BILL ANALYSIS AB 2758 Page 1 Date of Hearing: April 19, 2010 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Steven Bradford, Chair AB 2758 (Bradford) - As Amended: April 12, 2010 SUBJECT : Public utilities: procurement. SUMMARY : Requires each cable television corporation with gross annual revenues exceeding $25 million, and their commission-regulated subsidiaries and affiliates, to submit annual plans for increasing procurement from women, minority, veteran and disabled veteran business enterprises. EXISTING LAW : 1)The Public Utilities Code requires each electrical, gas, water and telephone corporation with gross annual revenues exceeding $25 million to annually submit a detailed and verifiable plan to the California Public Utilities Commission (CPUC) for increasing women, minority, and disabled veteran business enterprises (W/M/DVBE) procurement in all categories that includes goals and timetables. 2)Requires the CPUC to establish guidelines for the annual plans. 3)Requires each electrical, gas, water and telephone corporation with gross annual revenues exceeding $25 million to furnish an annual report to the PUC regarding the implementation of W/M/DVBE programs. 4)The State Constitution prohibits the State from discriminating against, or granting preferential treatment to any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting. THIS BILL : 1)Requires each cable television corporation with gross annual revenues exceeding $25 million to annually submit a detailed and verifiable plan to the CPUC for increasing W/M/DVBE procurement in all categories that includes goals and timetables. AB 2758 Page 2 2)Adds "veteran business enterprises" to the list of enterprises for which electrical, gas, water and telephone corporations that are required to submit an annual detailed and verifiable plan to increase procurement. 3)Specifies renewable energy, wireless telecommunications, broadband, smart grid and rail projects as categories for which utilities should increase procurement from women, minority and disabled veteran business enterprises. COMMENTS : According to the author, the purpose of this bill is to capture information about the procurement practices of cable corporations, who to date, have not chosen to voluntarily submit information about their plans to increase procurement with minority, women, veteran and disabled veteran enterprises. These companies maintain a substantial presence in California and like other utilities should be encouraged to share and improve their efforts in this area. 1) Background : In 1986, the CPUC adopted General Order 156 (GO 156), which created Women-Owned and Minority-Owned Business Enterprise (W/MBE) program to increase diversity in various utility operations and procurement processes. GO 156 requires PUC-regulated electrical, gas, and telephone corporations with gross annual revenues exceeding $25 million to submit annual detailed and verifiable plans that includes short- and long-term goals and timetables for increasing W/MBE procurement in all procurement categories. GO 156 includes rules and regulations for the utilities' compliance with the W/MBE program, and requires participating utilities to inform, recruit, and obtain at least 20 percent of their products and services purchased within a five-year period from W/MBEs (15 percent from minority-owned businesses and 5 percent from women-owned businesses). AB 3678 (Moore) Chapter 1259, Statutes of 1986, codified the broader parameters of GO 156, and requires each electrical, gas, and telephone corporations (with gross annual revenues exceeding $25 million) to annually submit a detailed and verifiable plan for increasing W/MBE procurement in all categories that includes short- and long-term goals and timetables, and furnish an annual report. It also required the PUC to establish guidelines for the plans. AB 2758 Page 3 SB 2398 (Dills) Chapter 516, Statutes of 1990, later included disabled veteran business enterprises in the classes of entities eligible under W/MBE programs. A subsequent PUC decision includes disabled veteran-owned business enterprises (D. 95-12-045) and establishes a 1.5-percent goal for disabled veteran-owned businesses. AB 873(Davis) Chapter 316, Statutes of 2008, included water corporations with gross annual revenues of more than $25 million in the requirement to annually submit a detailed and verifiable plan to the CPUC for increasing W/M/DVBE procurement in all categories and to submit an annual report on the results of that plan. 2) Should cable companies be included: CPUC jurisdiction of cable television corporations is limited to the issuance of state video franchises for the provision of video. The Digital Infrastructure and Video Competition Act of 2006 created this jurisdiction, which includes approving applications, enforcing antidiscrimination and build-out rules, and preventing the use of stand-alone, residential, primary line, and basic phone service revenues from being used to pay for deployment of video infrastructure. This jurisdiction, however, does not include oversight over cable television services or operations. While cable corporations may not be regulated by the CPUC, the state, as well as the federal government, has placed priority on the expansion of broadband particularly in rural and underserved communities. Also, this bill includes an expansion to the reporting requirements of publicly regulated utilities to include broadband in their M/W/DVBE procurement plans. Due to the fact that cable companies have and continue to make significant infrastructure investments in this area, it may be in the state's best interest to have a clearer understanding of the priorities within those corporations for a contracting process that incorporates diversity. 3) Why include veterans: The California Disabled Veteran Business Enterprise Program was established to address the special needs of disabled veterans seeking rehabilitation and training through entrepreneurship and to recognize the sacrifices of Californians disabled during military service. Section 999 of the Military and Veterans Code defines a disabled veteran as "a veteran of the military, naval, or air service of AB 2758 Page 4 the United States, including, but not limited to, the Philippine Commonwealth Army, the Regular Scouts, 'Old Scouts', and the Special Philippine Scouts, 'New Scouts,' who has at least a 10-percent service connected disability and who is domiciled in the state." According to the PUC "Year 2008 Utility Procurement of Goods, Services and Fuel from Women, Minority, and Disabled Veteran Owned Business Enterprises" report to the Legislature, 29 utilities filed annual reports with the CPUC, however only 0.25% of the total 1.5% target goal for DVBE procurement was achieved. In response, some utilities hosted events for disabled veterans aimed at encouraging entrepreneurship and contracting opportunities. According to the sponsor of the bill, tens of thousands of men and women in uniform returning from Iraq and Afghanistan who are becoming more engaged in the emergence of the green economy, are not able to be captured in the target 1.5% goal of DVBE procurement with utilities. By expanding GO 156 to include veterans, the bill allows for the reporting of veteran owned business and their potential impact in the emerging green economy. 4) Highlighting projects: AB 2758 specifies that renewable energy, wireless telecommunications, broadband, smart grid and rail projects should be projects of focus for utility procurement with M/W/DVBE. However, it can be deduced that because GO 156 applies directly to utility activities and encourages compliance through prime contractors and subcontracts, diversity compliance should be reflected in annual procurement reports as utilities begin to authorize and contract for these projects. 5) Smart grid: Last year, SB 17 (Padilla) Chapter 327 Statutes of 2009 required the CPUC, in consultation with the CEC and the CAISO to determine the requirements for a smart grid deployment plan and adopt standards and protocols to ensure functionality and interoperability developed by public and private entities by July 1, 2010. Due to the fact that the CPUC has not finished its work and because smart grid operators are bound by this provision for any distribution or transmission grid improvements, the author may wish to delete the reference to smart grid from the bill. AB 2758 Page 5 6) Related Legislation: AB 1918 (Davis) requires each "wireless communications service provider" with gross annual revenues exceeding $25 million to meet the same W/M/DVBE procurement requirements which are placed on electrical, gas, water, and telephone corporations. REGISTERED SUPPORT / OPPOSITION : Support American GI Forum of California Asian Business Association Black Business Association Black Economic Council (BEC) CHARO Community Development Corporation Economic Business Development, Inc. (EBD) Greenlining Institute (Sponsor) Hispanic Chamber of Commerce Alameda County Latino Business Chamber of Greater Los Angeles Mabuhay Alliance National Association of Filipino American Associations OurWeekly TELACU Opposition California Cable & Telecommunications Association (CCTA) Analysis Prepared by : Camille Wagner / U. & C. / (916) 319-2083