BILL ANALYSIS Ó AB 1800 Page 1 Date of Hearing: April 20, 2016 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Mike Gatto, Chair AB 1800 (Hadley) - As Amended April 4, 2016 SUBJECT: Utility outage compensation claims: annual posting SUMMARY: Requires an electric utility to post specified information relating to utility outage compensation claims on its Internet Web site. Specifically, this bill: 1)Requires each electrical corporation and local publicly owned electric utility to annually post all of the following information relating to utility outage compensation claims for the previous year on its Web site: a) The number of claims that remain open from the previous year. b) The number of new claims received in the current year. c) The total number of applicants awaiting determination or judgment at the end of the year. d) The median time taken to process claims once the outage AB 1800 Page 2 was determined to be the fault of the utility. e) The number of claims approved. f) The number of claims denied. 2)Specifies that the posting requirements only apply to those outages that the Independent System Operator (ISO), the California Public Utilities Commission (CPUC), or the electrical corporation or local publically owned electric utility has determined are the fault of the utility. EXISTING LAW: 1)Gives the CPUC regulatory authority over public utilities, including electrical corporations and gas corporations, as defined. (Public Utilities Code 218 and 222, et. seq.) 2)Defines an "electrical corporation" to include every corporation or person owning, controlling, operating, or managing any electric plant for compensation within the state, as specified. (Public Utilities Code Section 218) 3)Defines "local publicly owned electric utility" as a municipality or municipal corporation operating as a "public utility" furnishing electric service, a municipal utility district furnishing electric service, a public utility district furnishing electric service, an irrigation district furnishing electric service, or a joint powers authority that includes one or more of specified agencies and that owns generation or transmission facilities, or furnishes electric services over its own or its member's electric distribution AB 1800 Page 3 system. (Public Utilities Code Section 224.3) 4)Requires the CPUC to adopt inspection, maintenance, repair, and replacement standards for distribution systems of electrical corporations, as well as standards for operation, reliability, and safety during periods of emergency and disaster, as specified. (Public Utilities Code Section 364) 5)Requires the CPUC to establish standards for disaster and emergency preparedness plans, as specified. (Public Utilities Code Section 768.6) FISCAL EFFECT: Unknown. COMMENTS: 1)Author's Statement: "AB 1800 will give utility ratepayers the information necessary to know if their claims for reimbursement are being fairly and expeditiously processed, and will inspire more confidence in the claims process." 2)Background: Power outages are not an uncommon occurrence and can sometimes last a few hours to a few days. Such outages not only create an inconvenience for residents and businesses, but can also cause health and safety issues, as well as economic damages to businesses and communities. Under current law, the CPUC is required to adopt inspection, maintenance, repair, and replacement standards for electric distribution systems, as well as standards for operation, reliability, and safety during periods of emergency and disaster. The CPUC is also required to establish standards for disaster and emergency preparedness plans. AB 1800 Page 4 3)Major Power Outages in Southern California: There have been several major power outages that have affected the Southern California area, including the Southwest Power Outage and the Southern California Windstorm Power Outages in 2011, and the Long Beach power outages in 2015. On September 8, 2011 work being performed on a transmission line in Arizona, caused a power outage that affected approximately 1.4 million electricity customers in California, Arizona, and Mexico. Power was fully restored within 12 hours. In addition, from November 30 to December 1, 2011, hurricane force winds caused a power outage thought the Southern California region that affected approximately 430,000 electric customers in Southern California Edison's (SCE) territory. Power was not fully restored until December 8, 2011. More recently, fires in underground electric vaults caused two power outages that affected thousands of residents and business in the downtown Long Beach area. The two separate fires on July 15, 2015, and July 30, 2015, took out power for Long Beach residents for several days. 4)Outages and Claims: In most cases, electric utilities provide businesses and residents reimbursements if they suffered a loss or damage due to a service interruption as a result of the utility. According to SCE's Web site, it states that it evaluates each claim individually to determine if losses occurred due to its negligence, how the incident happened, the extent of damages, and what the law considers fair compensation. If SCE denies a claim, they will explain the reasons for the denial. SCE's goal is to reach a decision on most claims within 30 days of receipt. PG&E and SDG&E also have similar claims processes. 5)Reporting of Outage Claims: Utilities judge each claim individually. According to SCE's website, SCE evaluates each claim individually, and determines: a) if loses occurred due to their negligence; b) how the incident happened; c) the AB 1800 Page 5 extent of damages; and d) what is considered fair compensation. Customers must submit proof and documentation to verify their claims along with the application. Depending on the situation each claim can have different results. For example, claims involving food loss and spoilage might result in claims of a few hundred dollars, whereas, claims involving bodily injury or property damage could result in claims of thousands of dollars. Hence, depending on the detail of information available, such data could provide different representations of a utilities claims process. The author may wish to consider an amendment to mitigate the risk that the report could be used as evidence in a legal proceeding on a specific claim. This bill requires each electric utility to post specific information related to the utilities outage compensation claims, that the ISO, CPUC, and the electric utility has determined are the fault of the utility, for the previous year on its Web site. The author may also wish to consider an amendment to clarify the reporting requirement for utilities that do not differentiate between claims paid that are at the fault of the utility or was paid without regard to fault. 6)Suggested Amendments: Amend Sections 8390 and 8391 as follows: AB 1800 Page 6 8390. The reporting requirements of this chapter apply only to those outages that the Independent System Operator, the commission, or the electrical corporation or local publicly owned electric utility has determined are the fault of the utility , or that the electrical utility has determined to pay . 8391. (d) The median time taken to processapplications.claims once the outage was determined to be the fault of the utility , or that the electrical utility has determined to pay . Add the following section to the Public Utilities Code (PUC). PUC Section ---: Information relating to utility outage compensation claims shall not be admitted as evidence in any action for damages against the utility arising out of an outage or outages. 7)Arguments in Support: According to the City of Rancho Palos Verdes, "Customers may file claims for reimbursement, but there is currently no way to know what percentage of claims are being approved and denied, or how quickly, or the rationale behind these decisions. Without readily accessible claims data, many customers assume that all claims are denied. On the Palos Verdes Peninsula, [SCE] has recently confirmed that only 37% of claims filed over the past three years were paid." 8)Arguments in Opposition: According to the California Municipal Utilities Association (CMUA), "CMUA opposes AB 1800 because [Publicly Owned Utilities (POUs)] are already required under the Tort Claims Act (Government Code 900 et seq.) to review claims within 45 days and provide written notice to the AB 1800 Page 7 claimant regarding the outcome. Creating a new Public Utilities Code with new requirements for POUs is neither necessary nor consistent with current applicable Government Code sections. Additionally, each POU serves a specific locality, where customers may raise questions regarding their utilities services through regularly scheduled public meetings convened by locally elected officials." 9)Related Legislation: AB 2381 (Roger Hernández) of 2016: Requires an electrical corporation to establish a utility service guarantee program to provide bill credits for customer that experience power outages for over 24 hours. Pending in the Assembly Utilities and Commerce Committee. REGISTERED SUPPORT / OPPOSITION: Support City of Rancho Palos Verdes The Utility Reform Network (TURN) Opposition California Municipal Utilities Association AB 1800 Page 8 Southern California Public Power Authority Sacramento Municipal Utility District Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083