BILL NUMBER: AB 2168	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Williams

                        FEBRUARY 17, 2016

   An act to amend Sections 314.5 and 792.5 of the Public Utilities
Code, relating to the Public Utilities Commission.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2168, as introduced, Williams. Public Utilities Commission
Audit Compliance Act of 2016.
   (1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including electrical
corporations, gas corporations, heat corporations, telegraph
corporations, telephone corporations, and water corporations. The
California Constitution authorizes the commission to establish rules,
examine records, and prescribe a uniform system of accounts for all
public utilities. The Public Utilities Act requires the commission to
inspect and audit the books and records of electrical corporations,
gas corporations, heat corporations, telegraph corporations,
telephone corporations, and water corporations for regulatory and tax
purposes. An inspection and audit is required to be done at least
every 3 years if the utility has over 1,000 customers and at least
every 5 years if the utility has 1,000 or fewer customers. The act
requires that reports of the inspections and audits and other
pertinent information be furnished to the State Board of Equalization
for use in the assessment of the public utilities.
   This bill, which would be known as the Public Utilities Commission
Audit Compliance Act of 2016, would delete the requirement that the
reports of the inspections and audits and other pertinent information
be furnished to the State Board of Equalization for use in the
assessment of the public utilities and instead would require the
commission to post reports of the inspections and audits and other
pertinent information on its Internet Web site.
   (2) Existing law directs the Public Utilities Commission to
require a public utility to establish and maintain a reserve account
whenever the commission authorizes a change in rates reflecting and
passing through to customers specific changes in costs to reflect the
balance between the related costs and revenues.
   This bill would require the commission to develop a risk-based
approach for reviewing those balancing accounts periodically to
ensure that the transactions recorded in the balancing accounts are
for allowable purposes and are supported by appropriate
documentation.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  This act shall be known, and may be cited, as the
Public Utilities Commission Audit Compliance Act of 2016.
  SEC. 2.  (a) The Legislature hereby finds and declares that the
California State Auditor, at the behest of the Joint Legislative
Audit Committee, has made multiple legislative recommendations
relating to the operations of the Public Utilities Commission in
recent years. Those legislative recommendations include both of the
following:
   (1) The Legislature should amend Section 314.5 of the Public
Utilities Code to remove the requirement that the Public Utilities
Commission provide audit reports to the State Board of Equalization
(Report 2013-109).
   (2) To ensure proper oversight of balancing accounts to protect
ratepayers from unfair rate increases, the Legislature should amend
Section 792.5 of the Public Utilities Code to require the Public
Utilities Commission to develop a risk-based approach for reviewing
all balancing accounts periodically to ensure that the transactions
recorded in the balancing accounts are for allowable purposes and are
supported by appropriate documentation, such as invoices (Report
2013-109).
   (b) It is the intent of the Legislature in enacting this act to
codify the California State Auditor's legislative recommendations
described in subdivision (a) to ensure that the Public Utilities
Commission continues to prioritize the protection of ratepayers and
remains accountable to legislative oversight.
  SEC. 3.  Section 314.5 of the Public Utilities Code is amended to
read:
   314.5.  The commission shall inspect and audit the books and
records for regulatory and tax purposes  (a)  
(1)  at least once  in  every three years in
the case of every electrical, gas, heat, telegraph, telephone, and
water corporation serving over 1,000 customers, and  (b)
  (2)  at least once  in  every
five years in the case of every electrical, gas, heat, telegraph,
telephone, and water corporation serving 1,000 or fewer customers. An
audit conducted in connection with a rate proceeding shall be deemed
to fulfill the requirements of this section.  Reports
  The commission shall post reports  of 
such   the  inspections and audits and other
pertinent information  shall be furnished to the State Board
of Equalization for use in the assessment of public utilities.
  on its Internet Web site. 
  SEC. 4.  Section 792.5 of the Public Utilities Code is amended to
read:
   792.5.   (a)    Whenever the commission
authorizes any change in rates reflecting and passing through to
customers specific changes in costs, except rates set for common
carriers, the commission shall require as a condition of 
such   the  order that the public utility establish
and maintain a reserve account reflecting the balance, whether
positive or negative, between the related costs and revenues, and the
commission shall take into account by appropriate adjustment or
other action any positive or negative balance remaining in 
any such   the reserve account at the time of any
subsequent rate adjustment. 
   (b) The commission shall develop a risk-based approach for
reviewing all balancing accounts periodically to ensure that the
transactions recorded in the balancing accounts are for allowable
purposes and are supported by appropriate documentation.