BILL ANALYSIS                                                                                                                                                                                                    Ó          1





                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                                 ALEX PADILLA, CHAIR
          

          AB 1678 -  Gordon                                 Hearing Date:   
          June 17, 2014              A
          As Amended:         June 4, 2014             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, generally  
          known as the Supplier Diversity program. (Public Utilities Code  
          § 8283)

           This bill  requires this annual plan to also increase procurement  
          with lesbian, gay, bisexual, or transgender (LGBT) enterprises.

           Current law  requires each utility to submit an annual report to  
          the CPUC regarding implementation of its Supplier Diversity  
          program and requires the CPUC to annually report to the  
          Legislature on the progress of utilities in implementing these  
          programs. (Public Utilities Code § 8283)

           This bill  requires the CPUC's report to the Legislature to  
          include information about LGBT procurement starting with the  
          2016 report.
           
           Current law  requires the CPUC to adopt criteria for verifying  
          eligibility of women and minority enterprises and the Department  
          of General Services to verify disabled veteran enterprises.  
          (Military and Veterans Code § 999.2)

           This bill  requires the CPUC to adopt criteria for verifying  
          eligibility of LGBT enterprises in consultation with LGBT  











          chambers of commerce and other entities with relevant expertise.

           Current law  makes a person or corporation subject to a fine of  
          up to $5,000 and jail for up to one year for falsely  
          representing a business as eligible for the Supplier Diversity  
          program.

           This bill  would make those provisions apply to any false  
          representation of being a LGBT enterprise.




                                      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 diverse enterprises.   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  
          supplier diversity in all procurement 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 diversity  
          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 Supplier Diversity program 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 2014, the CPUC reported  
          that companies participating in its Supplier Diversity program  
          achieved a new record in 2013, procuring approximately $8.5  
          billion in goods and services from diverse suppliers, an  
          increase of about $500 million over 2012 procurement. According  
          to the CPUC, more than 30 companies participate in the program,  
          with the following doing the most business with diverse firms in  
          2013:

                 Pacific Gas and Electric Company: $2.3 billion, or 42.1  
               percent;

                 Southern California Edison: $1.4 billion, or 40.99  
               percent;

                 AT&T: $1.2 billion, or 51.57 percent;

                 AT&T Wireless: $999 million, or 27.74 percent;

                 Sprint: $546 million, or 41.88 percent;

                 San Diego Gas & Electric: $453 million, or 44.88  
               percent;

                 Southern California Gas Company: $428 million, or 45.38  
               percent;

                 Verizon: $115 million, or 48.84 percent; and

                 Comcast $64 million, or 22.35 percent.

          LGBT Certification - According to the National Gay & Lesbian  
          Chamber of Commerce (NGLCC), there are an estimated 1.4 million  
          LGBT-owned businesses in the United States, although less than  
          10% currently contract with state or local governments.  The  
          NGLCC has established a process to certify enterprises that are  
          at least 51% owned, operated, managed, and controlled by an LGBT  
          person or persons who are either U.S. citizens or lawful  
          permanent residents.  Qualifiers of LGBT status include:











                 Certified copy of domestic partnership registration,  
               civil union certification, or marriage certification;
                 Proof of domestic partnership health insurance  
               utilization;
                 Evidence of completed or attempted parenting and family  
               building efforts made by LGBT applicant and same sex  
               partner;
                 Apartment lease, automobile title, financing agreement,  
               or utility bills with name of applicant and partner listed;
                 Proof of joint property ownership;
                 Physician or attorney letter on official letterhead  
               attesting to the LGBT status of the applicant; and
                 Legal petition for name change (for transgender  
               applicants).

          NGLCC reports that there are currently 96 certified LGBT  
          businesses nationwide, with about 60 in the process of being  
          certified.

          Pacific Gas & Electric Company (PG&E) leadership decided to  
          include LGBT-owned business enterprises certified by the NGLCC  
          to its Supplier Diversity program at the end of 2012.  Last  
          October, PG&E hosted the first Supplier Diversity business  
          development workshop for LGBT business owners in collaboration  
          with the Golden Gate Business Association and the NGLCC.  

                                       COMMENTS
                
              1.   Author's Purpose  .  According to the author, the CPUC's  
               Supplier Diversity program has been effective in  
               encouraging utilities to contract with diverse suppliers  
               that may not have the knowledge or expertise to initiate  
               such a partnership. The estimated 1.4 million LGBT-owned  
               businesses in the United States have a low rate of  
               contracting with state or local governments currently,  
               although 80% of LGBT businesses responded to a survey that  
               they would like that opportunity.  It is important to  
               recognize the contributions LGBT businesses, large and  
               small, have had and continue to have on California's  
               economy and to ensure that these businesses also have the  
               opportunity to participate in the state's success.

              2.   Evolving Program  .  The Supplier Diversity program began  










               in the late 1980s with efforts to increase utility  
               contracting with women- and minority-owned businesses.   
               Disabled veterans were added in 1990.  Adding LGBT  
               enterprises to the program reflects a policy choice to  
               extend the benefits of the Supplier Diversity program to  
               another distinct group with a history of limited  
               participation in utility contracting.

              3.   Related Legislation  .  AB 2760 (Bradford) defines  
               "renewable energy" for purposes of the CPUC Supplier  
               Diversity program. Status: Set for hearing in the Senate  
               Committee on Energy, Utilities and Communications June  
               23rd.

                                           

                                   ASSEMBLY VOTES
           
          Assembly Floor                     (54-20)
          Assembly Appropriations Committee  (12-5)
          Assembly Utilities and Commerce Committee                       
          (10-3)

                                       POSITIONS
           
           Sponsor:
           
          National Gay and Lesbian Chamber of Commerce

           Support:
          
          AT&T
          Ace Mailing
          Blue Wave Solutions, Inc.
          California Communities United Institute
          California Small Business Association
          Desert Business Association
          Design Work Place, Inc.
          Envirolution, Inc.
          Golden Gate Business Association
          Green Viking Consulting, LLC
          InSight Consulting Partners, Inc.
          Landis Communications Inc.
          London Guest Suites










          Long Beach Gay & Lesbian Chamber of Commerce
          Los Angeles Gay & Lesbian Chamber of Commerce
          OutSmart Office Solutions, Inc.
          OutThink Partners
          Rainbow Chamber of Commerce Silicon Valley
          Riviera Advisors, Inc.
          San Francisco Small Business Network
          Small Business California
          Southern California Edison
          Vaughan Benz
          WriteAway Communications Corporation
          Many Individuals

           Oppose:
           
          None on file

          Jacqueline Kinney 
          AB 1678 Analysis
          Hearing Date:  June 17, 2014