BILL ANALYSIS Ó AB 865 Page 1 ASSEMBLY THIRD READING AB 865 (Alejo) As Amended May 6, 2015 Majority vote ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+----------------------+--------------------| |Utilities |10-3 |Rendon, Achadjian, |Patterson, Hadley, | | | |Bonilla, Burke, |Obernolte | | | |Eggman, Cristina | | | | |Garcia, Quirk, | | | | |Santiago, Ting, | | | | |Williams | | | | | | | |----------------+------+----------------------+--------------------| |Jobs |6-1 |Eduardo Garcia, |Brough | | | |Brown, Chu, Gipson, | | | | |Irwin, Mathis | | | | | | | |----------------+------+----------------------+--------------------| |Appropriations |12-4 |Gomez, Bonta, |Bigelow, Gallagher, | | | |Calderon, Daly, |Jones, Wagner | | | |Eggman, Eduardo | | | | |Garcia, Gordon, | | | | |Holden, Quirk, | | | | |Rendon, Weber, Wood | | | | | | | | | | | | AB 865 Page 2 ------------------------------------------------------------------- SUMMARY: Requires any contractor or recipient of a grant or loan of $1 million or more from the California Energy Commission (CEC), on or after October 1, 2016, to prepare, implement, and report on an outreach plan for increasing subcontractor opportunities for certified women, minority, disabled veteran, and lesbian, gay, bisexual, and transgender (LGBT) business enterprises as specified. This bill also requires CEC to develop an outreach program to inform and recruit the most qualified loan and grant applicants and contractors, including but not limited to women, minority, disabled veteran, and LGBT business enterprises as defined. FISCAL EFFECT: According to the Assembly Appropriations Committee, increased annual costs of $300,000 (Energy Resources Program Account or other fund) to develop guidelines for the outreach programs, establish policies for funding agreements, and perform additional outreach and tracking activities. COMMENTS: 1)Author's Statement: "AB 865 will ensure that California's clean energy future is inclusive of diverse communities. This bill will help working families and working-class communities make economic and environmental gains with its investments. The CEC currently directs much of California's investments in clean energy research, clean transportation, and energy efficiency. This bill helps ensure California's climate change policies and investments have maximum co-benefits to reduce pollution and poverty." 2)CEC Resolution: On April 8, 2015, the CEC adopted a resolution to implement a policy to reflect the CEC's commitment to making sure the widest possible range of Californians participate in existing and future programs. The resolution specifically aims AB 865 Page 3 to maximize opportunities for small businesses, women, disabled veteran, minority and LGBT-owned businesses, as well as economically disadvantaged and underserved communities, to participate in and benefit from CEC programs. 3)Similar PUC programs: Beginning in 1986, the Legislature enacted a series of statutes, resulting in the adoption of General Order (GO) 156 by the California Public Utilities Commission (CPUC). GO 156 established the Supplier Diversity program, symbolizing an evolving state effort to increase utility contracting with women and minority-owned businesses. Disabled veterans were added in 1990, and LGBT enterprises were added to the program in 2012. Under GO 156, each electrical, gas, water, and telephone corporation with gross annual revenues exceeding $25 million, and their associated CPUC-regulated subsidiaries and affiliates, are required to participate in the Supplier Diversity program. Under this program, utilities are required to annually submit a detailed and verifiable plan with goals and timetables for increasing supplier diversity in all procurement categories. 4)Auditor Report: A recent State Auditor's report, titled Disabled Veteran Business Enterprise Program, released in February 2014, analyzes the current way the state contracts with Disabled Veteran businesses, a subcategory of what this bill requires. The Disabled Veteran Business Enterprise (DVBE) program, administered by the Department of General Services, directs state governmental entities to procure goods and services from DVBE firms. The legislative intent of the DVBE program is to target DVBE firms and have them benefit financially from doing business with the State. However, based on data compiled in the State Auditor's report, only a AB 865 Page 4 relatively small subset of DVBE firms benefit from the program and State contracting. For example, during the fiscal year 2012 to 2013, 83 percent of the DVBE contracting went to only 30 firms. A significant cause of this problem, among others, can be attributed to weak reporting requirements. This bill addresses the discrepancies in the reporting process and is in line with the Auditor's recommendations. Analysis Prepared by: Allegra Roth / U. & C. / (916) 319-2083 FN: 0000710