BILL ANALYSIS Ó AB 825 Page 1 GOVERNOR'S VETO AB 825 (Rendon and Mark Stone) As Enrolled September 16, 2015 2/3 vote ----------------------------------------------------------------- |ASSEMBLY: |79-0 |(June 3, 2015) |SENATE: |40-0 |(September 10, | | | | | | |2015) | | | | | | | | ----------------------------------------------------------------- ----------------------------------------------------------------- |ASSEMBLY: |79-0 |(September 11, | | | | | | |2015) | | | | | | | | | | | | | | | | | | | | | | | | | ----------------------------------------------------------------- Original Committee Reference: U. & C. SUMMARY: Proposes reforms to governance and operations at the California Public Utilities Commission (CPUC) to increase transparency and oversight over the activities of the CPUC. AB 825 Page 2 The Senate amendments do the following: 1)Clarify that the Inspector General for the CPUC takes direction from the State Auditor, and provides funding for the Inspector General upon appropriation. 2)Delete provisions treating certain categories of documents as public. 3)Clarify the process for allowing parties to challenge confidentiality of documents in CPUC proceedings. 4)Clarify the role of the CPUC public advisor at the CPUC. 5)Establish "all party conferences" as part of the hearing process for commissioners. 6)Require public comments at hearings to be incorporated into the hearing's evidentiary records. 7)Require commissioners to hold public office hours and attend all hearings. 8)Require the CPUC's public advisor to update and maintain the CPUC's service of process lists. 9)Prohibit a CPUC attorney who prosecutes an action before the CPUC from meeting with a commissioner without all parties present. 10) Delete prohibition on reassignment of CPUC staff without AB 825 Page 3 statutory authority. 11) Delete requirement that internal CPUC auditors report directly to CPUC. 12) Make additional technical and clarifying changes. EXISTING LAW: 1)Establishes the CPUC with five members appointed by the Governor and confirmed by the Senate, empowers it to regulate privately-owned public utilities in California, and specifies that the Legislature may prescribe additional classes of private corporations or other persons as public utilities. (California Constitution Article XII and Public Utilities Code Section 301) 2)Requires the CPUC to provide public copies of the agenda and related items prior to the start of any voting meeting of commissioners, and publish specified documents on the Internet. (Public Utilities Code Section 311.5) 3)Prohibits any 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, as specified, from being 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 Section 583) 4)Establishes the office of the public advisor, and requires the CPUC to appoint a public advisor in order to assist members of AB 825 Page 4 the public and ratepayers who desire to testify before or present information to the CPUC in any hearing or proceeding, and advise the CPUC on procedural matters relating to public participation in proceedings. Provides that the CPUC can employ staff as necessary to carry out the duties of the office of public advisor. (Public Utilities Code Section 321) 5)Requires the CPUC to determine whether a proceeding requires a hearing, and to determine whether the matter requires a quasi-legislative, adjudication, or a ratesetting hearing, and to establish regulations regarding ex parte communication on case categorization issues. (Public Utilities Code Section 1701.1) FISCAL EFFECT: According to the Senate Appropriations Committee, this bill would have the following costs: 1)Ongoing costs of at least $170,000 and up to $1 million to increase the amount of information available on the CPUC Web site. 2)Ongoing costs of approximately $200,000 for the public advisor to have independent responsibility over the CPUC Web site. 3)Unknown costs to post the transcripts of documents, evidence, testimony, and proceedings online. 4)One-time costs of $157,000 annually for two years for a proceeding to reopen its confidentiality practices. 5)Ongoing costs of $626,000 annually for hearings to consider motions to make confidential documents public. AB 825 Page 5 6)Unknown costs to require that the assigned commissioner attend all hearings in a proceeding. 7)Ongoing costs between $450,000 and $850,000 to appoint an inspector general from the State Auditor's office to the CPUC. 8)Ongoing costs of $220,000 annually 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 divisions to oversee compliance. COMMENTS: 1)Author's Statement: "Transparency in how government makes its decisions remains a critical link to gaining the public's trust in those decisions. Recent media reports have shown that California Public Utilities Commission decisions lacked transparency, with some deals done in private meetings with investor-owned utility representatives. AB 825 addresses several issues to improve the Commission's transparency." 2)Background: The CPUC is governed by five full-time commissioners appointed by the Governor and confirmed by the State Senate. Commissioners are appointed for six-year terms and can only be removed by the Legislature. Beginning in 2014, Pacific Gas & Electric began releasing over 65,000 emails from a five-year period. The emails revealed a culture of secrecy within the CPUC. Many of the emails exposed regular private communications between CPUC commissioners and staff with regulated entities on subjects the CPUC was deliberating within a number of proceedings, many of which arguably violated CPUC's rules governing ex parte communications, including emails pertaining to the selection of Administrative Law Judges (ALJs) for ratesetting cases. AB 825 Page 6 3)CPUC Transparency and Oversight: Recently, the CPUC has undergone a number of audits that has raised concerns about the ability of the CPUC to manage even some of its core functions. In response, the CPUC established an Internal Audit Unit, overseen by a chief internal auditor, to perform audits of the CPUC's internal controls and management, oversees its organizational risk assessment and enterprise risk management, and provides consulting services to assist CPUC operations. In addition, current law establishes the Public Advisor's Office, which provides procedural information and advice to individuals and groups who want to participate in formal CPUC proceedings. The office also informs the CPUC of any barriers that prevent effective public participation. This bill requires the State Auditor to appoint an inspector general to conduct oversight review and assess, audit, investigate, and report on the policies, practices, and procedures of the CPUC, as specified. In addition, the bill tasks the public advisor of the CPUC with the responsibility of ensuring that the activities of the CPUC are transparent to the public, as specified. Furthermore, to promote greater transparency, the bill requires the CPUC to post specified information on its website regarding electricity procurement contracts, pending proceedings, non-confidential documents, Public Records Act requests, and advice letters. 4)Confidentiality: Current law prohibits any information furnished to the CPUC by a public utility, as specified, except those matters specifically required to be open to public inspection, as specified, from being 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. As a result, regulated utilities argue that there exists a presumption that information is confidential unless a commissioner, on a case-by-case basis, decides it is not. This bill creates a specified process that provides parties to AB 825 Page 7 a proceeding with the ability to contest claims of confidentiality by filing a motion to make the information public, and requires the assigned ALJ or commissioner to make written findings and conclusions. GOVERNOR'S VETO MESSAGE: These bills include various provisions to increase transparency and accessibility to the Public Utilities Commission. I support the intent of these bills and many of their proposed reforms, however some additional work is needed to ensure that they achieve their intended purposes and can be effectively implemented. Allowing Bagley-Keene and Public Records Act lawsuits to be brought against the Commission by any interested party in Superior Court, rather than exclusively in the Courts of Appeal and the California Supreme Court, will only result in increased litigation and likely delay Commission decision-making. It will not improve public access to critical information about the actions of regulated entities. Amending Section 583 of the Public Utilities Code to require more information to be publicly available is a much better way to ensure that the public is provided with this information. Moreover, the Commission needs sufficient funds to fully accomplish some of these reforms, such as holding more public meetings outside of San Francisco, shortening the timeframe for concluding formal ratesetting and quasi-legislative proceedings and expanding the scope of the information required to be posted on the CPUC's Web site. I am directing the Commission to work with the Legislature through the budget process to ensure the necessary funds are dedicated to accomplish these needed reforms. AB 825 Page 8 Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083 FN: 0002517