BILL ANALYSIS Ó
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THIRD READING
Bill No: SB 611
Author: Hill (D)
Amended: 5/28/13
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMMITTEE : 3-1, 4/30/13 (FAIL)
AYES: Padilla, Fuller, Hill
NOES: Wright
NO VOTE RECORDED: Cannella, Corbett, De León, DeSaulnier,
Knight, Pavley, Wolk
SENATE ENERGY, UTIL. & COMMUNIC. COMMITTEE : 9-0, 5/2/13
AYES: Padilla, Fuller, Cannella, DeSaulnier, Hill, Knight,
Pavley, Wolk, Wright
NO VOTE RECORDED: Corbett, De León
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Public Utilities Commission: Division of Ratepayer
Advocates
SOURCE : Author
DIGEST : This bill renames the Division of Ratepayer Advocates
(DRA) the Office of Ratepayer Advocates (ORA) and transfers the
ORA to the Department of Consumer Affairs (DCA). This bill
authorizes the ORA to seek rehearing and judicial review as
specified and requires to have a budget approved by the
Department of Finance (DOF). This bill requires the Public
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Utilities Commission (PUC) to continue to collect moneys as
specified, for the support of the ORA in the amounts authorized
by the DOF.
ANALYSIS : The California Constitution establishes the PUC,
with jurisdiction over all public utilities, as defined and
grants the PUC certain general powers over all public utilities,
subject to control by the Legislature.
Existing law:
1. Establishes the DRA within the PUC to represent the
interests of public utility customers and subscribers, with
the goal of obtaining the lowest possible rate for service
consistent with reliable and safe service levels.
2. Requires the Director of the DRA to submit an annual budget
to the PUC for final approval.
3. Requires the Governor to designate the president of the PUC
from among its members and requires the president to direct
the executive director, the attorney, and other staff of the
PUC, except for the DRA, in accordance with PUC policies and
guidelines.
4. Establishes the PUC Utilities Reimbursement Account (UR
Account) and authorizes the PUC to annually determine a fee
to be paid by every public utility providing service directly
to customers or subscribers and subject to the jurisdiction
of the PUC, except for a railroad corporation. The PUC is
required to establish the fee, with the approval of the DOF,
to produce a total amount equal to that amount established in
the authorized PUC budget for the same year, and an
appropriate reserve to regulate public utilities, less
specified sources of funding.
5. Provides for the PUC Ratepayer Advocate Account (RA Account)
in the General Fund (GF) and requires that money from the PUC
UR Account be transferred in the annual Budget Act to the PUC
RA Account for performance of the duties of the DRA.
This bill:
1. Renames the DRA to the ORA.
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2. Transfers the ORA to the DCA.
3. Authorizes the ORA to seek rehearings and judicial reviews
of PUC decisions.
4. Requires that the Director of ORA develop a budget for the
ORA which is to be submitted to the DOF for final approval
rather than the PUC.
5. Allows the ORA to employ experts necessary to carry out its
functions.
6. Provides that the ORA shall have access, upon request, to
all information provided to the PUC, a Commissioner of the
PUC, or an officer or employee of the PUC.
7. Requires the PUC to continue to collect moneys through PUC
reimbursement fees for the support of the ORA in the amounts
authorized by the DOF.
8. Provides that moneys collected for the support of the ORA be
paid into the ORA Special Fund Account, which this bill
creates in the existing Consumer Affairs Fund.
9. Provides that moneys in the account will be available, upon
appropriation by the Legislature, only for use by the ORA in
performing its assigned functions and that moneys in the
account are held in trust on behalf of the public utility
ratepayers from whom the moneys were collected and may not be
appropriated, or in any other manner transferred or otherwise
diverted, to any other fund or entity.
Background
DRA . The DRA is an independent division within the PUC 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
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Legislature.
DRA has been without an official Director for nearly three
years. Dana Appling was the Director of DRA from August 2004
through July 2010, and Joe Como has served as the 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
PUC. DRA has a lead attorney appointed by the Director, with
other staff attorneys assigned by the PUC's general counsel from
the PUC'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 DOF Office of State Audits and
Evaluations released its performance audit of the PUC budget
process. The audit identified PUC 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."
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Ongoing costs of approximately $290,000 annually from the
PUC UR Account (special fund) for legal staff to provide ORA
with the same information as a Commissioner.
Ongoing costs of approximately $360,000 from the PUC UR
Account (special fund) for legal staff to respond to ORA
requests for judicial review.
Unknown increased costs for equipment, services,
administration, due to loss economies of scale.
SUPPORT : (Verified 5/23/13)
Division of Ratepayer Advocates
The Utility Reform Network
OPPOSITION : (Verified 5/23/13)
California Water Association
Public Utilities Commission
ARGUMENTS IN SUPPORT : According to The Utility Reform
Network, this bill makes several changes that will increase the
independence of the DRA from the rest of the PUC and enhance its
ability to represent ratepayers. The most important of these
would:
Allow DRA to employ its own personnel, including attorneys,
rather than having to rely on the PUC to supply them;
Allow DRA to submit its proposed budget directly to the DOF,
rather than to the PUC, for approval; and
Clarify that DRA, like other parties that participate in
cases before the PUC, has the right to seek judicial review
of PUC decisions.
These reforms enables DRA to carry out its statutory mission of
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advocating before the PUC on behalf of public utility customers
without fear of reprisal by a commission that currently has the
ultimate power to determine its budget and personnel.
ARGUMENTS IN OPPOSITION : The Public Utilities Commission
states this bill appropriates ratepayer monies for GF purposes.
This bill as amended would have ratepayers pay nearly $30
million to fund 137 positions at the DCA, a GF agency. This
sets a dangerous precedent of ratepayers subsidizing the GF.
PUC states this bill harms ratepayers and threatens public
safety. Section 583 of the Public Utilities Code specifically
prohibits PUC staff from divulging confidential utility
documents. By moving DRA outside of the PUC, its staff would be
exempt from these confidentiality requirements. Leaked market
sensitive data would harm ratepayers by hampering competitive
forces and driving up
service prices. Similarly, the release of confidential gas
pipeline and electrical grid information could expose
California's energy network to attack.
JG:k 5/29/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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