BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  April 20, 2016


                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                  Mike Gatto, Chair


          ACA 11  
          (Gatto) - As Introduced March 9, 2016


          SUBJECT:  Public Utilities Commission


          SUMMARY:  Authorizes the Legislature to reallocate or reassign  
          all or a portion of the functions of the California Public  
          Utilities Commission (CPUC) to other state agencies,  
          departments, boards, or other entities, consistent with  
          specified purposes.  Specifically, this constitutional  
          amendment:  


          1)Repeals the provisions of the California Constitution  
            pertaining to the CPUC effective January 1, 2019.


          2)Specifies that a statute that was valid at the time the  
            statute was enacted is not invalid by virtue of the repeal of  
            those constitutional provisions.


          3)Authorizes the Legislature to reallocate or reassign all or a  
            portion of the functions of the CPUC to other state agencies,  
            departments, boards, or other entities, consistent with  
            specified purposes.










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          4)Directs the Legislature to adopt appropriate structures to  
            provide greater accountability for the public utilities of the  
            state and provide the necessary guidance to the CPUC to focus  
            its regulatory efforts on safety, reliability, and ratesetting  
            and to implement statutorily authorized programs for reducing  
            emissions of greenhouse gases.


          EXISTING LAW:  


          1)Establishes the CPUC with jurisdiction over all public  
            utilities. (California Constitution, Article XII)


          2)Grants the CPUC certain general powers over all public  
            utilities, subject to control by the Legislature. (California  
            Constitution, Article XII)


          3)Authorizes the Legislature, unlimited by the other provisions  
            of the Constitution, to confer additional authority and  
            jurisdiction upon the CPUC that is cognate and germane to the  
            regulation of public utilities, to establish the manner and  
            scope of review of CPUC action in a court of record, and to  
            enable the CPUC to fix just compensation for utility property  
            taken by eminent domain. (California Constitution, Article  
            XII)


          FISCAL EFFECT:  Unknown.


          COMMENTS:  


          1)Author's Statement: "ACA 11 will place before the voters an  
            initiative to strike Article 12 from the Constitution, thereby  
            removing the constitutional protections currently enjoyed by  








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            the CPUC.  It will require the Legislature reassign the  
            functions of the CPUC by 2019, when Article 12 will sunset.    
            ACA 11 recognizes that the 21st Century no longer requires the  
            CPUC be enshrined in the California Constitution.  It will  
            allow for reforms to the Public Utilities Code to modernize  
            the CPUC, reassign regulation of industries unrelated to the  
            CPUC's core functions to more appropriate state bodies, and  
            provide greater accountability to Californians.  The  
            legislation specifies that these reforms shall be in  
            furtherance of consumer protection, public health,  
            environmental protection, increased transparency, public  
            access, and shall preserve the ability of third parties to  
            advocate for and intervene on behalf of those that need  
            advocacy."



          2)Background:  The CPUC is charged with ensuring the provision  
            of safe, reliable service at reasonable rates. In 1911, the  
            voters established the Railroad Commission in the California  
            Constitution.  In 1912, the Legislature passed the Public  
            Utilities Act, expanding the Commission's regulatory authority  
            to include natural gas, electric, telephone, and water  
            companies, in addition to railroads and marine transportation  
            companies.  In 1946, it was renamed the California Public  
            Utilities Commission.



            The CPUC's status as a Constitutionally-authorized agency is  
            unique and has enabled the CPUC to enact and enforce policies  
            and program if it finds the policies and programs cognate and  
            germane.  Limitations on the CPUC's broad authority are those  
            that have been enacted by statute.













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            Recently, the CPUC's ability to regulate these wide-ranging  
            and diverse industries - from electric and natural gas  
            companies to limousines and transportation network companies -  
            has been called into question.  Following the 2010 explosion  
            of a Pacific Gas and Electric gas line that resulted in  
            numerous injuries and deaths in San Bruno, an independent  
            study commissioned by the CPUC found that the CPUC had not  
            been adequately overseeing gas pipeline safety.


            In December 2011, nearly 500,000 Californians experienced  
            widespread power outages of up to six days in the Los Angeles  
            region due to windstorms. The Assembly Utilities and Commerce  
            Committee's investigation revealed that the CPUC allowed  
            Southern California Edison (SCE) to keep unspent maintenance  
            funds and that the CPUC does not check to make sure that the  
            maintenance work was performed.

            In January 2012, a leak of contaminated steam was detected at  
            one of the two new replacement generators at the San Onofre  
            Nuclear Power Station (SONGS). In June 2013, SCE decided to  
            permanently shut down SONGS as a result of design flaws  
            affecting the both generators. In a meeting held in Warsaw,  
            Poland in March 2012 between then-CPUC President Peevey and an  
            SCE executive outlined a settlement framework. In November  
            2014, the CPUC allocated three quarters of the cost of the  
            SONGS generators to be paid by ratepayers "without review of  
            the expenses for the steam generator replacement projects" and  
            consistent with the notes from the Warsaw meeting. 

            The recent gas well leak in Aliso Canyon, which displaced  
            thousands of residents in Porter Ranch, Granada Hills, Bernal  
            Heights, and surrounding communities and resulted in over  
            87,000 metric tons of methane being pumped into the air, has  
            reinvigorated these concerns.  The investigation into the  
            Aliso Canyon gas well leak is still ongoing, but the CPUC's  
            response to the crisis has frustrated many in the community.   
            Californians are not confident that CPUC regulators are able  
            to properly exercise oversight of utilities or act decisively  








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            to protect communities under the current system, which cannot  
            be changed without this initiative.





          3)Related Legislation.
            AB 825 (Rendon) 2015: Proposes a suite of reforms of the CPUC  
            largely directed at increased transparency of the activities  
            of the agency, including requiring the California State  
            Auditor's Office to appoint an Inspector General within its  
            office for the CPUC, expanding the roles and responsibilities  
            of the CPUC public advisor, specifying additional requirements  
            of commissioners, and increased transparency of electric  
            utilities' procurement, among others. Vetoed by the Governor.


            AB 895 (Rendon) 2015: Requires proceeds of any claims arising  
            out of the 2000 to 2002 energy crisis to be monetary and  
            deposited into the Ratepayer Relief Fund to be appropriated  
            for the benefit of ratepayers, and provides that actions to  
            enforce the CPUC's process for handling and determining  
            disclosable public records, as well as actions to enforce  
            Bagley-Keene Open Meetings Act requirements, may be taken to  
            the superior court. Vetoed by the Governor.


            AB 1023 (Rendon):  Requires the CPUC to establish and maintain  
            a weekly communications log summarizing all oral or written ex  
            parte communications. Vetoed by the Governor.  


             SB 18 (Hill) 2015: Requires any contract entered into by the  
            CPUC for outside legal counsel services to represent it in a  
            criminal investigation to be submitted to the Joint  
            Legislative Budget Committee (JLBC) for review, with specified  
            information, and approved by a vote of the CPUC no sooner than  
            30 days after the contract has been submitted to the JLBC.  








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            Vetoed by the Governor.


            SB 48 (Hill) 2015: Proposes a suite of reforms of the  
            governance and operations of the CPUC, including, among  
            others, requiring sessions in Sacramento, applying the Code of  
            Ethics from the Administrative Procedures Act to  
            administrative law judges, clarifying and augmenting the  
            information the CPUC must provide the Legislature in its  
            annual report, and others. Vetoed by the Governor.


            SB 660 (Leno) 2015: Proposes a suite of reforms of the  
            governance, rules, operations and procedures of the CPUC,  
            including:  reform of laws and rules related to ex parte  
            communications, criteria and process for disqualification of  
            commissions to a proceeding, and authorizes the Commission to  
            appoint the chief administrative law judge. Vetoed by the  
            Governor.


          4)Support and Opposition. Supporters state that the CPUC has  
            proved itself incapable of fairly and effectively regulating  
            charter-party carriers, including limousines and TNCs and has  
            limited enforcement capacity.
            While there is no formal opposition to ACA 11, one party  
            expressed concern with regard to competition in communication  
            services and that the CPUC is  charged with removing "the  
            barriers to open and competitive markets" and promoting "fair  
            product and price competition in a way that encourages greater  
            efficiency, lower prices and more consumer price."  They  
            encourage the author to include "preserving and promoting  
            competition" to the list of critical CPUC functions listed in  
            Section 10 (a)(2) of the measure.


          REGISTERED SUPPORT / OPPOSITION:










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          Support


          San Francisco Taxi Workers Alliance




          Opposition


          None on file




          Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083