BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 340 - Bradford Hearing Date:
June 18, 2013 A
As Amended: April 25, 2013 FISCAL B
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DESCRIPTION
Current law directs the California Public Utilities Commission
(CPUC) to require each electrical, gas, water, and telephone
corporation, and each wireless telecommunications service
provider, with gross annual revenues exceeding $25 million, to
submit annually a plan for increasing procurement with women,
minority, and disabled veteran business enterprises (WMDVBEs) in
all categories, including, but not limited to, renewable energy,
wireless telecommunications, broadband, smart grid, and rail
projects. (Public Utilities Section 8283)
Current law requires each of these same entities to submit an
annual report to the CPUC regarding implementation of its WMDVBE
program and requires the CPUC to annually report to the
Legislature on the progress of utilities in implementing their
WMDVBE programs. (Public Utilities Section 8283)
Current decisions of the CPUC require collection from ratepayers
of an Electric Program Investment Charge (EPIC) to fund public
interest investments in research and development, technology
demonstration and deployment, and market facilitation of clean
energy technologies and approaches, with funds to be awarded by
the California Energy Commission (CEC) and electric utilities.
(D.12-05-037)
This bill requires the CPUC to establish a program to encourage
the use of WMDVBEs as prime contractors and subcontractors for all
grants, contracts, subsidies, financing, and activities
administered through the EPIC program.
This bill requires the CPUC, no later than 2014, to report on its
progress with this program in its annual WMDVBE report to the
Legislature.
BACKGROUND
Supplier Diversity Program - Beginning in 1986, the Legislature
enacted a series of statutes, and the CPUC adopted General Order
(GO) 156, to establish a Supplier Diversity program to encourage
the award of a fair proportion of all utility contracts for
products and services to WMDVBEs. Each electrical, gas, water,
and telephone corporation (including wireless telecommunications
providers), with gross annual revenues exceeding $25 million, and
their CPUC-regulated subsidiaries and affiliates, are required to
participate. CPUC-regulated water utilities originally were not
required to participate in the program but were added in 2009. AB
1386 (Bradford, 2011) encouraged voluntary participation by cable
television corporations and direct broadcast satellite providers,
which are not generally subject to CPUC jurisdiction.
The utilities are required to annually submit a detailed and
verifiable plan, with goals and timetables, for increasing WMDVBE
procurement in all categories, including technology, equipment,
supplies, services, materials, and construction. A separate
annual report on progress made in meeting those goals also is
required. GO 156 specifies guidelines for the utilities to follow
in meeting WMDVBE requirements, including the following
procurement goals: 5% of all procurement from woman-owned
business enterprises; 15% from minority-owned business
enterprises, and 1.5% for disabled veteran-owned businesses
enterprises. There is no penalty for failure of a utility to meet
its goals. The CPUC is required to make an annual report to the
Legislature on utility progress in meeting WMDVBE goals.
In May 2011, the CPUC issued a decision (D.11-05-019) reaffirming
its support of the policy goals of GO 156, particularly the
economic benefits to ratepayers and communities, and amended GO
156 to enhance transparency and accountability of the program. In
March 2013, the CPUC reported that companies participating in its
Supplier Diversity program achieved a new record, procuring
approximately $8.1 billion in goods and services from WMDVBE
suppliers, with the largest utilities all procuring more than 36
percent from diverse firms.
EPIC - The CPUC has ordered the collection of $162 million per
year in ratepayer funds from 2013 through 2020 to fund public
interest investments in research and development, technology
demonstration and deployment, and market facilitation of clean
energy technologies and approaches. The funds are to be
distributed by four program administrators - the CEC, San Diego
Gas & Electric Company, Pacific Gas and Electric Company, and
Southern California Edison Company - pursuant to investment plans
the CPUC approves every three years. The administrators are
required to make individual project awards primarily through
competitive bidding, with sole-source contracts and interagency
agreements if justified. Contractor evaluation guidelines included
in a pending Proposed Decision approving administrator investment
plans specify WMDVBE status of the bidder or subcontractor as a
criterion for IOUs to use, although it is not clear if the CEC is
required to follow those guidelines.
COMMENTS
1. Author's Purpose . According to the author, "The State has
adopted and funded millions of dollars in job training
programs in energy efficiency and renewable energy
technologies. After the training is complete we need to make
sure that jobs are available for these graduates. And these
jobs should not be limited to just construction jobs - they
need to include all of the types of jobs common in the energy
industry, such as technical support, administration, legal,
finance, engineering, economics, management, and
entrepreneur. Currently ratepayer funded energy research
programs do not have to report on their programs and progress
toward including women, minorities, and disabled veterans.
"My bill would ensure that the EPIC program administrators
have such programs and report on their progress. This is the
kind of program that can help these women, minorities, and
disabled veterans gain the experience that will lead them to
better opportunities in the executive offices and board rooms
of California energy companies."
2. IOUs Already Subject to GO 156. This bill requires the
CPUC to establish a program to encourage the use of WMDVBEs
as prime contractors and subcontractors for all grants,
contracts, and other award of funds under the EPIC program,
consistent with General Order 156. To date, the CPUC has
made the CEC and IOUs the administrators of the EPIC program
with authority to make individual awards. The IOUs already
are required to comply with GO 156 in all their procurement.
Thus, a new program is not required for IOU administration of
EPIC awards to encourage diversity in contracting, although
CPUC action would be required to make CEC subject to this
bill's requirements.
3. Is New Proceeding Required ? Regarding CEC award of EPIC
funds, this bill gives the CPUC the option of establishing a
diversity program by modifying an existing general order, or
through an existing or new proceeding. In the ongoing EPIC
proceeding, contractor evaluation guidelines included in a
pending Proposed Decision approving administrator investment
plans specify WMDVBE status of the bidder or subcontractor as
a criterion. Thus, it appears that the CPUC could
potentially accomplish the requirements of this bill in an
existing proceeding and avoid the expense and delay of
initiating a new proceeding. Modifying an existing general
order would not appear to be an option for reaching CEC as it
is not subject to the CPUC's GO 156.
4. Encourage, Not Require . This bill appropriately provides
for a program to "encourage" but not require WMDVBE
contracting. Proposition 209, enacted by the voters in 1996,
prohibited state agencies from considering race, sex, or
ethnicity in public contracting, as well as public employment
and public education. Since then, state agencies may not
give preferences in contracting to women or minorities,
although preferences to disabled veterans are permitted. To
the extent the diversity criterion suggested in the EPIC
proposed decision may be a starting point for the CPUC to
meet the requirements of this bill, the CPUC must ensure that
it does not establish preferences or other programs that
violates Proposition 209.
ASSEMBLY VOTES
Assembly Floor (50-21)
Assembly Appropriations Committee (12-5)
Assembly Utilities and Commerce Committee
(10-4)
POSITIONS
Sponsor:
Author
Support:
California Public Utilities Commission
Oppose:
None on file.
Jacqueline Kinney
AB 340 Analysis
Hearing Date: June 18, 2013