BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2120 (Weber) - Public Utilities Commission: proceedings:
intervenor fees: customers
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|Version: April 26, 2016 |Policy Vote: E., U., & C. 7 - 2 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 1, 2016 |Consultant: Narisha Bonakdar |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 2120 expands the California Public Utilities
Commission's (CPUC) intervenor compensation program to include
county offices of education and consortiums of K-12 public
school districts or agencies that participate or intervene in a
proceeding related to gas or electricity rates.
Fiscal
Impact:
1)Unknown, potentially significant, costs (Utilities
Reimbursement Account) to the CPUC. (See staff comments).
2)Potential costs to the state as a ratepayer in the tens of
thousands. This bill increases the number of entities eligible
to receive intervenor compensation program awards. Utilities
are allowed to recover the full amount of the award in
customer rates within one year of the award. Given that the
state itself is a ratepayer, responsible for approximately
1-2% of the state's electricity use, this expansion could
increase the state's utility costs.
AB 2120 (Weber) Page 1 of
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Background:
The CPUC Intervenor Program. The CPUC's intervenor compensation
program (program) is intended to encourage and enable wide
customer participation in CPUC proceedings by removing cost as a
barrier to participation. The program started with utility rate
cases because of the CPUC's complex and lengthy proceeding
process, which acts much like a court, relying on judges,
attorneys, and expert witnesses before making final decisions.
The cases involve public hearings with written and oral
testimony, cross examination, opening and reply briefs, draft
decisions with comments from parties, and ultimately a final
decision.
Under the program, customers who had "significant financial
hardship" and who have made a "substantial contribution" to the
case, as determined by the CPUC, are eligible to have their
reasonable expenses covered, including attorney fees and expert
witness fees. Awards are paid for by the public utility that is
the subject of the proceeding.
Utilities subject to traditional cost-of-service ratemaking
(e.g. the electric utilities), may recover the expense of the
program from ratepayers. Where the utility is subject to
price-cap regulation, or where prices aren't regulated (e.g.
telecommunications utilities) the utility must manage the cost
of the program. In 2015, intervenors filed 98 claims and the
CPUC issued 158 decisions.
Local governments are explicitly exempt from participating in
the program premised on the fact that local government agencies
are funded with public dollars and have the ability to increase
taxes or fees to fund their activities. Proponents of this bill
argue that, while schools are public entities, they do not have
the same authority to generate funds through taxes or fees, and
therefore need intervenor compensation to participate in the
proceedings.
According to the CPUC, in response to State Audit Report
2012-118, the CPUC modified program procedures and augmented
staffing to achieve compliance with statutory requirements.
Based on the average number of claims filed each year and the
productivity of the average staff person, staffing is currently
sized to enable the CPUC to comply with the requirements of §
AB 2120 (Weber) Page 2 of
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1804(e) to resolve compensation requests within 75 days.
Currently, a staff person can process about 40 compensation
requests per year.
The impetus for the bill. According to the author, last year,
school districts in San Diego County experienced an
unprecedented and unanticipated surge in electricity costs
averaging 39%, with 33% of that increased attributable to
utility rate increases alone.
It is estimated that this increase cost San Diego County School
Districts more than $25 million in one year. This resulted in
an estimated 15% to 20% of the 2014-15 increase in Local Control
Funding Formula (LCFF) Base Grants fund being diverted away from
their intended purpose.
A coalition of 40 San Diego County School Districts and the
county Office of Education formed a coalition dedicated to
seeking protection from further drastic escalation of
electricity costs in order to preserve LCFF funds for their
intended purpose. Specifically, one of their recommendations
was to allow schools to participate in the CPUC intervenor
compensation proceedings. This bill implements that
recommendation.
Proposed Law:
This bill:
1)Defines "customer" to include a county office of education or
a consortium of public school districts or agencies in
addition to the existing definition.
2)Requires a consortium of public school districts or agencies
to only participate or intervene on behalf of a LEA in a CPUC
proceeding.
3)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.
Related
Legislation:1) SB 1165 (Wright, 2012) would have allowed intervenor
compensation to be awarded for participation or intervention in
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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
college district. This bill was held on suspense in the Senate
Appropriations Committee.
Staff
Comments: The cost of this bill is dependent upon how many of
the 130 newly-eligible local educational agencies (LEAs)
participate and seek reimbursement, and the reimbursement
amounts requested.
According to the CPUC:
While the current bill language is narrower than the original
language, which included telecommunications and water industry
proceedings, it encompasses more proceedings than just general
rate cases (GRC). There are many proceedings in addition to
GRCs that relate to or have an effect on gas and electricity
rates. Examples include applications to construct major new
infrastructure such as gas pipelines, or proceedings relating to
greenhouse gas cap and trade, charges for customer solar
installation and interconnection and metering, and tiered rate
structures. Accordingly, it is likely that more than 43
requests per year could be filed.
An increase of 43 claims per year result in a 44% increase over
the average number of claims filed over the last three years.
Without additional staff support resources, the CPUC would not
be able to process claims within 75 days, as required by §
1804(e)."
The number of claims and reimbursement data for the last three
years is below:
2013: 107 claims filed with an average of $102,018 per
claim
2014: 92 claims filed with an average of $80,089 per
claim
2015: 94 claims filed with an average of $85,208 per
claim
Staff notes that it is unclear how many LEA's would participate
in the intervenor compensation program, in which type of
proceedings they would participate, and the reimbursable costs
associated with that participation. However, it is likely that
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the expansion of the eligible participation will result in an
increase in staff costs for the CPUC to accommodate this
increase as well as increased costs to the state as a ratepayer
to reimburse utilities for intervenor compensation.
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