BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 2120 Hearing Date: 6/27/2016
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|Author: |Weber |
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|Version: |4/26/2016 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Nidia Bautista |
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SUBJECT: Public Utilities Commission: proceedings: intervenor
fees: customers
DIGEST: This bill would authorize compensation for
participation or intervention of a county office of education,
or a consortium of public school districts or agencies on behalf
of local K-12 educational agencies (LEAs) in a California Public
Utilities Commission (CPUC) proceeding relating to gas or
electricity rates.
ANALYSIS:
Existing law:
1)Authorizes intervenors involving electric, water, and
telephone utilities to be compensated for making a substantial
contribution to proceedings of the CPUC, as determined by the
CPUC. (Public Utilities Code §1801 et seq.)
2)Requires intervenor compensation to be awarded to eligible
intervenors in a timely manner, within a reasonable period
after the intervenor has made the substantial contribution to
a proceeding that is the basis for the compensation award.
(Public Utilities Code §1801.3)
3)Defines "compensation" to mean payments for all or part, as
determined by the CPUC, of reasonable advocate's fees,
reasonable expert witness fees, and other reasonable costs of
preparation for and participation in a proceeding, and
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includes the fees and costs of obtaining an award, as
specified, and of obtaining judicial review, if any. (Public
Utilities Code §1802)
4)Defines "customer" to mean any of the following:
a) A participant representing consumers, customers, or
subscribers of any electrical, gas, telephone, telegraph,
or water corporation that is subject to the jurisdiction of
the CPUC;
b) A representative who has been authorized by a customer;
or
c) A representative of a group or organization authorized
pursuant to its articles of incorporation or bylaws to
represent the interests of residential customers, or to
represent small commercial customers who receive bundled
electric service from an electrical corporation. (Public
Utilities Code §1802)
d) States that "customer" does not include any state,
federal, or local government agency, any publicly owned
public utility, or any entity that, in the CPUC's opinion
was established or formed by a local government entity for
the purpose of participating in a CPUC proceeding. (Public
Utilities Code §1802)
5)Establishes an Office of Ratepayer Advocates (ORA) to
represent and advocate on behalf of public utility customers
with a goal to obtain the lowest possible rate for service
consistent with reliable and safe service levels with a
primary focus on residential and small commercial customers.
(Public Utilities Code §309.5)
This bill:
1)Includes findings and declarations that LEAs are limited in
their ability to raise local tax revenues, the costs to
AB 2120 (Weber) Page 3 of ?
intervene in CPUC proceedings is often prohibitive for LEAs,
and a county office of education is the appropriate intervenor
in a proceeding affecting any LEA in whole or in part.
2)Defines "customer" to include a county office of education or
a consortium of public school districts or agencies in
addition to the existing definition.
3)Requires a consortium of public school districts or agencies
to only participate or intervene on behalf of a LEA in a CPUC
proceeding.
4)Prohibits a representative of a consortium of public school
districts or agencies participating or intervening in a CPUC
proceeding from having a direct financial interest in the
resolution of the CPUC proceeding within the two years
preceding the filing of comments with the CPUC and sooner than
two years after that resolution.
Background
CPUC intervenor compensation. The CPUC initiated its intervenor
compensation program in 1981 and state law was enacted in 1984
to govern the program. The program is intended to ensure that
intervenors - individuals and groups that represent the
interests of utility ratepayers - have the financial resources
to bring their concerns and interest to the CPUC at its
proceedings. Intervenors advocate for a variety of ratepayers,
including residential and small-business customers, minority
groups, and the disabled. State law allows intervenors that
participate in CPUC proceedings involving utilities, such as
electric, gas, and water utilities, to request compensation for
the costs associated with that participation. Public utilities
generally pay these intervenor compensation awards from the
amounts they collect from their ratepayers. These awards affect
utility rates so that utilities can recoup any amounts they pay
to intervenors.
Intervenor compensation process. An intervenor planning to
claim intervenor compensation must get involved in the
proceeding by filing a notice of intent to claim compensation
that indicates the planned extent and estimated costs of the
intervenor's planned participation in a proceeding. In
addition, to be eligible for compensation, the intervenor must
show that it meets various mandates that state law imposes,
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including the need to demonstrate substantial contribution to
the CPUC proceeding. When an intervenor participates in a
proceeding they are excepted to contribute via factual
contentions, legal arguments, or policy recommendations. These
efforts can be demonstrated by bringing witnesses, submitting
testimony from multiple witnesses, raising issues when it
cross-examines the utility's witnesses during evidentiary
hearings, working with other intervenors to achieve a settlement
and others. When the CPUC issues a final decision on a
proceeding, the intervenor may file a claim for intervenor
compensation. The CPUC reviews the claim and adjusts up or down
based on their assessment of the intervenor's participation.
Additionally, intervenors must show "significant financial
hardship" to receive compensation, by submitting documents
demonstrating either that the intervenor could not afford to
participate without undue hardship or that the economic interest
of the individual members is small in comparison to the cost of
effective participation in the proceeding.
Office of Ratepayer Advocates (ORA). Within the CPUC is an
independent ORA to represent and advocate on behalf of the
interests of public utility customers and subscribers within the
jurisdiction of the CPUC. ORA's goal is to obtain the lowest
possible rate for service consistent with reliable and safe
service levels. For revenue allocation and rate design matters,
the office primarily considers the interests of residential and
small commercial customers. ORA has a staff of 147 staff,
consisting of engineers, economists, scientists, and auditors
with expertise in regulatory issues related to the electricity,
natural gas, water, and communications industries in California.
ORA's staff performs in-depth review and analyses of regulatory
policy issues and utility proposals, for funding that totals in
the tens of billions of dollars, in order to determine whether
utility requests are in the interest of the ratepayers who fund
utility activities through their utility bills. ORA also
supports environmental policies that benefit customers and seeks
to ensure that utility actions comport with CPUC rules and
California environmental laws and policy goals. In 2015, ORA
participated in 192 CPUC proceedings.
Government agencies not eligible. The statute governing
intervenor compensation excludes state, federal, or local
government agency, any public utility, or any entity formed by a
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local government agency for the purpose of participating in a
CPUC proceeding from the definition of customer. This exclusion
is premised on the fact that government agencies are funded with
public dollars and have the ability to increase taxes or fees to
fund their activities. Government agencies can participate as a
party in any CPUC proceeding. However, in the case of K-12
school districts, they argue that they have very limited ability
to raise revenues through parcel taxes or school facilities
bonds. It is not always foreseeable when CPUC proceeding
intervention may be deemed necessary because rate increases can
be unpredictable. Further, it is not clear that the costs of
intervention would be eligible for facilities bond funding.
Finally, it may be difficult to pass a parcel tax increase with
voters if there is no guarantee when the funds will be needed.
According to the author's office, these funding barriers result
in intervention costs being covered by with funds that may be
better directed at classroom instruction.
2013 State Auditor's report. In July 2013, the State Auditor
issued a report on an audit it conducted on the intervenor
compensation program at the CPUC. The report found that despite
some administrative weaknesses, the CPUC had generally awarded
compensation to intervenors in accordance with state law. The
report identified the 10 largest intervenors from 2008 to 2012.
During that time period, the CPUC awarded $25.5 million in
intervenor compensation. The Utility Reform Network accounted
for approximately $12.7 million of the awards claimed, followed
by the Utility Consumers Action Network with approximately $2.9
million, and Disability Rights Advocates with approximately $1.3
million.
Opportunities to engage. In addition to the efforts of ORA to
address general rate cases on behalf of ratepayers, the CPUC
process to establish rates often involves numerous public
participation hearings that provide anyone from the public to
weigh in on their perspectives. For general rate cases
involving investor-owned electric utilities, these public
hearings often occur within the territory of the given utility.
Schools, like other participants, can participate without much
expense. However, the capacity of school districts may be
limited as they juggle other priorities.
The case for schools. The author reports a number of schools in
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the San Diego region have recently experienced sharp increases
in their electricity bills. According to representatives of
those schools, the increases have come about, in large part,
because of rate increases. Many of these schools have coalesced
to participate in CPUC ratemaking proceedings. However, as
stated above, schools are limited in their ability to raise
revenues to cover costs related to participating in CPUC
proceedings. As a result, LEAs desire to participate in the
CPUC intervenor compensation program. A similar legislative
bill in 2012 also proposed to allow schools to participate in
the intervenor compensation program via representation from
county offices of education. This bill was held in Senate
Committee on Appropriations.
A slippery slope? It may be difficult to allow K-12 schools to
participate in the intervenor compensation program, but not
allow other government agencies that may also face similar
challenges in their ability to raise revenues to cover costs to
participate in CPUC proceedings. Ultimately, it's ratepayers
who shoulder the costs of compensating intervenors. However, in
the case of schools, it may be students who are affected if LEAs
can't participate in the intervenor compensation program.
According to the author, LEAs are among those who most affected
by proposed energy rate increases, and also cash-strapped to
afford the costs necessary to intervene in all CPUC rate
proceedings without the potential for reimbursement.
Prior/Related Legislation
SB 512 (Hill, 2015) would define a customer for purposes of
participating in the intervenor compensation program to include
a local government entity that is not a publicly owned public
utility that participates in a proceeding for purposes of
protecting the health and safety of the residents within their
jurisdiction after suffering a material loss, either in
significant damage to infrastructure or loss of life and
property. The bill will be considered on June 29th in the
Assembly Committee on Utilities and Commerce.
SB 1165 (Wright, 2012) would have allowed intervenor
compensation to be awarded for participation or intervention in
proceedings at the CPUC for a county office of education, on
behalf of any of the local educational agencies in whole or part
within the county or on behalf of itself, or for a community
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college district. Died in the Senate Committee on
Appropriations.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
San Diego Schools Coalition for Electricity Cost Reduction
(Source)
Association of California School Administrators
California Association of School Business Officials
California Educational Technology Professional Association
California School Boards Association
Contra Costa County Superintendents' Coalition
Coronado Unified School District
Fallbrook Union Elementary School District
Jamul-Dulzura Union School District
La Mesa-Spring Valley School District
Mountain Empire Unified School District
National School District
San Bernardino County District Advocates for Better Schools
San Diego County Office of Education
Santee School District
School Energy Coalition
School Project for Utility Rate Reduction, if amended
Small School Districts' Association
Solana Beach School District
South Bay Union School District
Sweetwater Union High School District
Valley Center-Pauma Unified School District
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: According to the author: "LEAs are
among those who are most affected by proposed energy rate
increases, and in order to advocate on the behalf of children
and schools, must hire attorneys and other experts at
substantial cost. In such cases, it is difficult for
cash-strapped LEAs to afford the costs necessary to intervene in
all CPUC rate proceedings without the potential for
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reimbursement. Furthermore, schools lack the ability to raise
money to accommodate sudden jumps in energy bills without
potentially taking valuable dollars out of classrooms."
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