BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 434
                                                                  Page  1


          SENATE THIRD READING
          SB 434 (Hill)
          As Amended  January 6, 2014
          Majority vote 

           SENATE VOTE  :26-2  
           
           UTILITIES & COMMERCE                 14-0                       
           
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          |Ayes:|Bradford, Patterson,      |     |                          |
          |     |Bonilla, Buchanan,        |     |                          |
          |     |Chávez, Dahle, Fong, Beth |     |                          |
          |     |Gaines, Garcia,           |     |                          |
          |     |Roger Hernández, Jones,   |     |                          |
          |     |Mullin, Quirk, Rendon     |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
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           SUMMARY  :  Expands the prohibition of a sitting California Public  
          Utilities Commission (PUC) Commissioner from acting as an owner,  
          director, or officer of a non-state entity of existing non-state  
          entities created before January 1, 2014, to those created by  
          future actions of the PUC.  Specifically,  this bill  :  
           
          1)Expands the prohibition of a sitting PUC Commissioner from  
            acting as an owner, director, or officer of a non-state entity  
            created before January 1, 2014, to those by future actions of  
            the PUC.

          2)Provides that, beginning June 1, 2014, a Commissioner who acts  
            as an owner, director, or office of a non-state entity that  
            was established as a result of an order, decision, motion,  
            settlement, or other action by the PUC in which the  
            Commissioner participated, neglects his or her duty and may be  
            removed pursuant to the California Constitution, irrespective  
            of when the non-state entity was established. 

          3)Specifies a two-thirds vote of both houses of the Legislature  
            is needed to remove a Commissioner of the PUC, in the event  
            that a Commissioner violates specified prohibitions.

           FISCAL EFFECT  :  Unknown.  This bill is keyed non-fiscal by the  
          Legislative Counsel.








                                                                 SB 434
                                                                  Page  2



           COMMENTS  :  According to the author, "The purpose of the bill is  
          to enhance state oversight over moneys approved by the  
          California Public Utilities Commission.  Current law prohibits a  
          commissioner from sitting on a non-state entity that he or she  
          had a hand in creating as a commissioner, but only if the  
          non-state entity was created before January 1, 2014 (active June  
          1, 2014).  This bill would instead ensure that the policy is  
          forward-looking and would apply to all current and future  
          commissioners upon the operative date of the legislation, which  
          would be January 1, 2015 if enacted and signed by the Governor."

          1)Why is the prohibition needed.  Within this capacity, the PUC  
            reviews current policy and attempts to set rates in a manner  
            that is forward thinking and in compliance with the terms of  
            state law.  In recent years, the PUC has extended its reach a  
            number of times beyond its rate-making capabilities, spending  
            considerable time and effort to create entities that use  
            ratepayer funds but are outside the state budget process.  It  
            is common for Commissioners or their designees to serve on  
            these nonprofits as board members, officers, or advisors.
            In many of these cases, the Legislature has stepped in to stop  
            these practices.  This issue was highlighted in 2008, where  
            the Legislature required the PUC to report on expenditures  
            from specific non-budget entities established by the PUC  
            (Public Utilities Code Section 326.5). 

            The provision contained in this bill draws a bright line  
            between the PUC and the entities it oversees and regulates as  
            it ensures no current or future commissioners can serve on  
            non-state entities that are not subject to the Legislature's  
            oversight.   


           Analysis Prepared by  :    DaVina Flemings / U. & C. / (916)  
          319-2083 


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