BILL NUMBER: SB 48	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 18, 2014
	AMENDED IN ASSEMBLY  MARCH 18, 2014
	AMENDED IN ASSEMBLY  JUNE 19, 2013
	AMENDED IN SENATE  MAY 8, 2013
	AMENDED IN SENATE  APRIL 8, 2013

INTRODUCED BY   Senator Hill

                        DECEMBER 19, 2012

   An act to amend Section 740.1 of, and to add  Sections
  Section  740.12  and 740.13  to,
the Public Utilities Code, relating to public utilities.



	LEGISLATIVE COUNSEL'S DIGEST


   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.  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. 
    This 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   Beginning 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  of 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.  
   Because 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.  
   The 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.  
   This bill would provide that no reimbursement is required by this
act for a specified reason. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program:  yes   no  .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    The Legislature finds and declares all
of the following:  
   (a) It is in the interest of the state that its residents have
confidence in the decisions of the state's agencies and in the
operations of the industries that those agencies regulate.  

   (b) Research and development projects are scientific in nature,
technical in nature, or both, and therefore the advice of independent
scientific and technical experts may be used to inform agency
decisionmaking in the approval of those projects. Demonstration
projects concern the application of technology, and so scientific and
technical experts may not be necessary to inform agency
decisionmaking in approving those projects.  
   (c) It is in the interest of the state to ensure that the advice
issued by independent scientific and technical experts to state
agencies is sound, and that this advice should be, and should be
perceived to be, not only highly competent, but also the result of a
process that is fairly balanced in terms of the knowledge,
experience, and perspectives used to produce it, free of any
significant conflict of interest, and not subject to undue influence
from the state agencies that they advise.  
   (d) The goal of independent expert review is to ensure the
scientific integrity and technical credibility of a decisionmaking
process. Independent expert review is different from, and
complementary to, stakeholder involvement.  
   (e) The credibility of agency decisions is improved when the
results of independent scientific and technical expert review are
used to improve the quality of an agency's decisionmaking process.
The use of independent expert review therefore provides observers
confidence that decisions are made with the best available scientific
and technical information. 
   SECTION 1.   SEC. 2.   Section 740.1 of
the Public Utilities Code is amended to read:
   740.1.  (a) The commission shall consider the following guidelines
in evaluating the research, development, and demonstration programs
proposed by electrical and gas corporations:
   (1) Projects should offer a reasonable probability of providing
benefits to ratepayers.
   (2) Expenditures on projects that have a low probability for
success should be minimized.
   (3) Projects should be consistent with the corporation's resource
plan.
   (4) Projects should not unnecessarily duplicate research
currently, previously, or imminently undertaken by other electrical
or gas corporations or research organizations.
   (5) Each project should also support one or more of the following
objectives:
   (A) Environmental improvement.
   (B) Public and employee safety.
   (C) Conservation by efficient resource use or by reducing or
shifting system load.
   (D) Development of new resources and processes, particularly
renewable resources and processes that further supply technologies.
   (E) Improve operating efficiency and reliability or otherwise
reduce operating costs. 
   (b) The commission may establish an advisory committee to evaluate
whether a research and development project meets the guidelines
described in subdivision (a). The advisory committee, if established,
shall be composed of persons who meet all of the following
requirements:  
   (1) Be independent of the person proposing the project. 

   (2) Be independent of the persons conducting the proposed project,
if different from those persons proposing the project. 

   (3) Be knowledgeable in the field of endeavor to which the
proposed project pertains.  
   (b) (1) Findings supporting a decision to approve the inclusion of
expenses incurred for research and development projects or programs
in electricity rates pursuant to Section 740 shall be informed by
independent expert review. Independent expert review means a review
to examine the effectiveness with which the proposed research and
development application meets the guidelines described in subdivision
(a) that is performed by persons who have the following attributes:
 
   (A) Are independent of the applicant.  
   (B) Are independent of the persons conducting the proposed project
or program, if different from the applicant.  
   (C) Are knowledgeable about the scientific or technical aspects of
the field of endeavor to which the proposed application pertains.
 
   (4) Be 
    (D)     Are  free of any financial or
other interest that could significantly impair the ability of the
person  serving on the committee  to be objective or
that could create an unfair competitive advantage  in favor
 of a person or organization. 
   (2) This subdivision shall become operative on ____. 
   (c) The establishment of an advisory committee  to perform the
independent review pursuant to subdivision (b)  is not an
unlawful delegation of the commission's authority. 
  SEC. 2.    Section 740.12 is added to the Public
Utilities Code, to read:
   740.12.  (a) On or before July 1, 2016, an electrical corporation
with more than 100,000 customer accounts shall, in consultation with
the National Research Council, create a peer review committee to
evaluate whether a research and development project proposed in an
application for the inclusion of expenses for research and
development in rates pursuant to Section 740 meets the guidelines in
Section 740.1 and to evaluate all of the following technical aspects:

   (1) The overall scientific or technical merits of the proposed
project.
   (2) The extent to which the same or similar project could be
performed by entities that the electrical corporation does not
select.
   (3) The appropriateness of the level of requested funding in
comparison to other projects by similarly experienced individuals
using similar facilities performing in similar timeframes and
circumstances.
   (4) The likelihood that the proposed project can be accomplished
within the proposed time and budget by the investigators or the
technical staff, given their experience and expertise and available
resources.
   (b) The peer review committee shall have a membership of no more
than nine persons.
   (c) The composition and policies of the peer review committee
described in subdivision (a) shall ensure that the evaluation of an
application shall be performed by persons who meet all of the
following requirements:
   (1) Be independent of persons submitting the proposed project that
is included in the application.
   (2) Be independent of persons conducting the project, if different
from those persons proposing the project.
   (3) Be knowledgeable in the field of endeavor to which the
proposed project pertains.
   (4) Be free of any financial or other interest that could
significantly impair the ability of the person serving on the
committee to be objective or that could create an unfair competitive
advantage for a person or organization.
   (d) The commission shall, upon appropriation by the Legislature,
reimburse the electrical corporation for costs incurred by the
electrical corporation in consulting with the National Research
Council and in creating and operating the peer review committee from
the Energy Resources Programs Account.
   (e) The commission shall not approve the inclusion of expenses
incurred by a research and development project in electricity rates
pursuant to Section 740 for a proposed project that is not
supplemented by a written evaluation from the peer review committee.
In a decision to approve the inclusion of expenses incurred by
research and development projects in electricity rates pursuant to
Section 740, the commission shall make findings on how the written
evaluation by the peer review committee informed the decision,
including aspects of the proposed projects in which the opinion of
the commission differs from the opinion of the peer review committee.

   (f) The requirement for a written evaluation pursuant to
subdivision (e) may be waived by the commission for a proposed
project listed in an application submitted to the commission if both
of the following conditions are satisfied:
   (1) Substantial funding for the project is contingent upon
approval by a state or federal agency.
   (2) Funding for the project may be awarded by the state or federal
agency only after a review by persons who meet the criteria in
subdivision (c). 
  SEC. 3.  Section  740.13   740.12  is
added to the Public Utilities Code, to read:
    740.13.   740.12.   (a) On or before
 December 31, 2015,   February 1, 2016, 
and, notwithstanding Section 10231.5 of the Government Code, on or
before  December 31   February 1  of every
three years thereafter or more frequently as determined by the
commission, the commission shall submit to the fiscal and relevant
policy committees of the Legislature a report listing all research
and development projects for which the costs of the projects were or
are recovered from ratepayers during the previous three 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 projects.
   (b) The report submitted pursuant to subdivision (a) shall be
submitted in compliance with Section 9795 of the Government Code.

  SEC. 4.    No reimbursement is required by this
act pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.