BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 825|
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THIRD READING
Bill No: AB 825
Author: Rendon (D) and Mark Stone (D)
AmendedAmended:9/4/15 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 11-0, 7/7/15
AYES: Hueso, Fuller, Cannella, Hertzberg, Hill, Lara, Leyva,
McGuire, Morrell, Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE: 5-0, 8/27/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NO VOTE RECORDED: Bates, Nielsen
ASSEMBLY FLOOR: 79-0, 6/3/15 - See last page for vote
SUBJECT: Public Utilities Commission
SOURCE: Author
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 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.
Senate Floor Amendments of 9/4/15 generally include additional
requirements for improved transparency and public access of the
CPUC, including (1) specifying additional requirements of the
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Page 2
agency in making documents publicly accessible and
understandable; (2) further clarify the role of the public
advisor, including removal of proposed additional
responsibilities; (3) provide greater public access of
proceedings by specifying the use of all-party meetings at
specific points of the proceedings; and (4) require the CPUC to
adopt rules for posting comments, proceeding documents, workshop
reports and other documents to the agency web site. Other
amendments remove portions of the bill including (1)
requirements of commissioners to attend all hearings; (2)
language in order to avoid chaptering issues with related
legislation, including interaction with SB 48 (Hill, 2015).
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 provide copies and publish the agenda
and related items prior to the start of any voting meeting
of commissioners. (Public Utilities Code §311.5)
3) 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)
4) 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.
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(Public Utilities Code §321)
This bill:
1) Requires the California State Auditor to appoint an
Inspector General for the purposes of providing oversight of
the CPUC at the direction of the State Auditor, including
conducting audits, investigations, and reports on the
policies, practices, and procedures of the CPUC.
2) Requires each public utility that submits an application
to change its rates to include a summary of the application
that can be understood by the utility's ratepayers.
3) 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 document that contains sufficient information for any
other party to the proceeding to understand the nature of
its contents.
4) 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
5) Requires the public advisor to be responsible for ensuring
that the activities of the CPUC are transparent to the
public, including (1) working with agency directors to
ensure the agency's Web Site provides sufficient
transparency and (2) 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.
6) Requires the 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, with specific requirements, and requires the CPUC to
open a proceeding to reexamine a specified decision relative
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to confidentiality of electric procurement data.
7) Requires the CPUC to use all-party conferences, with
required transcripts for the record, as a tool for listening
to parties' perspectives on the most important issues and to
facilitate public discussion between commissioners and
parties, including at varying points of a proceeding, such
as after a proposed decision is issued.
8) Prohibits an attorney or other staff member who has served
as a prosecutor or advocate of an adjudicatory proceeding
before the CPUC from meeting with any commissioner regarding
the matter unless all parties are present.
9) Requires the commission to adopt rules providing for
public comments to be included in the record of its
proceedings and require the assigned commissioner or a
quorum of commissioners to attend public participation
proceeding.
10) Includes chaptering language related to SB 48, including
provisions applying the Administrative Procedures Act Code
of Ethics to Administrative Law Judges and provisions
related to the role of the public advisor.
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. 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.
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
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the pipeline and, more generally, valued profits over safety.
These same investigations also noted the CPUC's inadequate
oversight of PG&E.
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 CPUC rules governing ex parte communications." The
initial release of emails revealed efforts by PG&E executives to
influence the CPUC's assignment of the administrative law judge
to the San Bruno proceeding. Many of the 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, 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. The facility had a
failed steam generator that required SONGS 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
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the deal.
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
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.
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 provides programs and services to
educate and assist the public, including special accommodations
and interpreter services.
NOTE: See Senate Energy, Utilities, and Commerce Committee
analysis for a full discussion of this bill.
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 currently under
consideration on the Assembly Floor.
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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 the Senate Committee on Energy, Utilities and
Communications 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 currently
under consideration on the Assembly Floor.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
Cost pressures of $200,000 annually (special*) for the CPUC
commissioners to hold office hours at least once a month in
San Francisco or Los Angeles.
Ongoing costs of approximately $170,000 (special*) to increase
the amount of information available on the CPUC website.
Ongoing costs of approximately $200,000 (special*) for the
public advisor to have independent responsibility over the
CPUC website.
Unknown costs (special*) to post the transcripts of documents,
evidence, testimony, and proceedings online.
One-time costs of $157,000 annually for two years (special*)
for a proceeding to reopen its confidentiality practices.
Ongoing costs of $626,000 annually (special*) for hearings to
consider motions to make confidential documents public.
Unknown costs (special*) to require that the assigned
commissioner attend all hearings in a proceeding.
Ongoing costs between $450,000 and $850,000 (special*) to
appoint an inspector general from the State Auditor's office
to the CPUC.
Ongoing costs of $220,000 annually (special*) to provide legal
staff at the public advisor's office to ensure compliance with
the Public Records Act and the Bagley-Keene Open Meeting Act.
These costs may be offset by reduced workload in other CPUC
division to oversee compliance.
* Public Utilities Commission Utilities Reimbursement Account.
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SUPPORT: (Verified9/8/15)
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
Sierra Club California
Utility Workers Union of America, AFL-CIO
OPPOSITION: (Verified9/8/15)
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.
ASSEMBLY FLOOR: 79-0, 6/3/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Ting, Wagner, Waldron,
Weber, Wilk, Williams, Wood, Atkins
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NO VOTE RECORDED: Thurmond
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
9/8/15 18:56:35
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