BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 699| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 699 Author: Hill (D), et al. Amended: 8/22/14 Vote: 21 ASSEMBLY FLOOR : 78-0, 8/26/14 - See last page for vote SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 7-0, 8/28/14 (Pursuant to Senate Rule 29.10) AYES: Padilla, Fuller, Cannella, Corbett, DeSaulnier, Hill, Wolk NO VOTE RECORDED: Block, De León, Knight, Pavley SUBJECT : Public utilities: electrical corporations SOURCE : Author DIGEST : This bill requires the Public Utilities Commission (PUC) to consider adopting rules to address physical security risks to the distribution systems of electrical corporations. Assembly Amendments delete the Senate version of this bill which required an electrical corporation to annually report to the PUC specified capital expenditures and instead add the current language. ANALYSIS : Existing law: CONTINUED SB 699 Page 2 1.Provides that the PUC has regulatory authority over public utilities, including electrical corporations, as defined. 2.Requires the PUC to adopt inspection, maintenance, repair, and replacement standards for the distribution systems of investor owned utilities (IOUs) in order to provide high-quality, safe, and reliable service. 3.Requires the PUC to conduct a review to determine whether the standards have been met and to perform the review after every major outage. This bill: 1.Requires the PUC to open a new proceeding or phase of an existing proceeding by July 1, 2015, to consider adoption of rules. 2.Authorizes the PUC to, consistent with other provisions of law, withhold from the public information generated or obtained pursuant to these rules that it deems would pose a security threat to the public if disclosed. Background A major driver of this bill is the extensive damage that occurred in April 2013 at an electrical substation caused by a physical attack (approximately 100 rounds from a high-powered rifle) fired on electrical equipment. The severity of the damage and the appearance that the attack was well planned raised attention to the extent to which critical electric infrastructure were vulnerable to potential terrorist attacks and raised questions about the extent to which utilities addressed potential vulnerabilities. In this incident the utility successfully rerouted power to maintain electrical services and the California Independent System Operator called for customer conservation to maintain electrical system frequency within federal regulatory requirements. Investigations into identifying the perpetrator(s) of the attack are ongoing. The Federal Energy Regulatory Commission (FERC) is a federal agency that regulates the interstate transmission of CONTINUED SB 699 Page 3 electricity, natural gas, and oil, including regulations of transmission and wholesale sales of electricity in interstate commerce. California utilities own and operate facilities that are regulated by FERC. The PUC regulates investor owned electric, gas, water, rail, some telecommunication companies. The PUC has authority to order IOUs to maintain distribution infrastructure and make improvements as deemed necessary and allow the IOUs to recover these costs in rates. California's publicly-owned utilities are self-governing by a local government (city or county) or an independently elected Board of Directors. The attack occurred at an electrical substation under the jurisdiction of FERC. Similarly, interstate natural gas pipelines are under the jurisdiction of FERC. Most telecommunication industries are regulated by the Federal Communication Commission. Comments According to the author, 'The security of our nation's infrastructure is of paramount importance. The recent sophisticated attack on an electric substation that a former vice president at PG&E [Pacific Gas and Electric Company] described as a "dress rehearsal" for future attacks is evidence - not only that we are vulnerable - but that our vulnerabilities are clearly understood by those who wish to exploit them. As has been made clear by a recent National Research Council report, one of the best ways to protect ourselves from an attack on the electric grid is to lessen the damage that any attack can do. If we lessen the consequence of the failure of any one location or piece of equipment, if we increase the speed with which we can respond to an outage, if we can protect critical facilities from power disruption by using clean distributed generation, then the effort required for a malicious actor to seriously disrupt our power delivery system will make the target much less interesting - and we will be left with a more reliable grid." FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes CONTINUED SB 699 Page 4 According to the Assembly Appropriations Committee: Increased one-time costs to the PUC in the $500,000 to $600,000 range to expand the rule-making proceeding. Potential increased contracting costs of up to $250,000 for consultant services. Unknown, likely minor, ongoing costs. ASSEMBLY FLOOR : 78-0, 8/26/14 AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor, Medina, Melendez, Mullin, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, John A. Pérez, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins NO VOTE RECORDED: Muratsuchi, Vacancy JG:e 8/29/14 Senate Floor Analyses SUPPORT/OPPOSITION: NONE RECEIVED **** END **** CONTINUED