BILL ANALYSIS                                                                                                                                                                                                    



                                                                       AB 865


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          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


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          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  








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            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  








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            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