BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        AB 895|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
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                                   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  








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          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  







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            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.







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          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.







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          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  







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          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


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