BILL ANALYSIS Ó
AB 1266
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
1266 (Gonzalez)
As Amended September 4, 2015
Majority vote
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|ASSEMBLY: | | (June 3, |SENATE: |24-14 | (September 10, |
| |48-28 |2015) | | |2015) |
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Original Committee Reference: U. & C.
SUMMARY: Prohibits an electrical or gas corporation from
recovering from ratepayers' expenses for excess compensation
paid to an officer of the utility for five years following a
triggering event, unless approved by the California Public
Utilities Commission (CPUC), as specified.
The Senate amendments redefine excess compensation as over $1
million, clarify that restriction on excess compensation applies
to five years after a triggering event, and make other technical
changes.
EXISTING LAW:
1)Gives the CPUC regulatory authority over public utilities,
including electrical corporations and gas corporations, as
AB 1266
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defined. (Public Utilities Code Sections 218 and 222)
2)Requires the shareholders of a public utility to bear any
expenses resulting from a bonus paid to an executive officer
of a public utility that has ceased to pay its debts in the
ordinary course of business, and prohibits any expense from
being recovered in rates. (Public Utilities Code Section
451.5)
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill would have unknown ongoing costs,
potentially $200,000 annually, to the Public Utilities
Reimbursement Account for proceedings and review of excess
compensation.
COMMENTS:
1)Author's Statement: "Neither shareholders nor ratepayers
played any role in the management missteps that led to the
multi-billion dollar disaster that the SONGS shutdown has
become. To reward top executives for successfully passing the
buck to everyday ratepayers and stockholders who are trying to
build a secure retirement is inexplicable to me, and should
face public scrutiny."
2)Background: The CPUC requires regulated utilities to go
through a General Rate Case to request funding for
distribution and generation costs. The General Rate Case
examines the utility's revenues and expenses, including
executive compensation, and provides a detailed forecast of
how they will structure their operations and make investments
for the next three years. Furthermore, CPUC General Order No.
77-M requires the utility to file a statement showing the
names, titles, and duties of all employees with a base salary
of at least $125,000 annually.
3)Closure of San Onofre Nuclear Plant: In 2012, Southern
California Edison (SCE) announced that it was closing the San
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Onofre Nuclear Generating Station (SONGS) after a leak was
discovered in a steam generator tube installed in 2010 that
transported radioactive water from one of the reactors. In
2014, SCE reached a settlement with the CPUC to allow it to
collect $3.3 billion from ratepayers and $1.4 billion from
shareholders to fund the cost of closing SONGS. The
settlement also 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.
This bill prohibits an electrical or gas corporation from
recovering expenses for excess compensation from ratepayers
for five years following a triggering event unless the utility
obtains approval from the CPUC, as specified.
Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083
FN: 0002268