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. The bill would require the commission to maintain an inventory of the balancing accounts and would require public utilities to record 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.
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
P3 1Commission provide audit reports to the State Board of
2Equalization (Report 2013-109, Recommendation 15).
3(2) To
ensure proper oversight of balancing accounts to protect
4ratepayers from unfair rate increases, the Legislature should amend
5Section 792.5 of the Public Utilities Code to require the Public
6Utilities Commission to develop a risk-based approach for
7reviewing all balancing accounts periodically to ensure that the
8transactions recorded in the balancing accounts are for allowable
9purposes and are supported by appropriate documentation, such
10as invoices (Report 2013-109, Recommendation 1).
11(b) It is the intent of the Legislature in enacting this act to codify
12the California State Auditor’s legislative recommendations
13described in subdivision (a) to ensure that the Public Utilities
14Commission continues to prioritize the protection of ratepayers
15and remains accountable to legislative oversight.
Section 314.5 of the Public Utilities Code is amended
17to read:
The commission shall inspect and audit the books and
19records for regulatory and tax purposes (1) at least once every
20three years in the case of every electrical, gas, heat, telegraph,
21telephone, and water corporation serving over 1,000 customers,
22and (2) at least once every five years in the case of every electrical,
23gas, heat, telegraph, telephone, and water corporation serving 1,000
24or fewer customers. An audit conducted in connection with a rate
25proceeding shall be deemed to fulfill the requirements of this
26section. The commission shall post reports of the inspections and
27audits and other pertinent information on its Internet Web site.
Section 792.5 of the Public Utilities Code is amended
29to read:
(a) Whenever the commission authorizes any change
31in rates reflecting and passing through to customers specific
32changes in costs, except rates set for common carriers, the
33commission shall require as a condition of the order that the public
34utility establish and maintain a balancing account reflecting the
35balance, whether positive or negative, between the related costs
36and revenues, and the commission shall take into account by
37appropriate adjustment or other action any positive or negative
38balance remaining in the balancing account at the time of any
39subsequent rate adjustment.
P4 1(b) The commission shall develop a risk-based approach for
2reviewing
all balancing accounts periodically to ensure that the
3transactions recorded in the balancing accounts are for allowable
4purposes and are supported by appropriate documentation.
5(c) The commission shall maintain an inventory of the balancing
6accounts established pursuant to this section.
7(d) The commission shall require the public utility to record all
8related costs and revenues in the balancing account, unless those
9costs or revenues are specifically exempted by the commission.
10(e) The commission shall adopt balancing account review
11procedures that prioritize the review of the following balancing
12
accounts:
13(1) Balancing accounts with a quarter-end balance with more
14than abegin delete 10 percentend deletebegin insert 10-percentend insert differential from the balancing
15account’s authorized revenue amount.
16(2) Balancing accounts with an authorized revenue amount that
17is in the top 25th percentile of all balancing accounts.
18(3) Balancing accounts that have experienced volatile
19fluctuations in their quarterly balances over time.
20(4) Balancing accounts that have not been reviewed in the
21previous three years.
22(f) The commission maybegin delete foregoend deletebegin insert forgoend insert the review of a balancing
23account pursuant to this section if the Office of Ratepayer
24Advocates or an independent auditor plans to review or audit the
25balancing account. Thebegin insert balancing account review procedures
26adopted pursuant to subdivision (e) do not apply to the Office of
27Ratepayer Advocates, and theend insert commission shall retain sole
28responsibility for the results of those reviews or audits conducted
29by the Office of Ratepayer Advocates or by independent auditors.
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