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.begin delete Existing law establishes the Energy Resources Programs Account and requires a specified surcharge on electricity usage to be transferred to the Energy Resources Programs Account.end delete
begin deleteThis bill would authorize the commission to establish an advisory committee consisting of persons meeting specified requirements to evaluate whether proposed research and development projects meet the guidelines. The bill would, by July 1, 2016, require an electrical corporation with more than 100,000 customer accounts to create a peer review committee to evaluate whether projects meet the guidelines and to evaluate specific technical aspects of the proposed project. The bill would prohibit, except under specified conditions, the commission from approving the inclusion of expenses incurred by a project in electricity rates if the proposed project is not supplemented by a
written evaluation from the peer review committee. The bill would require the commission, upon appropriation by the Legislature, to reimburse the electrical corporation for costs incurred in creating and operating the peer review committee from the Energy Resources Programs Account. The bill would require the commission, by December 31, 2015, and by December 31 end deletebegin insertBeginning at an unspecified date, this bill would require that findings supporting a decision to approve the inclusion of expenses incurred for research and development projects or programs in electricity rates be informed by independent expert review, as defined. The bill would require the commission by February 1, 2016, and by February 1 end insertof every 3 years thereafter, to 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.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
end deleteBecause some electrical corporations would be required to create a peer review committee, a violation of which would be a crime, this bill would impose a state-mandated local program.
end deleteThe California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
end deleteThis bill would provide that no reimbursement is required by this act for a specified reason.
end deleteVote: majority.
Appropriation: no.
Fiscal committee: yes.
State-mandated local program: begin deleteyes end deletebegin insertnoend insert.
The people of the State of California do enact as follows:
begin insertThe Legislature finds and declares all of the
2following:end insert
3(a) It is in the interest of the state that its residents have
4confidence in the decisions of the state’s agencies and in the
5operations of the industries that those agencies regulate.
6(b) Research and development
projects are scientific in nature,
7technical in nature, or both, and therefore the advice of
8independent scientific and technical experts may be used to inform
9agency decisionmaking in the approval of those projects.
10Demonstration projects concern the application of technology,
11and so scientific and technical experts may not be necessary to
12inform agency decisionmaking in approving those projects.
13(c) It is in the interest of the state to ensure that the advice issued
14by independent scientific and technical experts to state agencies
15is sound, and that this advice should be, and should be perceived
16to be, not only highly competent, but also the result of a process
17that is fairly balanced in terms of the knowledge, experience, and
18perspectives used to produce it, free of any significant conflict of
19interest, and not subject to undue
influence from the state agencies
20that they advise.
21(d) The goal of independent expert review is to ensure the
22scientific integrity and technical credibility of a decisionmaking
23process. Independent expert review is different from, and
24complementary to, stakeholder involvement.
25(e) The credibility of agency decisions is improved when the
26results of independent scientific and technical expert review are
27used to improve the quality of an agency’s decisionmaking process.
28The use of independent expert review therefore provides observers
29confidence that decisions are made with the best available scientific
30and technical information.
Section 740.1 of the Public Utilities Code is amended
33to read:
(a) The commission shall consider the following
35guidelines in evaluating the research, development, and
P4 1demonstration programs proposed by electrical and gas
2corporations:
3(1) Projects should offer a reasonable probability of providing
4
benefits to ratepayers.
5(2) Expenditures on projects that have a low probability for
6success should be minimized.
7(3) Projects should be consistent with the corporation’s resource
8plan.
9(4) Projects should not unnecessarily duplicate research
10currently, previously, or imminently undertaken by other electrical
11or gas corporations or research organizations.
12(5) Each project should also support one or more of the
13following objectives:
14(A) Environmental improvement.
15(B) Public and employee safety.
16(C) Conservation by efficient resource use or by reducing or
17shifting system load.
18(D) Development of new resources and processes, particularly
19renewable resources and processes that further supply technologies.
20(E) Improve operating efficiency and reliability or otherwise
21reduce operating costs.
22(b) The commission may establish an advisory committee to
23evaluate whether a research and development project meets the
24guidelines described in subdivision (a). The advisory committee,
25if established, shall be composed of persons who meet all of the
26following requirements:
27(1) Be independent of the person proposing the project.
end delete
28(2) Be independent of the persons conducting the proposed
29project, if different from those persons proposing the project.
30(3) Be knowledgeable in the field of endeavor to which the
31proposed project pertains.
32(b) (1) Findings supporting a decision to approve the inclusion
33of expenses incurred for research and development projects or
34programs in electricity rates pursuant to Section 740 shall be
35informed by independent expert review. Independent expert review
36means a review to examine the effectiveness with which the
37proposed research and development application meets the
38guidelines described in subdivision (a) that is performed by persons
39who have the following attributes:
40(A) Are independent of the applicant.
end insertbegin insert
P5 1(B) Are independent of the persons conducting the proposed
2project or program, if different from the applicant.
3(C) Are
knowledgeable about the scientific or technical aspects
4of the field of endeavor to which the proposed application pertains.
5(4) Be
end delete
6begin insert(D)end insertbegin insert end insertbegin insertAreend insert free of any financial or other interest that could
7significantly impair the ability of the personbegin delete serving on the to be objective or that could create an unfair competitive
8committeeend delete
9advantagebegin insert
in favorend insert of a person or organization.
10(2) This subdivision shall become operative on ____.
end insert
11(c) The establishment of an advisory committeebegin insert to perform the
12independent review pursuant to subdivision (b)end insert is not an unlawful
13 delegation of the commission’s authority.
Section 740.12 is added to the Public Utilities Code,
15to read:
(a) On or before July 1, 2016, an electrical corporation
17with more than 100,000 customer accounts shall, in consultation
18with the National Research Council, create a peer review committee
19to evaluate whether a research and development project proposed
20in an application for the inclusion of expenses for research and
21development in rates pursuant to Section 740 meets the guidelines
22in Section 740.1 and to evaluate all of the following technical
23aspects:
24(1) The overall scientific or technical merits of the proposed
25project.
26(2) The extent to which the same or similar project could be
27performed by entities that the electrical corporation does not select.
28(3) The appropriateness of the level of requested funding in
29comparison to other projects by similarly experienced individuals
30using similar facilities performing in similar timeframes and
31circumstances.
32(4) The likelihood that the proposed project can be accomplished
33within the proposed time and budget by the investigators or the
34technical staff, given their experience and expertise and available
35resources.
36(b) The peer review committee shall have a membership of no
37more than nine persons.
38(c) The composition and policies of the peer review committee
39described in subdivision (a) shall ensure that the evaluation of an
P6 1application shall be performed by persons who meet all of the
2following requirements:
3(1) Be independent of persons submitting the proposed project
4that is included in the application.
5(2) Be independent of persons conducting the project, if different
6from those persons proposing the project.
7(3) Be knowledgeable in the field of endeavor to which the
8proposed project pertains.
9(4) Be free of any financial or other interest that could
10significantly impair the ability of the person serving on the
11committee to be objective or that could create an unfair competitive
12advantage for a person or organization.
13(d) The commission shall, upon appropriation by the Legislature,
14reimburse the electrical corporation for costs incurred by the
15electrical corporation in consulting with the National Research
16Council and in creating and
operating the peer review committee
17from the Energy Resources Programs Account.
18(e) The commission shall not approve the inclusion of expenses
19incurred by a research and development project in electricity rates
20pursuant to Section 740 for a proposed project that is not
21supplemented by a written evaluation from the peer review
22committee. In a decision to approve the inclusion of expenses
23incurred by research and development projects in electricity rates
24pursuant to Section 740, the commission shall make findings on
25how the written evaluation by the peer review committee informed
26the decision, including aspects of the proposed projects in which
27the opinion of the commission differs from the opinion of the peer
28review committee.
29(f) The requirement for a written evaluation pursuant to
30subdivision (e) may be waived by the commission for a proposed
31project listed in an application
submitted to the commission if both
32of the following conditions are satisfied:
33(1) Substantial funding for the project is contingent upon
34approval by a state or federal agency.
35(2) Funding for the project may be awarded by the state or
36federal agency only after a review by persons who meet the criteria
37in subdivision (c).
Section begin delete740.13end deletebegin insert740.12end insert is added to the Public Utilities
39Code, to read:
(a) On or beforebegin delete December 31, 2015,end deletebegin insert February 1,
32016,end insert and, notwithstanding Section 10231.5 of the Government
4Code, on or beforebegin delete December 31end deletebegin insert February 1end insert of every three years
5thereafter or more frequently as determined
by the commission,
6the commission shall submit to the fiscal and relevant policy
7committees of the Legislature a report listing all research and
8development projects for which the costs of the projects were or
9are recovered from ratepayers during the previous three years,
10including, for each project the citations of all published papers, all
11oral and poster presentations given at public meetings, and all
12patents awarded for the funded projects.
13(b) The report submitted pursuant to subdivision (a) shall be
14submitted in compliance with Section 9795 of the Government
15Code.
No reimbursement is required by this act pursuant to
17Section 6 of Article XIII B of the California Constitution because
18the only costs that may be incurred by a local agency or school
19district will be incurred because this act creates a new crime or
20infraction, eliminates a crime or infraction, or changes the penalty
21for a crime or infraction, within the meaning of Section 17556 of
22the Government Code, or changes the definition of a crime within
23the meaning of Section 6 of Article XIII B of the California
24Constitution.
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