BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 611 - Hill Hearing Date: May 2, 2013
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As Amended: April 15, 2013 FISCAL B
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DESCRIPTION
The California Constitution establishes the California Public
Utilities Commission (CPUC) and grants the CPUC authority to
regulate public utilities subject to control by the Legislature.
(Cal. Const. Article II, Section 1)
Current law establishes within the CPUC a Division of Ratepayer
Advocates (DRA) to advocate on behalf of utility customers, with
a director appointed by the Governor, a lead attorney designated
by the director, and funding, attorneys and other staff provided
by the CPUC. (Public Utilities Code 309.5)
This bill changes DRA to the Office of Ratepayer Advocates (ORA)
within the commission, provides ORA more autonomy in its budget
and staff, including attorneys, and authorizes ORA to seek
rehearing and judicial review of CPUC decisions the same as other
parties to a CPUC proceeding.
BACKGROUND
Division of Ratepayer Advocates - The DRA is an independent
division within the CPUC that advocates solely on behalf of
residential and small commercial utility ratepayers. First
established in 1984, DRA was later codified in SB 960 (Leonard,
1996), which also required that its director be appointed by the
Governor subject to Senate confirmation. The statutory goal of
DRA is "to obtain the lowest possible rate for service consistent
with reliable and safe service levels." DRA advocates for
consumers in industry-wide proceedings, individual rate cases,
and before the Legislature.
DRA has been without an official director for nearly three years.
Dana Appling was DRA director from Aug 2004 through July 2010,
and Joe Como has served as acting director since August 2010.
DRA's staff consists of 137 technical, policy, and financial
analysts with professional backgrounds as engineers, auditors,
and economists with expertise in regulatory issues related to
electricity, natural gas, telecommunications, and water
industries in California. DRA has a separate budget account
controlled by the director but subject to final approval of the
commission. DRA has a lead attorney appointed by the director,
with other staff attorneys assigned by the CPUC's general counsel
from the CPUC's Legal Division. Currently, attorneys are
assigned on a case-by-case basis, although prior practice
included Legal Division attorneys assigned to DRA on long-term
basis.
According to DRA's 2012 annual report: "DRA participated in 176
CPUC proceedings and filed more than 600 pleadings to aid the
CPUC in developing the record from which Commissioners formulated
their final decisions. DRA lobbied decision-makers on behalf of
ratepayers nearly 250 times in 2012 to ensure that the consumer
perspective was heard. DRA's $27,535,000 budget represents a
small fraction of ratepayer's investment compared with the nearly
$4 billion in savings DRA's work was instrumental in achieving
for Californians in the form of lower utility rates and avoided
rate increases. For every dollar customers spent on DRA in 2012,
they saved approximately $153 across their utility bills.
Additionally, DRA influenced the outcome of numerous CPUC
policies, decisions, and California legislation that will impact
ratepayers."
On January 10, 2013, the Department of Finance (DOF) Office of
State Audits and Evaluations (OSAE) released its performance
audit of the CPUC budget process. The audit identified CPUC
noncompliance with statutory requirements specific to DRA's
budget. The DOF report stated that, "with minimal input from
DRA, the CPUC Budget Office prepares and communicates the budget
to DRA and Finance. However, this process has lacked
transparency and CPUC has not been able to explain or support to
DRA's satisfaction how the various budgeted cost categories were
determined. As a result, DRA is not able to adequately explain
or defend its own budget."<1>
COMMENTS
1. Reconsideration . The author presented this bill in
committee on April 30, but it failed passage. The author is
proposing to amend the bill to strike the following
provisions, which leaves in the bill only provisions related
to the DRA:
On page 5, strike lines 1-25
On page 6, strike lines 1-29
On page 8, strike lines 32-40
Strike pages 9-17
On page 18, strike lines 1-33
On page 23, strike lines 38-39
Strike page 24
2. Author's Purpose . According to the author: "SB 611 adds
statutory clarifications that will better allow the DRA,
established within the CPUC, to fulfill its statutory
mandate and operate independently in the interest of utility
customers. In order to develop its budget, the DRA submits
its budget request to the executive staff of the CPUC, which
then may adjust this request before final submission to the
Department of Finance and Legislature. This process is
appropriate for divisions reporting directly to the
Executive Director; however, the DRA Director is appointed
by the Governor and confirmed by the Senate. Within other
state agencies, separate entities are generally either
budgeted entirely outside the governing agency or are
allotted a clear "line item" annually, that separates the
chain of command. There is an untested theory that DRA may
not be able to appeal a CPUC decision, given its place
within the CPUC. It is imperative that DRA be allowed to
appeal, or it cannot fulfill its mission to obtain the
lowest possible rate consistent with reliable and safe
service levels. This right to appeal is granted all other
parties, and it should be clarified that it is available to
DRA as well."
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<1> "California Public Utilities Commission Budget Process
Performance Audit." Office of State Audits and Evaluations,
Department of Finance, December 2012, p. 13.
http://www.dof.ca.gov/osae/audit_reports/documents/FinalReport-Cal
iforniaPublicUtilitiesCommissionPerformanceAuditWEB.pdf
3. Enhancing the Power of DRA . This bill enhances the
independence and authority of DRA in three significant ways
- allows DRA to submit its own budget directly to DOF rather
than through the CPUC, allows DRA to employ its own staff
including attorneys, and authorizes DRA to seek judicial
review of CPUC decisions. DRA states that these changes
will "better situate DRA to more effectively and efficiently
utilize its resources to advocate for affordable, safe and
reliable IOU services." The Utility Reform Network (TURN)
states that these changes will empower DRA to advocate for
ratepayers "without fear of reprisal by a commission that
currently has ultimate power to determine its budget and
personnel."
DRA's status as a division of the CPUC has been a barrier to
appealing CPUC decisions in a court of law because that
would essentially be suing itself. This bill puts DRA on the
same footing as other parties to CPUC proceedings, thereby
putting more teeth in its advocacy by having the threat to
appeal. TURN states that this helps address "the tremendous
disparity of resources between the regulated entities and
the parties representing consumers and other public interest
concerns." It is possible this change could raise questions
about the need for ratepayer-funded intervenor compensation
for groups like TURN if DRA also has use of ratepayer funds
to represent ratepayers all the way through appeal.
However, according to TURN, these groups' collective
resources typically are only a fraction of that devoted to a
case by regulated entities.
Despite this bill's express grant of authority to the newly
named ORA to seek judicial review of CPUC decisions, it
retains the reference to the Office as "within the
commission." This creates ambiguity as to whether ORA is
sufficiently independent to have standing to seek judicial
review. Thus, the author and committee may wish to consider
amending the bill to strike all references to ORA as within
the commission.
POSITIONS
Sponsor:
Author
Support:
Division of Ratepayer Advocates
The Utility Reform Network
Oppose:
California Public Utilities Commission
Jacqueline Kinney
SB 611 Analysis
Hearing Date: May 2, 2013