BILL ANALYSIS Ó
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
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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
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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