventilation, and air
conditioning equipment, replacing pumps, and other
measures.
Because a Simi Valley city councilmember also works for
Southern California Edison, the City cannot contract with
Edison without violating the ban on economic self-dealing.
Councilmembers in other cities also work for investor-owned
utilities and may face similar problems.
Simi Valley's situation is a classic case of clashing
public policies. One state policy prohibits public
officials from economic self-dealing; it's a crime for
public officials to have a financial interest in contracts
with their own agencies. The other state policy pushes
investor-owned utilities to contract with consumers,
including public agencies, to conserve electricity and
natural gas; conservation is the best way to deliver new
energy supplies. Neither the Legislature nor the Public
Utilities Commission anticipated that their policies would
conflict. This bill resolves this conflict between the two
competing public policies by relegating the problem to the
category of a "remote interest" that doesn't result in a
crime.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/18/09)
City of Simi Valley (source)
Regional Council of Rural Counties
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ASSEMBLY FLOOR :
AYES: Adams, Anderson, Arambula, Beall, Bill Berryhill,
Tom Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuller, Furutani, Galgiani, Gilmore, Hagman, Hall,
Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande,
Niello, Nielsen, John A. Perez, V. Manuel Perez,
Portantino, Price, Ruskin, Salas, Silva, Skinner,
Solorio, Audra Strickland, Swanson, Torlakson, Torres,
Torrico, Tran, Villines, Yamada
NO VOTE RECORDED: Ammiano, Fuentes, Gaines, Garrick,
Saldana, Smyth, Bass
AGB:do 6/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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