BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1266


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          Date of Hearing:  May 27, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          1266 (Gonzalez) - As Amended May 4, 2015


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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill prohibits an electrical or gas corporation from  
          recovering excess compensation expenses from ratepayers  
          following a triggering event, unless approved by the Public  








                                                                    AB 1266


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          Utilities Commission.   Specifically, this bill:  


          1)Requires an electrical or gas corporation to file a TIER 3  
            advice letter prior to paying or seeking recovery of excess  
            compensation as specified.  Requires PUC to open a proceeding  
            or expand the scope of an existing proceeding to evaluate the  
            advice letter.


          2)Requires PUC to issue a written determination regarding the  
            ability to recover officers' compensation from ratepayers.


          3)Specifies that a triggering event occurs, after January 1,  
            2013, if an electrical or gas corporation violates a federal  
            or state safety violation resulting in ratepayers incurring  
            financial responsibility in excess of $5 million.


          4)Defines excess compensation as any salary, bonus, benefits or  
            other consideration of any value in excess of 10 times the  
            average salary of utility journeyman lineman.


          FISCAL EFFECT:


          1)Increased PUC costs of approximately $150,000 over an 18-month  
            period to conduct one proceeding.


          2)Ongoing annual PUC costs of approximately $50,000.


          COMMENTS:


          1)Rationale.  In 2012, Southern California Edison announced it  








                                                                    AB 1266


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            would close the San Onofre Nuclear Generating Station (SONGS)  
            in San Clemente following the discovery of a radioactive leak  
            caused by a faulty steam generator. In 2014, SCE reached a  
            settlement with the PUC to allow SCE to collect $3.3 billion  
            from ratepayers and $1.4 billion from shareholders to fund the  
            closure.


            The settlement gave ratepayers a share of the money recovered  
            from litigation against Mitsubishi, the manufacturer of the  
            faulty steam generator, as well as an equal share of any legal  
            settlement with Mitsubishi. 


            According to the author, neither shareholders nor ratepayers  
            played any role in the activities led to the multi-billion  
            dollar SONGS shutdown. This bill prevents investor-owned  
            utilities from providing its executives with excess  
            compensation after specific safety violations resulting in  
            costs to ratepayers.


          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081