BILL ANALYSIS Ó AB 825 Page A ASSEMBLY THIRD READING AB 825 (Rendon and Mark Stone) As Amended June 1, 2015 Majority vote ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+--------------------+----------------------| |Utilities |14-0 |Rendon, Patterson, | | | | |Achadjian, Bonilla, | | | | |Burke, Dahle, | | | | |Eggman, | | | | | | | | | | | | | | |Cristina Garcia, | | | | |Hadley, Obernolte, | | | | |Quirk, Santiago, | | | | |Ting, Williams | | | | | | | |----------------+------+--------------------+----------------------| |Judiciary |10-0 |Mark Stone, Wagner, | | | | |Alejo, Chau, Chiu, | | | | |Gallagher, Cristina | | | | |Garcia, Holden, | | | | |Maienschein, | | | | |O'Donnell | | | | | | | |----------------+------+--------------------+----------------------| |Appropriations |17-0 |Gomez, Bigelow, | | AB 825 Page B | | |Bonta, Calderon, | | | | |Chang, Daly, | | | | |Eggman, Gallagher, | | | | | | | | | | | | | | |Eduardo Garcia, | | | | |Gordon, Holden, | | | | |Jones, Quirk, | | | | |Rendon, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------- SUMMARY: Modifies various statutes governing the operation of the California Public Utilities Commission (CPUC). This bill imposes new requirements to increase the transparency of the CPUC decision-making and changes the process of the judicial review of CPUC decisions. Specifically this bill: 1)Prohibits the CPUC from reassigning any staff from duties or activities authorized by statute to other duties or activities unless authorized by the Legislature. Requires the CPUC's internal auditor to report directly to the commission. 2)Deletes the requirement to furnish reports of the inspections and audits and other pertinent information to the Board of Equalization (BOE), and instead requires the information to be posted on the CPUC's Internet Web site. 3)Requires each public utility submitting a rate change application to include, and electronically post, a summary that can be easily understood as specified. AB 825 Page C 4)Requires a public utility, subsidiary, affiliate, or holding company seeking to confidentially file a document in a CPUC proceeding to also file a public version that allows any other party to the proceeding to understand the nature of its contents. Authorizes any party to the proceeding to file a motion to make any document filed under the claim of confidentiality public. Requires an administrative law judge assigned to the proceeding or the assigned Commissioner to hold a hearing to determine if the document should be made public. 5)Requires CPUC to post on its Internet Web site a summary of all electricity procurement contracts entered into by an electrical corporation during the previous three years, the expenses CPUC approved as just and reasonable, and a list of all public utilities with pending rates-setting cases with specified information in summary form. FISCAL EFFECT: According to the Appropriations Committee, total annual increased CPUC costs of approximately $2.5 million (special fund):a) Prohibition on reassignment, b) Internal Auditor reports to Commissioners, c) Confidentiality motions and hearings, and d) Confidentiality proceeding. COMMENTS: AB 825 Page D 1)Purpose. According to the author, recent media reports on the CPUC have lessened the public's trust in the Commission, in part, by showing the Commission's decision-making process lacked transparency, with some deals done in private meetings with investor-owned utility representatives. This bill will improve transparency and increase public trust. 2)Staff reassignment. A 2013 audit of the CPUC by the California Department of Finance found "widespread weaknesses within CPUC's budget operations which compromise its ability to prepare and present reliable and accurate budget information." The Legislature enacted a requirement that the CPUC conduct a zero based budget (ZBB) for all of its programs by January 2015. The Legislative Analyst's Office reviewed the CPUC's ZBB<1> and made a number of findings and recommendations, one of which is: Based on our understanding of the various types of ZBBs, the CPUC report is not a ZBB. As discussed above, a common goal of most ZBBs is to encourage government agencies to analyze their existing resources in an effort to determine whether resources could be deployed in a more efficient and cost-effective manner. While the report includes a description of current activities and resources, it lacks a comprehensive analysis of these activities and resources. The report does not provide an analysis of the minimum level of funding needed to achieve current service levels or an analysis of the degree to which having higher or lower funding levels would affect the amount or quality of services provided. Without such an analysis, the --------------------- <1> http://www.lao.ca.gov/reports/2015/budget/resources-environmental-protection/Res-Budget-Analysis-021915.pdf AB 825 Page E report provides relatively little information to inform the Legislature about potential changes to the level or distribution of resources provided to CPUC. 3)Audits. In 2013, the California State Auditor<2> published a report on their review of the CPUC's compliance with statutory requirements to review utility balancing accounts. Their report states: We also found the commission does not audit the accounting records of the utilities it regulates according to the schedule prescribed by state law: every three years for those utilities that serve more than 1,000 customers and every five years for those utilities that serve 1,000 or fewer customers. In addition, the Auditor found that the CPUC has not always complied with the requirement to audit utilities' books and records according to the schedule prescribed by state law. The Auditor also found that for over three decades, it has not provided the results of these audits to the California State Board of Equalization for tax assessment purposes, as required by state law. This bill would eliminate the requirement that the audits be provided to California State Board of Equalization and instead require that they be posted on the CPUC Web site. 4)Rate Change Proposals. Currently, most utilities provide this information on their Web sites, although not always in a readily accessible location. Currently, utilities provide a summary of their rate cases in newspaper public notices that is approved by ---------------------------- <2> https://www.auditor.ca.gov/pdfs/reports/2013-109.pdf AB 825 Page F the CPUC. 5)Transparency and Confidentiality Provisions: The transparency provisions of this bill fall roughly into two categories. First, this bill requires the CPUC to post on its Web site certain documents pertaining to, or submitted by, regulated entities. For example, existing law requires the CPUC to periodically inspect and audit the books of regulated entities and submit reports of these investigations to the BOE. This bill would instead require these reports to be posted on the CPUC Web site. This bill also provides that when a regulated entity submits an application for a rate change, the application shall be reduced to a plain-language summary and posted on the PUC Web site. Second, this bill alters existing rules on documents submitted to the CPUC under claims of confidentiality. For example, under this bill, if a regulated entity seeks to preserve the confidentiality of a document, it must also file a "public version" of the document that contains sufficient information for any other party to understand the contents of the document. In addition, this measure allows any party to file a motion to make public any document filed under claim of confidentiality. An administrative law judge or commissioner considering the motion would hold a hearing and determine whether the document should be made public. Finally, this bill makes certain kinds of information presumptively public and not subject to confidentiality restrictions. These presumptively public documents would include contracts for goods and services executed by the CPUC and information submitted by a government entity that is available to the public from that entity. Analysis Prepared by: Sue Kateley / U. & C. / (916) 319-2083 FN: 0000827 AB 825 Page G