BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 291|
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UNFINISHED BUSINESS
Bill No: SB 291
Author: Hill (D)
Amended: 9/6/13
Vote: 21
SENATE ENERGY, UTILITIES & COMMUNICATIONS COMM. : 11-0, 4/2/13
AYES: Padilla, Fuller, Cannella, Corbett, De León, DeSaulnier,
Hill, Knight, Pavley, Wolk, Wright
SENATE APPROPRIATIONS COMMITTEE : 7-0, 4/15/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SENATE FLOOR : 36-0, 4/18/13
AYES: Anderson, Beall, Berryhill, Block, Calderon, Cannella,
Corbett, Correa, De León, DeSaulnier, Emmerson, Evans, Fuller,
Gaines, Galgiani, Hancock, Hernandez, Hill, Hueso, Huff,
Jackson, Knight, Lara, Leno, Lieu, Liu, Monning, Nielsen,
Price, Roth, Steinberg, Walters, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Padilla, Pavley, Vacancy, Vacancy
ASSEMBLY FLOOR : Not available
SUBJECT : Public Utilities Commission: safety enforcement:
gas and
electrical corporations
SOURCE : Author
DIGEST : This bill requires the California Public Utilities
Commission (PUC) to develop and implement a safety enforcement
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program for gas and electrical corporations by July 1, 2014, and
January 1, 2015, respectively.
Assembly Amendments revise and recast with similar intent as it
left the Senate.
ANALYSIS :
Existing law:
1. Permits powers and duties of public officers of the PUC to be
delegated to deputies of the officers or authorized personnel
unless expressly prohibited by law.
2. Declares that any public utility that violates or fails to
comply with any part or provision of any order, decision,
decree, rule, direction, demand, or requirement of the PUC is
subject to a penalty between $500 and $50,000 for each
offense.
This bill:
1. Requires PUC to develop procedures for commission staff to
issue corrective actions, orders and citations under the
direction of the Executive Director. PUC may institute a
formal proceeding regardless of any enforcement action taken
by commission staff.
2. Requires PUC to design the enforcement program to improve gas
and electrical system safety through the enforcement of
applicable law, order or rule.
3. Requires the commission staff to consider the nature of the
violation, voluntary removal or resolution efforts, and prior
history of violations when issuing citations and assessing
penalties.
4. Requires the procedures to include a notification of a
violation, a reasonable period not to exceed 30 days to
correct the violation. A hearing may be requested by the
party receiving the citation.
5. Requires PUC to develop an administrative limit on the amount
of any monetary penalty that may be set by commission staff.
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6. Requires PUC to develop and implement an appeals process
regarding issuances and appeals of citations.
7. Specifies that the provisions in this bill do not apply to
independent generators.
Background
In recent years, gas and electrical incidents have caused
fatalities, injuries, and serious damage to the gas and
electrical infrastructure. These incidents include the gas
pipeline explosion at San Bruno and a Southern California wind
storm that knocked out power to the region. In the aftermath of
these incidents, there has been increased focus on how the PUC
enforces the safety procedures of the utilities it regulates.
When an investor owned utility is suspected of violating a rule
established by the PUC, an investigation and proceeding are
opened to determine the magnitude of the potential violation.
These proceedings are classified as Orders Instituting
Investigation (OII) and are referred to as adjudication cases in
statute. Statute requires that adjudication cases be resolved
within 12 months of initiation unless the PUC makes findings why
that deadline cannot be met and orders an extension
While it is currently necessary for an electrical violation to
be evaluated through the OII process, the PUC has established
procedures for its staff to directly issue citations in other
industries that it regulates. For example, staff citation
programs have been developed for the Renewables Portfolio
Standard filing requirements, railroad citations, propane gas
distribution system, and water and sewer utilities.
Furthermore, after the San Bruno incident in 2010, the PUC
adopted Resolution ALJ-274 (see below), which implemented
procedures for staff to issue citations for gas pipeline safety.
The PUC does not currently delegate citation authority to staff
for electrical violations, but it reports that it intends to
implement such procedures.
On September 9, 2010, a gas pipeline in San Bruno, CA ruptured.
The resultant explosion and fire killed eight people and
destroyed 38 homes. The National Transportation Safety Board
(NTSB) performed an investigation and analysis of the incident.
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In addition, the PUC created an Independent Review Panel (IRP)
of experts to conduct an investigation of the explosion and
fire. Both the NTSB and the IRP recommended that staff at the
safety and reliability branches within the PUC be delegated
authority to issue citations to regulated entities.
The IRP based their recommendation in part on the citation model
of the Office of the State Fire Marshal (OSFM), which regulates
approximately 5,500 miles of intrastate hazardous liquid
transportation pipelines. The OSFM Pipeline Safety Division has
authority to initiate and conclude enforcement actions and
assess civil penalties without going through administrative
hearings. It should be noted that the organization of OFSM and
PUC are somewhat different. While there are five members who
make up the PUC, there is only one State Fire Marshal. By
necessity, the OFSM delegates authority to staff.
In December 2011, the PUC passed Resolution ALJ-274, which
delegated specified authority to the Consumer Protection and
Safety Division staff to issue citations to all gas corporations
to enforce compliance with regulations. Specific PUC rules
govern the design, construction, testing, maintenance, and
operation of utility gas pipeline systems. This resolution was
adopted largely as a response to the recommendations of the San
Bruno IRP report, the NTSB report, and legislation from 2011.
As currently instituted, the gas company citation program begins
when PUC staff discover a possible violation (PV). Possible
violations are categorized as hazardous or non-hazardous and
have varying levels or remedial actions, respectively.
Hazardous PVs result in the issuance of a citation and require
immediate correction. Non-hazardous PVs and all pertinent
information are forwarded to a review committee, which ensures
statewide consistency in reviewing PVs. The review committee
evaluates the PV and can draw any of three possible conclusions:
(1) no violation, (2) citation, or (3) warning. A warning
results in no monetary penalty, but is used for tracking trends
of similar violations. A citation results in the maximum
penalty. Once receiving a citation or warning, utilities may
appeal the violation in a proceeding before an administrative
law judge and then vote by the PUC Commissioners.
In January 2012, the PUC fined PG&E $16.8 million for failure to
conduct pipeline leak surveys. The Consumer Protection and
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Safety Division (CPSD) was notified by PG&E regarding the
violations on December 30, 2011, and staff issued the citation
on January 27, 2012. It has been the only citation issued under
the new citation program. The citation was appealed and the
appeal was denied.
A windstorm in Southern California on November 30 and December
1, 2011 caused prolonged power outages, affecting 248 wood poles
and 1,064 overhead conductors in the territory of Southern
California Edison (SCE). Up to 226,053 customers were without
power simultaneously. The CPSD investigated the outages and
concluded that SCE and several communication infrastructure
providers were in violation of PUC general orders, citing that
at least 21 poles and 17 guy wires did not meet the safety
factor requirements. The CPSD also found that SCE failed to
adequately investigate the outages and pole failures and failed
to preserve evidence after the windstorm.
As of this writing, the PUC has not opened an OII regarding the
power outages or potential violations of SCE. The PUC reports
that it has directed SCE to revise its emergency response
procedures. Furthermore, the PUC is currently revising its own
general orders relevant to emergencies and disasters and will
open a rulemaking regarding those revisions later this year. It
is not clear at this time if staff citation authority would
hasten the process or result in increased safety in this
instance.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee, on-going
costs of between $150,000 and $200,000 annually from the
Utilities Reimbursement Account to manage citations and appeals
including hearings before an administrative law judge.
According to PUC, there will also be an unknown one-time
collection from ratepayers for the development of a database to
track, manage and dispense with future citations. However, this
bill does not specifically require PUC to develop a database,
which likely will be necessary to address existing requirements
not associated with the bill.
SUPPORT : (Verified 9/11/13)
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Division of Ratepayer Advocates
The Utility Reform Network
JG:d 9/11/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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