BILL ANALYSIS Ó AB 1274 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1274 (Bradford) As Amended July 8, 2013 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |75-0 |(May 9, 2013) |SENATE: |37-0 |(September 3, | | | | | | |2013) | ----------------------------------------------------------------- Original Committee Reference: JUD. SUMMARY : Prohibits a business, as defined, from sharing, disclosing, selling, or otherwise making a customer's electrical and gas consumption data accessible to a third party, except as specified. Specifically, this bill : 1)Prohibits a business from sharing, disclosing, or otherwise making accessible to any third party a customer's electrical or natural gas usage data without obtaining the express consent of the customer and conspicuously disclosing to whom the disclosure will be made and how the data will be used. 2)Requires a business and a nonaffiliated third party, pursuant to a contract, to implement and maintain reasonable security procedures and practices to protect the data from unauthorized disclosure. 3)Prohibits a business from providing an incentive or discount to the customer for accessing the data without the prior consent of the customer. 4)Requires a business to take reasonable steps to dispose of that customer data within its custody or control when the data is no longer to be retained by the business, as specified. 5)Permits a customer who suffers damages as a result of a violation of the provisions of this bill to bring civil action for actual damages not to exceed $500 for each willful violation of these provisions. The Senate amendments : 1) Apply the prohibitions in this bill to any "business" or third party that handles a customer's data, instead of AB 1274 Page 2 restricting the prohibition to a customer's network service provider or energy management provider. 2) Clarify language relating to the security procedures and practices that a business must maintain and requires the business to dispose of the customer data once the data is no longer to be retained by the business. 3) Limit the amount of damages that a customer may recover to actual damages not to exceed $500 per violation. EXISTING LAW : 1)Prohibits an electrical corporation or gas corporation, and a local publicly-owned utility, from sharing, disclosing, or otherwise making accessible to a third party a customer's electric or gas usage that is made available as part of an advanced metering system. 2)Requires a gas or electrical corporation, and a local publicly-owned utility, to use reasonable security procedures and practices to protect a consumer's unencrypted data from unauthorized access, destruction, use, modification, or disclosure. 3)Requires a business that owns or licenses personal information about a California resident to implement and maintain reasonable security procedures and practices to protect the consumer information from unauthorized access. 4)Requires a business that discloses personal information about a California resident pursuant to a contract with a nonaffiliated third party to require by contract that the third party implement and maintain reasonable security measures to prevent unauthorized access to the personal information. FISCAL EFFECT : None COMMENTS : In the past, a "meter reader" came to our homes and places of business and read our gas and electric meters in order AB 1274 Page 3 to determine our usage and bill us accordingly. But today public utilities have the ability to send that information over the Internet through so-called "smart meters." These devices, however, do more than just send data to the public utility in real time; they also allow consumers to monitor their energy consumption patterns and, one hopes, use it to figure out ways to be more efficient. Almost three years ago the Assembly Judiciary Committee heard SB 1476 (Padilla), Chapter 497, Statutes of 2010. SB 1476 required an investor-owned utility (IOU) or publicly owned utility (POU) using advanced metering (smart meters) to protect consumers' energy usage data from an unauthorized access or disclosure. It generally prohibited the utilities from sharing or otherwise disclosing a customer's consumption data and patterns to third parties without the customer's consent, and it required those utilities to use reasonable security procedures, including encryption. Existing law also prohibits gas and electric utilities from selling a customer's usage data or any personal information or otherwise sharing that data without the customer's consent. Existing law also requires the utility to maintain reasonable security measures to protect the customer's consumer data. This bill would extend many of the same prohibitions that currently apply to gas and electrical utilities to other third party businesses, including, but not limited to, the customer's Internet service provider, that handle a customer's usage data. This bill would also allow a customer who suffers damages as a result of a violation of the bill's provision to bring an action not to exceed $500. According to the author, as "technology becomes available to provide services to Californian's that will allow them, in real time, to manage their energy use it is important to ensure that privacy safeguards are in place so that customers can be confident that these new service providers will protect this information and not misuse or sell it without consent. Important legislation has been enacted to protect the security of the energy grid . . . This bill will ensure that 3rd party providers of services that access customer utility data will follow similar rules that electric and gas utilities are already required to follow." Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334 AB 1274 Page 4 FN: 0001439