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.








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          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.








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          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
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          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