AB 2168, as amended, 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 rename the reserve accounts “balancing accounts” and 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.begin insert The bill would end insertbegin insertrequire the commission to maintain an inventory of the balancing accounts, and would require public utilities to include all related costs and revenues in their balancing accounts. The bill would require the commission to adopt balancing account review procedures that prioritize the review of balancing accounts with specified attributes.end insert
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
This act shall be known, and may be cited, as the
2Public Utilities Commission Audit Compliance Act of 2016.
(a) The Legislature hereby finds and declares that the
4California State Auditor, at the behest of the Joint Legislative Audit
5Committee, has made multiple legislative recommendations
6relating to the operations of the Public Utilities Commission in
7recent years. Those include, among other recommendations, both
8of the following:
9(1) The Legislature should amend Section 314.5 of the Public
10Utilities Code to remove the requirement that the Public Utilities
11Commission provide audit reports to the State Board of
12Equalization (Report 2013-109, Recommendation 15).
P3 1(2) To ensure
proper oversight of balancing accounts to protect
2ratepayers from unfair rate increases, the Legislature should amend
3Section 792.5 of the Public Utilities Code to require the Public
4Utilities Commission to develop a risk-based approach for
5reviewing all balancing accounts periodically to ensure that the
6transactions recorded in the balancing accounts are for allowable
7purposes and are supported by appropriate documentation, such
8as invoices (Report 2013-109, Recommendation 1).
9(b) It is the intent of the Legislature in enacting this act to codify
10the California State Auditor’s legislative recommendations
11described in subdivision (a) to ensure that the Public Utilities
12Commission continues to prioritize the protection of ratepayers
13and remains accountable to legislative oversight.
Section 314.5 of the Public Utilities Code is amended
15to read:
The commission shall inspect and audit the books and
17records for regulatory and tax purposes (1) at least once every
18three years in the case of every electrical, gas, heat, telegraph,
19telephone, and water corporation serving over 1,000 customers,
20and (2) at least once every five years in the case of every electrical,
21gas, heat, telegraph, telephone, and water corporation serving 1,000
22or fewer customers. An audit conducted in connection with a rate
23proceeding shall be deemed to fulfill the requirements of this
24section. The commission shall post reports of the inspections and
25audits and other pertinent information on its Internet Web site.
Section 792.5 of the Public Utilities Code is amended
27to read:
(a) Whenever the commission authorizes any change
29in rates reflecting and passing through to customers specific
30changes in costs, except rates set for common carriers, the
31commission shall require as a condition of the order that the public
32utility establish and maintain a balancing account reflecting the
33balance, whether positive or negative, between the related costs
34and revenues, and the commission shall take into account by
35appropriate adjustment or other action any positive or negative
36balance remaining in the balancing account at the time of any
37subsequent rate adjustment.
38(b) The commission shall develop a risk-based approach for
39reviewing
all balancing accounts periodically to ensure that the
P4 1transactions recorded in the balancing accounts are for allowable
2purposes and are supported by appropriate documentation.
3
(c) The commission shall maintain an inventory of the balancing
4accounts established pursuant to this section.
5
(d) The commission shall require the public utility to record all
6related costs and revenues in the balancing account, unless those
7costs or revenues are specifically exempted by the commission.
8
(e) The commission shall adopt balancing account review
9procedures that prioritize the review of balancing accounts that
10have any of the following:
11
(1) A quarter-end balance with
more than a 10 percent
12differential from the balancing account’s authorized revenue
13amount.
14
(2) An authorized revenue amount that is in the top 25th
15percentile of all balancing accounts.
16
(3) Experienced volatile fluctuations in its quarterly balances
17over time.
18
(4) Not been reviewed in the previous three years.
19
(f) The commission may forego the review of a balancing
20account pursuant to this section if the Office of Ratepayer
21Advocates or an independent auditor plans to review or audit the
22balancing account. The commission shall retain sole responsibility
23for the results of those reviews or audits delegated to, and
24conducted by, the Office of Ratepayer Advocates or by independent
25auditors.
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