BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 895| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 895 Author: Rendon (D) Amended: 9/4/15 in Senate Vote: 21 SENATE ENERGY, U. & C. COMMITTEE: 10-0, 6/30/15 AYES: Hueso, Fuller, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire, Morrell, Pavley NO VOTE RECORDED: Wolk SENATE APPROPRIATIONS COMMITTEE: 5-0, 8/27/15 AYES: Lara, Beall, Hill, Leyva, Mendoza NO VOTE RECORDED: Bates, Nielsen ASSEMBLY FLOOR: 79-0, 6/1/15 - See last page for vote SUBJECT: Utility rate refunds: energy crisis litigation: Public Utilities Commission: judicial review SOURCE: Author DIGEST: This bill allows actions to be brought in superior court to enforce against the California Public Utilities Commission (CPUC) the provisions of the Bagley-Keene Open Meeting Act and the Public Records Act. This bill prospectively allows the Attorney General (AG) or the CPUC to enter into an energy settlement agreement only on a monetary basis. This bill also prohibits the CPUC from distributing or expending the proceeds of claims recovered by the CPUC in any litigation or settlement to obtain ratepayer recovery for the effects of the 2000-02 energy crisis, and requires the proceeds of any claims arising from that crisis be deposited into the Ratepayer Relief AB 895 Page 2 Fund for appropriation by the Legislature. Senate Floor Amendments of 9/4/15 seek to relax limitations on judicial review of CPUC actions related to the Bagley-Keene Open Meeting Act or the Public Records Act. 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)Provides that only the California Supreme Court and the court of appeal may review appeals of CPUC decisions. (Public Utilities Code §1701.6) 3)Requires state agencies to conduct business via open public meetings, as described in Bagley-Keene Open Meeting Act. (Government Code § 11120 et seq.) 4)Requires state and local agencies to generally make public documents available upon request, as described in the Public Records Act. (Government Code § 6250 et seq.) 5)Establishes the Ratepayer Relief Fund in the State Treasury to benefit electricity and natural gas ratepayers, and to fund investigation and litigation costs of the state in pursuing allegations of overcharges and unfair business practices. (Government Code §16428.15) 6)Requires that any energy settlement agreement direct settlement funds to the following purposes in priority order: (a) to reduce ratepayer costs of those utility ratepayers harmed by the actions of the settling parties; and (b) for deposit in the Ratepayer Relief Fund. (Government Code §16428.3) 7)Authorizes funds deposited in the Ratepayer Relief Fund to be AB 895 Page 3 appropriated by the Legislature for purposes that benefit ratepayers. (Government Code §16428.3) This bill: 1)Provides that actions to enforce the requirements of the Bagley-Keene Open Meeting Act or the Public Records Act against the CPUC may be brought in superior court. 2)Prohibits the CPUC from distributing or expending the proceeds of claims in any litigation or settlement to obtain ratepayer recovery for the effects of the 2000-02 energy crisis. 3)Requires the proceeds of any claims arising from that crisis be deposited into the Ratepayer Relief Fund for appropriation by the Legislature. Background Limits on legal challenge to CPUC actions. The CPUC was established to act with considerable independence. One example of this independence is a limit on the ability of a party to challenge in court an action of the CPUC. Specifically, statute allows only the state Supreme Court and the court of appeal to affect a decision of the CPUC. The CPUC is subject to the Bagley-Keene Open Meeting Act. The Act requires a state body to take "action" (collective decision or an actual vote) only at a public meeting following the public posting of an agenda describing the item for proposed action at least 10 days prior to the meeting. Any private congregation of a majority of the members of a state body at the same time and place to hear, discuss, or deliberate upon any item that is within its jurisdiction is unlawful. Violations of the Act can result in members of the state body facing misdemeanor penalties and action taken rendered invalid, with attorney's fees awarded to prevailing plaintiffs. The CPUC is also subject to the Public Records Act. Generally, the Act requires a state or local agency, upon request, to make records available to any person upon payment of fees to cover the costs of providing the records. There are many specific exemptions to the general requirement. AB 895 Page 4 Amendments made in the most recent version of this bill expressly authorizes actions to enforce the Bagley-Keene Open Meeting Act or the Public Records Act to be brought in superior court. Electricity crisis litigation. In the latter half of the 1990s, the state restructured its electricity markets to provide more competition. These efforts were codified in AB 1890 (Brulte, Chapter 854, Statutes of 1996). Soon thereafter, in 2000 and 2001, the state experienced extraordinary wholesale electricity prices in what has become known as the California electricity crisis. Pacific Gas and Electric declared bankruptcy; Southern California Edison nearly did so. Subsequent investigation revealed numerous instances of illegal market manipulation on the part of electricity suppliers. The state - through the CPUC and the now-defunct Energy Oversight Board and, subsequently, the AG - has been party to litigation related to the energy crisis. The U.S. Supreme Court recently ruled that energy companies can be sued under state antitrust laws for illegally manipulating natural gas prices during California's 2000-2002 energy crisis. As a result, there will likely be additional claims relating to the energy crisis, as well as, potentially, additional judgments and settlements that compensate the state. In the past, proceeds of claims arising from the energy crisis have been handled differently. In some instances, the CPUC has directed settlement monies be returned directly to ratepayers. In one instance, however, the CPUC settled with parties to allow in-kind payments to fund installation of electric vehicle charging infrastructure. This bill allows the AG or CPUC to enter into an energy settlement agreement only on a monetary basis and expressly prohibits nonmonetary compensation in lieu of monetary compensation. This provision applies only to settlement agreements entered into before January 1, 2016. Finally, this bill requires that the proceeds of any claims arising from that crisis be deposited into the Ratepayer Relief Fund for appropriation by the Legislature and specifies that the requirement does not apply to claims brought by an electrical corporation that arise from the energy crisis. AB 895 Page 5 Prior/Related Legislation AB 1890 (Brulte, Chapter 854, Statutes of 1996) established a competitive deregulated electricity market in California. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee: Increased revenues, potentially in the billions of dollars, to the Ratepayer Relief Fund (special). Potential costs to the General Fund for litigation costs for the AG and the Department of Water Resources (DWR) associated with energy crisis. Unknown costs to the state, as a ratepayer, (General Fund and various special funds) to the extent that settlement monies are not deposited in the Electric Power Fund to repay bonds and long-term power contracts entered into by DWR. Potential impacts to settlement amounts. SUPPORT: (Verified9/4/15) California Manufacturers & Technology Association Office of Ratepayer Advocates The Utility Reform Network OPPOSITION: (Verified9/4/15) None received ARGUMENTS IN SUPPORT: The author and proponents contend that the ratepayers should directly benefit from any proceeds resulting from litigation related to the energy crisis. This AB 895 Page 6 bill helps ensure this benefit occurs, unless the Legislature - rather than the CPUC - determines the money should be used for other purposes. ASSEMBLY FLOOR: 79-0, 6/1/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, 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, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Brough Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107 9/8/15 20:56:32 **** END ****