BILL ANALYSIS Ó
SB 1364
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Date of Hearing: June 18, 2012
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
SB 1364 (Huff) - As Amended: May 25, 2012
SENATE VOTE : 39-0
SUBJECT : Water corporations.
SUMMARY : Subjects water corporations with more than 2,000
service connections to the same reporting and auditing powers of
the California Public Utilities Commission (PUC) currently
imposed on electrical, gas, and telephone corporations.
Specifically, this bill :
1)Requires water corporations with more than 2,000 service
connections to include more specific information in its
notices to ratepayers regarding rate increases.
2)Allows the PUC to direct a water corporation with more than
2,000 service connections, or an electrical, gas or telephone
corporation, to utilize the services of an independent
auditor, who shall be selected and supervised by that water,
electrical, gas, or telephone corporation.
3)Authorizes the PUC to audit specified records and documents of
any business that is a subsidiary or affiliate of, or a
corporation that holds controlling interest in, a water
corporation with more than 2,000 service connections.
EXISTING LAW :
1)Specifies the PUC has regulatory authority over public
utilities, including electrical corporations, gas
corporations, telephone corporations, and water corporations,
as defined.
2)Pursuant to the Public Utilities Act, authorizes the PUC, each
commissioner, and each officer and person employed by the PUC
at any time to inspect the accounts, books, papers, and
documents of any public utility. This authorization applies
to inspections of the accounts, books, papers, and documents
of any business that is a subsidiary or affiliate of, or a
corporation that holds a controlling interest in, an
SB 1364
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electrical, gas or telephone corporation.
3)Authorizes the PUC to fix the rates and charges for every
public utility, and requires that those rates and charges be
just and reasonable.
4)Prohibits, with certain exceptions, a public utility from
changing any rate, except upon a showing before the PUC and a
finding by the PUC that the new rate is justified.
5)With certain exceptions, whenever any electrical, gas, heat,
telephone, water, or sewer system corporation files an
application to change any rate for the services or commodities
furnished by it, existing law requires that the corporation
furnish its customers notice of its application to the PUC for
approval of the new rate.
6)Requires every electrical, gas, and telephone corporation to
annually prepare and submit to the PUC a report describing all
significant transactions between the corporation and every
subsidiary or affiliate of, or corporation holding a
controlling interest in, the electrical, gas, or telephone
corporation. The report must identify the nature of the
transactions and the terms and conditions applying to them,
including the basis upon which cost allocations and transfer
pricing were established for the transactions.
7)Requires the PUC to periodically audit all significant
transactions between an electrical, gas, or telephone
corporation and every subsidiary or affiliate of, or
corporation holding a controlling interest in, that
electrical, gas, or telephone corporation.
FISCAL EFFECT : Unknown.
COMMENTS : The author states "under the Public Utilities Code,
water corporations are subject to less oversight, transparency
and accountability than gas, electric and telephone
corporations. SB 1364 seeks to ensure that ratepayers served by
private water companies are not asked to pay more for the same
service than a ratepayer serviced by a public agency without a
clear understanding of the associated costs".
1)Background : Water utility service is a monopoly subject to
full rate regulation by the PUC.
SB 1364
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California has 135 water utilities, generally classified by
their number of service connections, including 10 Class A
companies with more than 10,000 service connections; 6 Class B
companies with more than 2,000 service connections, 22 Class C
companies having more than 500 service connections, and 83 Class
D companies with less than 500 service connections.
2)Customer notice of rate increases : The regulated water
corporations are required to file any
proposed rate increases in a General Rate Case every three years
at the PUC. Current law and PUC rules require utilities to do a
bill insert or other mailed notice to customer of any rate
change proposal filed with the PUC for approval. This
requirement ensures customers are aware of proposed rate
increases and enables their participation in PUC review of the
proposed increase and scrutiny of the utility's expenditures
given as justification for the increase.
This bill allows the PUC to require water corporations with more
than 2,000 customers to inform customers in a separate letter or
through a bill insert, of the outcome of the GRC within a
specified period of time.
REGISTERED SUPPORT / OPPOSITION :
Support
Carol Warren, Mayor, City of Stanton
City of Claremont (Sponsor)
City of Placentia (Sponsor)
Golden State Water Company
Orange County Board of Supervisors
Opposition
None on file.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083