BILL ANALYSIS Ó
ACA 11
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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