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 ----------------------------------------------------------------- |Ayes:|Bradford, Patterson, | | | | |Bonilla, Buchanan, | | | | |Chávez, Dahle, Fong, Beth | | | | |Gaines, Garcia, | | | | |Roger Hernández, Jones, | | | | |Mullin, Quirk, Rendon | | | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- 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 FN: 0004329