BILL NUMBER: AB 1266 ENROLLED
BILL TEXT
PASSED THE SENATE SEPTEMBER 10, 2015
PASSED THE ASSEMBLY SEPTEMBER 11, 2015
AMENDED IN SENATE SEPTEMBER 4, 2015
AMENDED IN SENATE AUGUST 31, 2015
AMENDED IN ASSEMBLY MAY 4, 2015
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, 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 for a
period of 5 years following a triggering event, as defined, unless
the utility obtains the approval of the commission. The bill would
provide that anytime within a 5-year period 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 an application with the commission containing
specified information. The bill would require the commission,
following a duly noticed public hearing in the proceeding to consider
the application, to issue a written decision determining whether any
expenses for excess compensation proposed to be paid by the
corporation should be recovered in rates, or if previously authorized
to be recovered in rates, should be refunded to 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.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 706 is added to the Public Utilities Code, to
read:
706. (a) For purposes of this section, the following terms have
the following meanings:
(1) "Excess compensation" means any annual salary, bonus,
benefits, or other consideration of any value, paid to an officer of
an electrical corporation or gas corporation that is in excess of one
million dollars ($1,000,000).
(2) A "triggering event" occurs if, after January 1, 2013, an
electrical corporation or gas corporation violates a federal or state
safety regulation with respect to the plant and facility of the
utility and, as a proximate cause of that violation, ratepayers incur
a financial responsibility in excess of five million dollars
($5,000,000).
(b) For a five-year period following a triggering event, no
electrical corporation or gas corporation shall recover expenses for
excess compensation from ratepayers unless the utility complies with
the requirements of this section and obtains the approval of the
commission pursuant to this section.
(c) Any time within a five-year period following a triggering
event and prior to paying or seeking recovery of excess compensation,
an electrical corporation or gas corporation shall file an
application with the commission that, with respect to any officer to
whom it seeks to pay excess compensation, includes all of the
following:
(1) The compensation history for the officer.
(2) The proposed compensation to be paid to the officer, including
the compensation recovered from ratepayers and that paid solely by
shareholders of the utility.
(3) Whether any of the compensation paid to an officer was
previously included or proposed to be included in rates and any
justification for the proposed compensation.
(4) Any additional information required by the commission.
(d) As part of the proceeding to consider the application, the
commission shall consider the costs to ratepayers of the triggering
event. The commission shall hold not less than one duly noticed
public hearing in the proceeding. The commission shall issue a
written decision determining whether any expenses for excess
compensation proposed to be paid by the electrical corporation or gas
corporation should be recovered in rates, or if previously
authorized to be recovered in rates, should be refunded to
ratepayers.
(e) A person or corporation owning or operating a qualifying
facility pursuant to federal law or a facility that is an exempt
wholesale generator is not an electrical corporation due to the
ownership or operation of that facility. This subdivision is
declaratory of existing law.
(f) In every decision on a general rate case, the commission shall
require all authorized executive compensation to be placed in a
balancing account, memorandum account, or other appropriate mechanism
so that this section can be implemented without violating any
prohibition on retroactive ratemaking.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.