BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 825 Hearing Date: 7/7/2015
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|Author: |Rendon |
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|Version: |6/18/2015 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Nidia Bautista |
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SUBJECT: Public Utilities Commission
DIGEST: This bill proposes a suite of reforms of the
California Public Utilities Commission (CPUC) largely directed
at increased transparency of the activities of the agency,
including expanding the roles and responsibilities of the public
advisor, specifying additional requirements of commissioners,
increased transparency of electric utilities' procurement, among
others.
ANALYSIS:
Existing law:
1) Establishes the CPUC with five members appointed by the
Governor and confirmed by the Senate and empowers it to
regulate privately-owned public utilities in California.
Specifies that the Legislature may prescribe that
additional classes of private corporations or other persons
are public utilities. (Article XII of the California
Constitution; Public Utilities Code §301 et seq.)
2) Requires the CPUC to hold at least one hearing per
calendar month in the City and County of San Francisco.
(Public Utilities Code §306)
3) Provides that the executive director may employ such
officers, administrative law judges, experts, engineers,
employees and others, as the executive director deems
necessary to carry out and exercise powers conferred upon
the CPUC by law. (Public Utilities Code §309)
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4) Provides commissioners may request one adviser for each
member to be appointed by the Governor and limits the total
advisers exempt from civil service to five. (Public
Utilities Code §309.1)
5) Requires the CPUC to provide copies and publish the
agenda and related items prior to the start of any voting
meeting of commissioners. (Public Utilities Code §311.5)
6) Requires the CPUC to provide any reports of inspections
and audits of utilities to the Board of Equalization.
(Public Utilities Code §314.5)
7) Provides that no information furnished to the CPUC by a
public utility, or any business which is a subsidiary or
affiliate of a public utility, or a corporation which holds
a controlling interest in a public utility, except those
matters specifically required to be open to public
inspection by this part, shall be open to public inspection
or made public except on order of the CPUC, or by the CPUC
or commissioner in the course of a hearing or proceeding.
(Public Utilities Code §583)
8) Establishes the office of the public advisor and
requires the CPUC to appoint a public advisor, with a
separate office in Los Angeles, in order to assist members
of the public and ratepayers who desire to testify before
or present information to the CPUC in any hearing or
proceeding. Provides that the CPUC can employ staff as
necessary to carry out the duties of the office of public
advisor. (Public Utilities Code §321)
9) Authorizes the CPUC to appoint a general counsel to
represent the CPUC in all actions, to commence, prosecute
or intervene in proceedings as directed by the president,
and to advise the CPUC and each commissioner on all
matters. (Public Utilities Code §307)
10) Requires the CPUC to determine whether a proceeding
requires a hearing and whether it is quasi-legislative,
adjudication or ratesetting. Provides rules governing each
type of proceeding, including prohibiting any substantive
communication between a decision maker and a party f in
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adjudicative cases. (Public Utilities Code §§1701.1 and
1701.2)
This bill:
1) Prohibits the CPUC from reassigning any staff member
from a duty or activity authorized by statute to another
duty or activity unless the Legislature has authorized
personnel for that duty or activity.
2) Requires the CPUC's internal auditor to report directly
to the CPUC.
3) Requires that each commissioner hold office hours and be
available to meet with members of the public at least once
a month in San Francisco or Los Angeles.
4) Deletes the requirement that the reports of the
inspections and audit of utilities and other pertinent
information be furnished to the State Board of Equalization
for use in the assessment of the public utilities, and
instead requires that the inspections and audit and other
pertinent information be posted on the CPUC's Internet Web
site.
5) Requires each public utility that submits an application
to change its rates to include in its application a summary
of the application that can be understood by the utility's
ratepayers. Requires that this summary and the application
be posted on the CPUC's Internet Web site and, if the
utility has an Internet Web site, to be posted on the
utility's Internet Web site. Each public utility that
maintains an Internet Web site would additionally be
required to include on that site contact information for a
utility official who can discuss the nature of the rate
application.
6) Provides that if in a proceeding before the CPUC, a
public utility, or subsidiary, affiliate, or holding
company, seeks to file a pleading, report, or other
document with the CPUC that preserves the confidentiality
of information contained therein, it would be required to
file a public version of the pleading, report, or other
document that contains sufficient information for any other
party to the proceeding to understand the nature of its
contents.
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7) Authorizes any party to the proceeding to file a motion
to make public a pleading, report, or other document filed
under a claim of confidentiality. Requires an
administrative law judge assigned to the proceeding or the
assigned commissioner to hold a hearing on the motion and
determine whether the pleading, report, or other document
should be made public
8) Requires that each document that the CPUC distributes to
any service-of-process list be docketed and identified on
the CPUC's Internet Web site.
9) Requires that the CPUC provide an opportunity for
members of the public to comment on a specific agenda item
during the time that the CPUC considers the item.
10) Adds legislative findings and declarations relative to
improving the transparency of CPUC regulatory activities.
11) Requires the public advisor to be responsible for
ensuring that the activities of the CPUC are transparent to
the public consistent with these legislative findings and
directions, the California Public Records Act, the
Bagley-Keene Open Meeting Act, and other specified matter.
12) Requires the public advisor to have independent
responsibility for overseeing the CPUC's Internet Web site
and would require the CPUC to post on its Internet Web site
a summary, as specified, of all electricity procurement
contracts entered into by an electrical corporation during
the previous three years, with specific requirements.
13) Requires the public advisor to update, maintain, and
post the CPUC's service-of-process lists on the CPUC's
Internet Web site in an electronic form that may be used by
any party to complete service of process.
14) Requires the CPUC to open a proceeding to reexamine a
specified decision relative to confidentiality of electric
procurement data.
15) Requires the California State Auditor to appoint an
inspector general who would be authorized to audit and
investigate the CPUC's activities and report any finding to
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the Legislature.
16) Requires the assigned commissioner to convene an
all-parties meeting as soon as practicable after the
parties in a proceeding are known to discuss the
substantive matter to be decided in the proceeding and
prospects for resolving issues that would otherwise be
litigated.
17) Requires an assigned commissioner to attend all
hearings in a proceeding.
18) Prohibits an attorney that is prosecuting a matter
before the CPUC from meeting with any commissioner
regarding the matter that the attorney is prosecuting
unless all parties are present.
Background
The CPUC quasi-independent, but still accountable to the
legislature. The CPUC was established by constitutional
amendment as part of the sweep of progressive reforms in the
early 1900's. Then-Governor Hiram Johnson pushed for reforms of
the Railroad Commission, which became today's CPUC, as a largely
independent agency that would guard against the corrupting
influence of railroads. In demonstration of its independence,
the CPUC was located in San Francisco, a distance from the state
capitol in Sacramento. Article XII of the California
Constitution grants the CPUC authority to regulate public
utilities "subject to control of the Legislature" and grants the
Legislature "plenary power" to confer authority and jurisdiction
upon the CPUC, with the intent that the CPUC be accountable to
the Legislature.
The CPUC has historically been afforded much independence.
Commissioners are appointed for staggered six-year terms to
limit the potential for a single Governor to appoint a majority
of commissioners within a four-year term. The Legislature, not
the Governor, may remove a commissioner. The CPUC has been
given broad latitude to set its own procedures, and any review
of CPUC decisions has historically been limited to review only
by courts of appeal and the Supreme Court, not trial courts.
CPUC in 2015. The CPUC is governed by five full-time
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commissioners, appointed by the governor and confirmed by the
Senate, and staffed by approximately 1,000 individuals who,
together, regulate privately owned electric, natural gas,
telecommunications, water, railroad, rail transit, and passenger
transportation companies. CPUC staff includes four personal
advisors to each commissioner, except five to the president, as
well as the 42 judges of the Administrative Law Division -
attorneys, engineers and accountants who prepare the docket for
all CPUC official filings, including maintenance of the official
record of proceedings.
Fatal explosion in San Bruno. On September 9, 2010, a natural
gas pipeline owned by Pacific Gas and Electric Company (PG&E)
exploded in residential neighborhood in the City of San Bruno.
Eight people died, dozens were injured, 38 houses were destroyed
and many more were damaged. The investigations by the National
Transportation Safety Board (NTSB) and an independent review
panel appointed by the CPUC found that PG&E mismanaged their
pipeline over decades, failed to adequately test the strength of
the pipeline and, more generally, valued profits over safety.
These same investigations also noted the CPUC's inadequate
oversight of the PG&E.
Following the investigation, in May of 2013, the Safety and
Enforcement Division (SED) of the CPUC formally recommended the
CPUC to levy fines of $2.25 billion against PG&E, the full
amount of which to be used to enhance safety. The CPUC referred
the SED's proposed penalty against PG&E to the Administrative
Law Division for assignment to an administrative law judge
(ALJ). The ALJ was to review the recommendation and,
eventually, propose a final decision on the matter, including
how any fines would be allocated among PG&E's shareholders and
ratepayers. Eventually, the five commissioners of the CPUC would
vote on whether to adopt, modify, or reject the ALJ's proposed
decision.
Emails demonstrate "Culture of Conversation." During the summer
and fall of 2014, PG&E, bowing to legal pressure from the City
of San Bruno, began to release a growing number of emails
between the utility and CPUC officials. PG&E released 65,000
emails from over a five year period that PG&E says it believes
"violated California Public Utilities Commission rules governing
ex parte communications." The initial release of emails
revealed efforts by PG&E executives to influence the CPUC's
assignment of ALJ to the San Bruno proceeding. Many of the
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other emails exposed regular, private, familiar communications
between PG&E and certain CPUC commissioners, including former
CPUC President Michael Peevey and current commissioner Peter
Florio, as well as senior CPUC officials.
Criminal investigations opened. Since PG&E's initial release of
the emails, both the state Attorney General and the United
States Department of Justice have opened investigations into
communications between the CPUC and regulated entities. PG&E
has fired three senior executives. A senior CPUC official has
resigned, while other top CPUC officials - including longtime
CPUC President Michael Peevey and Executive Director Paul
Clannon - have retired under pressure. Investigators working
with the Attorney General's Office have raided the CPUC offices
and the homes of former CPUC Commissioner President Peevey and
PG&E former-Vice President Brian Cherry.
San Onofre Nuclear Generating Stations (SONGS). In early
February, only after a newspaper published details of the search
warrant, Southern California Edison disclosed a meeting that
occurred two years prior in Warsaw, Poland between then-CPUC
President Peevey and a utility executive in which they discussed
how to resolve the shutdown plans for SONGS which had a failed
steam generator that required the facility to be permanently
retired. In November 2014, the CPUC approved a settlement
agreement between utilities and ratepayer advocates that split
the costs of retiring the facility and the associated
replacement power, with ratepayers shouldering $3.3 billion of
the $4.7 billion total costs. Some parties to the proceeding
who were not parties to the agreement, filed multiple lawsuits
against the agency and also requested public records related to
the deal. With growing concerns about the process that resulted
in the settlement agreement, The Utility Reform Network (TURN),
one of the parties to the settlement, announced in June their
request to the CPUC to withdraw the settlement and reopen the
proceeding.
Audits reveal CPUC's efforts are lacking. In recent years, the
CPUC has undergone a number of audits related to its budget,
transportation program, natural gas pipeline safety program and
others. The findings of these audits have raised concerns about
the ability of CPUC to manage even some of its core functions.
A March 2014 audit by the State Auditors found that "the CPUC
lacks adequate processes for sufficient oversight of utility
balancing accounts to protect ratepayers from unfair rate
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increases." The NTSB San Bruno investigation report and
subsequent audits, have found that CPUC's oversight of natural
gas pipeline safety efforts by the utilities needs improvements.
Internal auditor. In response, the CPUC recently established an
Internal Audit Unit, overseen by a Chief Internal Auditor, which
performs audits of the CPUC's internal controls and management,
oversees organizational risk assessment and enterprise risk
management, and provides consulting services as requested to
assist CPUC operations. Internal Audit Unit reports directly to
the CPUC, with the Chief functionally reporting to the
commissioners through its Finance and Administration Committee,
and operates under a charter approved by the CPUC on May 21,
2015. For day to day operations, the Chief reports
administratively to the Deputy Executive Director of Budget and
Finance. This bill would add an Inspector General, housed with
the State Auditor's Office, to audit and investigate activities
of the CPUC and report its findings to the Legislature.
Role of the public advisor. The Public Advisor's Office
provides procedural information and advice to individuals and
groups who want to participate in formal CPUC proceedings.
Additionally, the Office is required to inform the CPUC of
barriers that prevent effective public participation. The Public
Advisor's Office also provide programs and services to educate
and assist the public, including special accommodations and
interpreter services. The proposal in AB 1330 (Bloom, 2015)
expands the responsibilities of the Public Advisor's Office.
Should the bill move forward, the author may wish to more
clearly define the role of the public advisor and the role of
other staff for activities such as maintaining the website.
Transparency vs. Confidentiality. This bill proposes to more
clearly define information collected of utilities that should be
available to the public. Under current law, Public Utilities
Code Section 583, states that "no information furnished to the
CPUC by a public utility?, except those matters specifically
required to be open to public inspection by this part, shall be
open to public inspection or made public except on order of the
CPUC, or by the CPUC or a commissioner in the course of a
hearing or proceeding." Regulated utilities point to this
section to argue that there exists a presumption that their
information is confidential unless a commissioner, on a case by
case basis, decides it is not. In response to the numerous
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public records request the CPUC is receiving, including many
that stemmed from the San Bruno explosion, the CPUC in February
2013 adopted a resolution to "provide the public with more
immediate access to records of safety inspections, audits, and
investigations." The resolution, L-136, provides that the CPUC
would disclose categories of routine safety-related records
after any appropriate redactions, without requiring a vote of
the commissioners or an Administrative Law Judge ruling.
Furthermore, the resolution noted the agency's intention to open
a rulemaking "to address improving the public's access to
records that are not exempt under the California Public Records
Act (CPRA) or other state or federal law" with a formal
proceeding proposing amendments to General Order 66-C. As a
follow-up to the adoption of the resolution, the CPUC
commissioners voted on November 6, 2014 to adopt an Order
Instituting Rulemaking (OIR) to "Improve Public Access to Public
Records Pursuant to the California Public Records Act." The
adoption of the OIR has opened a current proceeding at the CPUC
to address amendments to General Order 66-C, first adopted in
1974, which "identifies all CPUC records as public unless they
fall within a short list of exemptions." As part of the OIR,
the CPUC stated that "Section 583 'neither creates a privilege
of nondisclosure for a utility, nor designates any specific
types of documents as confidential.' (D.06-06-066, Section
VII.). Section 583 precludes CPUC officers and employees from
publicly releasing information provided to the CPUC by regulated
utilities absent a CPUC order, and General Order 66-C is a CPUC
order directing the disclosure of public records in compliance
with the CPRA." This bill would further provide parties to a
proceeding to contest claims of confidentiality by filing a
motion to make the information public and the assigned
Administrative Law Judge or the commissioner would make a
determination in written findings and conclusions.
About D.06-06-066. This CPUC decision implements provisions of
SB 1488 (Bowen, Chapter 690, Statutes of 2004) which expressed a
preference for open decision-making and requires an examination
of CPUC practices regarding confidential information. Among the
findings of the decision, the CPUC states that SB 1488 requires
scrutiny of claims of confidentiality but does not prohibit all
use of confidential information and provided specifics regarding
handling of electricity procurement. Additionally, in the
decision, the CPUC argues that "Section 583 does not require the
CPUC to afford confidential treatment to date that does not
satisfy substantive requirements for such treatment created by
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other statute and rules. This is important because several of
the parties claim that there is a legal presumption of
confidentiality for all data."
Double referral. Should this bill be approved by this committee,
it will be re-referred to the Senate Committee on Judiciary for
its consideration.
Prior/Related Legislation
SB 48 (Hill, 2015) proposes a suite of reforms of the CPUC,
including modifying the role of the president, meeting location
requirements, and other reforms. The bill is scheduled to be
heard in the Assembly Committee on Appropriations.
SB 215 (Leno, 2015) proposes a suite of reforms of the CPUC
related to governance and operations, including disqualification
of commissioners to proceedings, modifying the role of the
president, modifying ex parte rules, and other reforms. The bill
was held in this committee after merging much of its contents
with SB 660.
SB 660 (Leno/Hueso, 2015) proposes a suite of reforms of the
CPUC focused on ex parte communications rules, addressing the
disqualification of commissioners in proceedings, modifying the
powers of the president, and others. The bill is scheduled to
be heard July 13th in the Assembly Committee on Utilities and
Commerce.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
ASSEMBLY VOTES:
Assembly Floor (79-0)
Assembly Appropriations Committee (17-0)
Assembly Judiciary Committee (10-0)
Assembly Utilities and Commerce Committee (14-0)
AB 825 (Rendon) Page 11 of ?
SUPPORT:
California Newspaper Publishers Association
California Teamsters Public Affairs Council
County of San Diego 2nd Supervisorial District, Dianne Jacob
County of San Joaquin
Engineers & Scientists of California
IFPTE Local 20 AFL-CIO
Utility Workers Union of America, AFL-CIO
CONCERNS:
California Cable & Telecommunications Association
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: Recent media reports have revealed a
lack of transparency in decisions by the CPUC. Transparency in
how public agencies make decisions remains a longstanding and
fundamental principle in California law and government. AB 825
increases CPUC transparency in three ways: (1) requires
disclosure of information on the web and requires other CPUC
actions to help Californians participate in the CPUC process;
(2) provides a process for challenging confidentiality of
documents; and (3) provides for independent oversight, by an
Inspector General in the State Auditor's office.
ARGUMENTS IN OPPOSITION: None received.
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