BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1800


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          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  








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               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  








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            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.  









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          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  








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            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: 










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            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 process  applications.   
            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  








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            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








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          Southern California Public Power Authority


          Sacramento Municipal Utility District 




          Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083