Amended in Assembly May 4, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 1266


Introduced by Assembly Member Gonzalez

February 27, 2015


An act to add Section 706 to the Public Utilities Code, relating to electrical and gas corporations.

LEGISLATIVE COUNSEL’S DIGEST

AB 1266, as amended, Gonzalez. Electrical and gas corporations: excess compensation.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations. Existing law authorizes the commission to fix the rates and charges for every public utility, and requires that those rates and charges be just and reasonable. Existing law requires that any expense resulting from a bonus paid to an executive officer, as defined, of a public utility that has ceased to pay its debts in the ordinary course of business, be borne by the shareholders of the public utility and prohibits any expense from being recovered in rates.

This bill would prohibit an electrical corporation or gas corporation from recovering from ratepayers expenses for excess compensation, as defined, paid to an officer of the utility following a triggering event, as defined, unless the utility obtains the approval of the commission. Following a triggering event and prior to paying or seeking recovery of excess compensation, the electrical corporation or gas corporation would be required to file a Tier 3 advice letter with the commission containing specifiedbegin delete information andend deletebegin insert information. If the electrical corporation or gas corporation sought or received authorization prior to the triggering event to recover excess compensation in rates,end insert the commission would be required to open a proceeding or expand the scope of an existing proceeding to evaluate the advice letter and, following a duly notice public hearing in the proceeding, to issue a written decision determiningbegin delete whether, and if so, how much, of each officers’ compensation shall be recoverable fromend deletebegin insert whether any expenses for excess compensation that the corporation was authorized to recover in rates should be refunded toend insert ratepayers.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because the provisions of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by creating a new crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 706 is added to the Public Utilities Code,
2to read:

3

706.  

(a) For purposes of this section, the following terms have
4the following meanings:

5(1) “Excess compensation” means any salary, bonus, benefits,
6begin delete stock options,end delete or other consideration of any value, paid to an officer
7of an electrical corporation or gas corporation that is in excess of
810 times the average compensation paid by the utility to the utility’s
9journeyman linemen.

10(2) A “triggering event” occurs if, after January 1, 2013, an
11electrical corporation or gas corporation violates a federal or state
12safety regulation with respect to the plant and facility of the utility
13and, as a proximate cause of that violation, ratepayers incur a
14financial responsibility in excess of five million dollars
15($5,000,000).

P3    1(b) No electrical corporation or gas corporation shall recover
2expenses for excess compensation from ratepayers following a
3triggering event unless the utility complies with the requirements
4of this section and obtains the approval of the commission pursuant
5to this section.

6(c) Following a triggering event and prior to paying or seeking
7recovery of excess compensation, an electrical corporation or gas
8corporation shall file a Tier 3 advice letter with the commission
9that, with respect to any officer paid excess compensation, includes
10all of the following:

11(1) The compensation history for the officer.

12(2) The proposed compensation to be paid to the officer,
13including the compensation recovered from ratepayers and that
14paid solely by shareholders of the utility.

15(3) begin deleteAny end deletebegin insertWhether any of the compensation paid to an officer
16was previously included or proposed to be included in rates and
17any end insert
justification for the proposed compensation.

18(4) Any additional information required by the commission.

19(d) begin deleteThe end deletebegin insertIf the electrical corporation or gas corporation sought
20or received authorization prior to a triggering event to recover
21excess compensation in rates, the end insert
commission shall open a hearing,
22or expand the scope of an existing proceeding, to evaluate the
23advice letter. As part of the proceeding, the commission shall
24consider the costs to ratepayers of the triggering event. The
25commission shall hold not less than one duly noticed public hearing
26in the proceeding. The commission shall issue a written decision
27determiningbegin delete whether, and if so, how much, of each officers’
28compensation shall be recoverable fromend delete
begin insert whether any expenses for
29excess compensation that the electrical corporation or gas
30corporation was authorized to recover in rates should be refunded
31toend insert
ratepayers.

begin insert

32(e) A person or corporation owning or operating a qualifying
33facility pursuant to federal law or a facility that is an exempt
34wholesale generator is not an electrical corporation due to the
35ownership or operation of that facility. This subdivision is
36declaratory of existing law.

end insert
37

SEC. 2.  

No reimbursement is required by this act pursuant to
38Section 6 of Article XIII B of the California Constitution because
39the only costs that may be incurred by a local agency or school
40district will be incurred because this act creates a new crime or
P4    1infraction, eliminates a crime or infraction, or changes the penalty
2for a crime or infraction, within the meaning of Section 17556 of
3the Government Code, or changes the definition of a crime within
4the meaning of Section 6 of Article XIII B of the California
5Constitution.



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