BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 853 Hearing Date: 7/13/2015
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|Author: |Roger Hernández |
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|Version: |4/30/2015 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Nidia Bautista |
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SUBJECT: Electrical and gas corporations: security of plant and
facilities
DIGEST: This bill requires an electrical and gas
investor-owned utility prior to contracting any work, besides
construction and maintenance, to get approval from the CPUC.
ANALYSIS:
Existing law:
1)Establishes the California Public Utilities Commission (CPUC)
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)Provides the CPUC regulatory authority over public utilities,
including electrical corporations and gas corporations, as
defined. (Public Utilities Code §§218 and 222)
3)Requires the CPUC, after a hearing, if it finds that the
rules, practices, equipment, appliances, facilities, or
service of any public utility, or the methods of manufacture,
distribution, transmission, storage, or supply employed by it,
are unjust, unreasonable, unsafe, improper, inadequate, or
insufficient, to determine and, by order or rule, fix the
rules, practices, equipment, appliances, facilities, service,
AB 853 (Roger Hernández) Page 2 of ?
or methods to be observed, furnished, constructed, enforced,
or employed. (Public Utilities Code §761)
4)Requires the CPUC to prescribe rules for the performance of
any service or the furnishing of any commodity of the
character furnished or supplied by any public utility, and, on
proper demand and tender of rates, require such public utility
to furnish such commodity or render such service within the
time and upon the conditions provided in such rules. (Public
Utilities Code §761)
This bill:
1)Requires, to the extent feasible, electrical and gas
corporations to utilize direct employees for any work
associated with design, engineering, and operation of its
nuclear, electrical, gas infrastructure, including all
computer and information technology systems.
2)Defines "direct employees" to include employees of a
contractor or subcontractor licensed in California for
construction and maintenance work and working under the direct
supervision of the electrical corporation or gas corporation.
3)Requires electrical and gas corporations to obtain approval
from the CPUC prior to utilizing non-direct employees.
4)Requires the electrical and gas corporation to file a Tier 3
advice letter with the CPUC that demonstrates that the work
can be performed safely and securely, and without jeopardizing
the security of its nuclear, electrical, and gas
infrastructure.
5)Requires the CPUC to open a proceeding, or expand the scope of
a proceeding, to evaluate the advice letter.
6)Requires the CPUC to hold not less than one public hearing for
the proceeding.
7)Requires the CPUC to issue a written decision on whether the
utility can utilize non direct employees.
Background
Southern California Edison (SCE) layoffs. In April 2014, SCE
announced it would be laying off 400-500 information technology
AB 853 (Roger Hernández) Page 3 of ?
(IT) workers at its Irwindale, California location. SCE has
also stated that an additional 100 employees would be leaving
voluntarily. The 500 lost jobs reportedly represent just over a
quarter to a third of the SCE Irwindale facility IT workforce of
1,500 to 1,800 employees.
Earlier this year, news reports in the Los Angeles Times, and
other outlets, surfaced that SCE was replacing laid off workers
with outsourced contracted workers from two Indian companies,
Infosys and Tata. Some of these news reports included claims by
SCE laid off workers that they were being asked to train their
replacements who were in the country on H-1B visas. SCE has
confirmed it is outsourcing IT work to two Indian companies,
Tata and Infosys, and that about 70 percent of that work would
be completed offshore, but did not know whether or not foreign
workers would be brought to the U.S. to complete the remaining
30 percent of the work.
H-1B Visas. H-1B visas were introduced by the federal
government in 1990, and over the years the annual cap on them
has ranged up to 195,000, and currently stands at 65,000 (plus
20,000 for individuals with master's degrees). Under federal
law, visa users must have specialized training or a bachelor's
degree in the subject for which they are being hired. The visa
holder must be offered the prevailing wage for the work, and
they can only take jobs for which employers could not find a
qualified American worker.
Tata and Infosys are reportedly the largest holders of H-1B
visas, based on the 2013 figures, with each having 6,000+ H-1B
visas. According to the same list, about 50 percent of the H-1B
visas holders are offshore companies. Employers must file wage
data and location information with federal authorities, known as
a Labor Condition Application (LCA). A February 2015 news story
in Computer World Magazine noted that "in Irwindale, California,
where SCE runs a major part of its IT operations, Tata and
Infosys, had as many as 180 LCAs, and in a random check of these
applications, every address matched a SCE location."
Lawmakers and the public have raised concerns about potential
abuses with the H-1B visa program after several news reports
have noted the potential widespread abuse of the program by
companies who are looking to reduce their costs at the expense
of American workers. Many of these news stories have included
claims by laid off employees that they are required to train
their replacements who are H-1B visa holders in exchange for
AB 853 (Roger Hernández) Page 4 of ?
their severance or other benefits package, and/or on condition
of confidentiality. In March 2015, the U.S. Senate Judiciary
Committee held a hearing on "Immigration Reforms Needed to
Protect Skilled American Workers." The hearing focused on the
H-1B visa program, the ability to bring high-skilled workers in
the country to help companies compete, but also noted concerns
with stories of abuse by employers who are displacing American
workers in a manner inconsistent with the requirements or intent
of the visa program.
Outsourcing as a security risk. AB 853 finds and declares that
protecting the security of nuclear, electrical, and natural gas
utility systems, as well as the privacy of ratepayers' personal
information is a paramount state interest. This bill declares
that electrical and gas corporations should make every
reasonable effort to protect their computer systems from
unauthorized intrusions and, to do so, the information
technology personnel who operate those systems should be direct
employees of the utility.
CPUC advice letter. An advice letter is a request by a utility
for CPUC approval, authorization, or other relief, including an
informal request for approval to furnish service under rates,
charges, terms or conditions other than those contained in the
utility's tariffs then in effect. Advice letters are
procedurally less formal than other proceedings at the CPUC
which require more judicial-type elements of an evidentiary
hearing. Advice letters are classified into three tiers,
ranging from Tier 1 to Tier 3. Tier 1 advice letters generally
become effective upon filing of the letter. However, Tier 3
advice letters require commissioners to hear the item and take a
vote at a publicly noticed meeting.
This bill requires a Tier 3 advice letter for any contracting
work done by a utility. Currently, the CPUC handles about 1,000
advice letters for the energy sector alone.
This bill could compound the number of advice letters that would
need to be processed and make the process untenable. An
alternative approach is to address any contracting work in the
utility's general rate case (GRC).
General Rate Case (GRC). All utilities that are regulated by
the CPUC are required to undergo a GRC to request funding for
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distribution and generation costs associated with their service.
GRCs are major regulatory proceedings and provide the CPUC an
opportunity to perform an exhaustive examination of a utility's
operations and costs. Usually performed every three years, the
GRC allows the CPUC to conduct a broad and detailed review of a
utility's revenues, expenses, and investments in plant and
equipment to establish an approved revenue requirement. Through
the GRC, a utility forecasts how they will structure their
operations and make investments for the next three years. In
consideration of the current volume of advice letters that must
be processed by the CPUC and the potential to overwhelm the
agency with requests, as noted by the opponents, the author and
committee may wish to amend the bill to have the CPUC approval
process occur exclusively as part of the GRC proceeding of the
utility.
Prior/Related Legislation
AJR 12 (E. Garcia, 2015) H-1B Visa Program: investigation of
misuse. The bill urges the United States Department of Labor
and the Congress of the United States to investigate alleged
misuse of the H1-B Visa program.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
ASSEMBLY VOTES:
Assembly Floor (50-25)
Assembly Appropriations Committee (12-5)
Assembly Utilities and Commerce Committee (10-4)
SUPPORT:
Coalition of California Utility Workers (source)
California Labor Federation
California State Association of Electrical Workers
California State Pipe Trades Council
International Union of Elevator Constructors
Western States Council of Sheet Metal Workers
OPPOSITION:
@Business, Inc.
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American Council of Engineering Companies
California Business Properties Association
California Chamber of Commerce
California Manufacturer & Technology Association
Large-scale Solar Association
Los Angeles Area Chamber of Commerce
Los Angeles County Business Federation
National Gay & Lesbian Chamber of Commerce
Southern California Edison
TechNet
Western Electrical Contractors Association, Inc.
ARGUMENTS IN SUPPORT: According to the author, AB 853
prohibits an electrical or gas corporation from outsourcing
critical nuclear, electrical and gas infrastructure work,
including computer and informational technology systems, without
first obtaining approval from the CPUC. The author cites
concerns with news reports regarding layoffs of hundreds of SCE
employees and the outsourcing of these jobs to contractors from
overseas, potentially including H-1B visa holders who would be
brought in to replace California workers. "The part of any
computer system most vulnerable to being compromised is the
personnel who operate the system. Unfortunately, recent events
have raised concerns about the safety and security of such
systems."
ARGUMENTS IN OPPOSITION: SCE argues that AB 853 has the
potential to jeopardize the safe, reliable operation of the
electric service and thousands of California jobs. SCE further
states they currently have a database of 8,000 contract workers
in a wide variety of jobs related to operations of the utility.
"Work is performed by contract workers in any manner of job
duties? to bring expertise that is not a core function of the
utility, for urgent projects? This bill could bring utility
projects to a stand-still, including interconnections, major
projects, and critical emergency response and recovery effort,
by requiring each hiring to go through a lengthy public process.
AB 853 suggests this [contract] workforce creates questions
about the security and safety of the utility, which is unfair
and unwarranted."
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