BILL ANALYSIS �
AB 874
Page 1
Date of Hearing: April 8, 2013
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 874 (Williams) - As Amended: March 21, 2013
SUBJECT : Public Utilities: unionization
SUMMARY : This bill would prohibit the Investor Owned Utilities
(IOUs) from recovering certain expenses from ratepayers.
Specifically, this bill :
Prohibits any expense incurred by an IOU in assisting or
deterring union organizing cannot be recoverable either directly
or indirectly in the utility's rates.
EXISTING LAW
1)Prohibits any expense resulting from a bonus paid to an
executive officer of an IOU that has ceased to pay its debts
in the ordinary course of business shall not be recoverable
either directly or indirectly in rates and shall be borne
exclusively by the shareholders of the public utility. (Public
Utilities Code 451.5(a)
2)Authorizes the California Public Utilities Commission (PUC) to
disallow expenses for whenever an IOU fails to prepare or
maintain records sufficient to enable the commission to
completely evaluate any relevant or potentially relevant issue
related to the reasonableness and prudence of any expense
relating to the planning, construction, or operation of the
corporation's plant. (Public Utilities Code 463(b))
3)Requires the PUC to initiate a rulemaking by March 1, 2012 to
adopt, among other things, rules to govern the conduct of
electrical corporations that ensure that an electrical
corporation does not market against a community choice
aggregation program, except through an independent marketing
division that is funded exclusively by the electrical
corporation's shareholders and that is functionally and
physically separate from the electrical corporation's
ratepayer-funded divisions. (Public Utilities Code 707)
FISCAL EFFECT : Unknown
AB 874
Page 2
COMMENTS :
1)Author's Statement . "AB 874 amends the Public Utilities code
to prohibit a regulated utility from recovering from
ratepayers either directly or indirectly in rates any expense
incurred by a utility in assisting or deterring union
organizing activities, and establishes that these expenses
shall be borne exclusively by the shareholder of the utility.
The Federal Public Utility Regulatory Policies Act of 1978
permits states to adopt rules prohibiting electric utilities
from recovering from any person other than shareholders direct
and indirect expenditures for promotional or political
advertising.
In 2000, AB 1889 by Assemblymember Cedillo was passed by the
legislature which prohibited state funds from being used to
assist or deter union organizing. This law was challenged in
Chamber of Commerce v. Brown and in 2008 the Supreme Court
held that the National Labor Relations Act preempted
California legislation that prohibited recipients of state
funds from using those funds to assist or deter union
organizing. The Court concluded that the private employers
were unfairly burdened by the requirements to provide detailed
accounting of their funds and was unfair because the law
effectively favored pro-union activities by exempting certain
expenditures, and therefore amounted to an impermissible state
regulation of labor relations. These circumstances DO NOT
apply in AB 874 because utilities are already required to
provide detailed accounting and segregation of funds to the
CPUC, and therefore no extra burden applies. Moreover, unlike
the previous California statute, AB 874 does not treat pro and
anti-union organizing activities differently, and therefore
provides no unfair advantages."
2)Need for the bill. This bill will ensure that any expenses
incurred by an IOU in assisting or deterring union
organization shall not be recoverable from ratepayers.
3)Neutral on Unions . This bill is neutral on union
representation campaigns. This bill ensures that ratepayer
funds cannot be used to assist or deter union organizing.
4)Federal Prohibitions. The Federal Public Utilities Regulatory
Policy Act (PURPA) of 1978 (P.L. 111-5, Enacted February 17,
AB 874
Page 3
2009) establishes rules, among other things, that prohibit an
electric utility from recovering ratepayer funds for any
direct or indirect expenditures for promotional or political
advertising. (Section 113 (b)(5))
REGISTERED SUPPORT / OPPOSITION :
Support
California State Association of Electrical Workers (sponsor)
Coalition of California Utility Employees (sponsor)
Opposition
None on file.
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083