SB 48, as amended, Hill. Public utilities: research and development projects.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, gas corporations, heat corporations, and telephone corporations, as defined. Existing law authorizes the commission to fix the rates and charges for every public utility, and requires that those rates and charges be just and reasonable. Existing law authorizes electrical corporations, gas corporations, heat corporations, and telephone corporations to voluntarily adopt certain research and development programs and authorizes the commission to allow inclusion of expenses for research and development in rates. Existing law requires the commission to consider specified guidelines in evaluating the research, development, and demonstration programs proposed by electrical corporations and gas corporations.
The bill would require the commission, by no later than January 1, 2016, to consolidate all review and approval of research and development projects into a single research investment planning proceeding that would be required to recur no more frequently than every 2 years. The bill would prohibit the commission from allowing cost recovery of expenses for funding any research and development project outside the consolidated proceeding, except for the excluded projects and programs, as defined, for which a public utility applied for research and development funding prior to January 1, 2013. The bill would require the commission, when reviewing any request for authorization of expenses for research and development projects where the expenses are to be recovered from ratepayers, to place a preference on projects if the application was solicited in a manner that provides for the maximum amount of competition, unless limited and unique circumstances exist where it is not possible or desirable to maximize competition, and the proposed project encourages the use and leveraging of matching funds where possible. The bill would require that certain research and development projects first undergo peer review, as defined, that considers specified matter. The bill would require the commission, before initiating a consolidated research planning proceeding, to prepare and submit a report to the relevant policy and fiscal committees of the Legislature listing all research and development projects where the expenses of the project were or are recovered from ratepayers during the previous 5 years.
end deleteThis bill would require that when the commission reviews a request from a public utility for authorization to incur expenses for a research and development project, as defined, where the project expenses are to be recovered from ratepayers and are in excess of $1,500,000 per year, the commission is to administer a peer review, as defined, with certain exceptions. The bill would require that the peer review consider specified matters. The bill would require the commission, by December 31, 2014, and by December 31 of each 3rd year thereafter, to prepare and submit a report to the relevant policy and fiscal committees of the Legislature listing all research and development projects where the expenses of the project were or are recovered from ratepayers during the previous 3 years, including for each project the citations of all published papers, all oral and poster presentations given at public meetings, and all patents awarded for the funded research.
end insertVote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 740.5 is added to the Public Utilities
2Code, to read:
(a) For purposes of this section, the following terms
2have the following meanings:
3(1) “Excluded projects and programs” means research and
4development or research, development, and demonstration projects
5and programs that are the subject of Application 12-11-009,
6Application 11-03-001, Application 11-03-002, Application
711-03-003, Application 12-07-001, Application 12-07-002,
8Application 12-07-003, Application 12-07-004, Application
911-06-006, Application 11-06-029, and Application 11-07-001.
10(2)
end delete
11begin insert(1)end insert “Peer review” means a thorough, consistent, and objective
12examination based on preestablished criteria by persons who are
13independent of persons submitting an application, or conducting
14
the research and development, and who are knowledgeable in the
15field of endeavor to which the application or research and
16development pertains. Peer reviewers shall be free of any financial
17or other interest which could significantly impair the individual’s
18objectivity or create and unfair competitive advantage for any
19person or organization.
20(3)
end delete
21begin insert(2)end insert “Research and development project” includes a research,
22development, and demonstration project or program.
23(b) No later than January 1, 2016, the commission shall
24consolidate all review and approval of research and development
25projects into a single research investment planning proceeding that
26shall recur no more frequently than every two years. Commencing
27January 1, 2014, the commission shall not allow cost recovery of
28expenses for funding any research and development project outside
29the consolidated proceeding, except for the excluded
projects and
30programs for which a public utility applied for research and
31development funding prior to January 1, 2013.
32(c) When reviewing any request for authorization of expenses
33for research and development projects where the expenses are to
34be recovered from ratepayers, the commission shall place a
35preference on projects where both of the following are true:
36(1) The application was solicited in a manner that provides for
37the maximum amount of competition, unless limited and unique
38circumstances exist where it is not possible or desirable to
39maximize competition.
P4 1(2) The proposed project encourages the use and leveraging of
2matching funds where possible.
3(d) Unless the proposed research and development project has
4been selected by the public utility
through an open solicitation of
5proposals, the commission shall not authorize expenses for a project
6that will be recovered from ratepayers in an amount in excess of
7one million five hundred thousand dollars ($1,500,000) without
8the project first undergoing peer review. The peer review shall
9consider all of the following:
10(b) When reviewing any request from a public utility for
11authorization to incur expenses for a research and development
12project where the project expenses are to be recovered from
13ratepayers and are in excess of one million five hundred thousand
14dollars ($1,500,000) per year, the commission shall administer a
15peer review of the proposed project before authorizing recovery
16of the project’s expenses from ratepayers. The peer review shall
17consider all of the
following:
18(1) The overall scientific or technical merits of the proposed
19research and development project.
20(1)
end delete
21begin insert(2)end insert The extent to which the same or similar research,
22development, and demonstration work could be performed by
23entities that the public utility does not select.
24(2)
end delete
25begin insert(3)end insert The appropriateness of the level of requested funding in
26camparison to other projects by similarly experience individuals
27using similar facilities performing in similar timeframes and
28circumstances.
29(3)
end delete
30begin insert(4)end insert The likelihood that the proposed work can be accomplished
31within the proposed time and budget by the investigators or the
32technical staff, given their experience and expertise and available
33resources.
34(c) The commission may waive the peer review requirements in
35subdivision (b) for a research and development project that was
36selected through an open solicitation of proposals or if the project
37is contingent upon a peer review by a public state or federal entity.
38(e)
end delete
39begin insert(d)end insert (1) begin deleteNotwithstanding Section 10231.5 of the Government begin insert
Theend insert commission shall prepare and submit a report
40Code, before initiating a consolidated research planning
P5 1proceeding, theend delete
2to the relevant policy and fiscal committees of the Legislature
3listing all research and development projects where the expenses
4of the project were or are recovered from ratepayers during the
5previousbegin delete fiveend deletebegin insert
threeend insert years, including for each project the citations
6of all published papers, all oral and poster presentations given at
7public meetings, and all patents awarded for the funded research.
8begin delete For an electrical corporation, the report may be included in the begin insert The first
9report made to the Legislature pursuant to Section 910.end delete
10report shall be submitted by December 31, 2014, and subsequent
11reports shall be submitted by December 31 of every third year
12thereafter, notwithstanding Section 10231.5 of the Government
13Code.end insert
14(2) A report to be submitted pursuant to paragraph (1) shall be
15submitted in compliance with Section 9795 of the Government
16Code.
17(f) The requirements of this section do not apply to research
18and development projects or programs managed by an independent
19contractor pursuant to subdivision (b) of Section 2851, or to those
20managed by the Energy Commission.
21(g) Except for those research and development projects exempt
22pursuant to subdivision (f), any research and development project
23for which recovery of expenses is requested pursuant to Section
24740, that furthers the goals of Section 740.1, or that advances the
25public interest consistent with subdivision (c) of Section 399, is
26subject to the requirements of subdivisions (b), (c), (d), and (e).
27(h) Nothing in this section authorizes funding of research and
28development projects through the rates of a gas corporation that
29is not in compliance with subdivision (a) of Section 890.
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