BILL NUMBER: AB 2168	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 14, 2016
	AMENDED IN ASSEMBLY  APRIL 28, 2016
	AMENDED IN ASSEMBLY  APRIL 4, 2016
	AMENDED IN ASSEMBLY  MARCH 17, 2016

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 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:

  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 include, among other recommendations, 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, Recommendation 15).
   (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, Recommendation 1).
   (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 (1) at least once every three
years in the case of every electrical, gas, heat, telegraph,
telephone, and water corporation serving over 1,000 customers, and
(2) at least once 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. The commission shall post reports of the inspections and
audits and other pertinent information 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 the order that the public utility establish
and maintain a balancing 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 the
balancing 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.
   (c) The commission shall maintain an inventory of the balancing
accounts established pursuant to this section.
   (d) The commission shall require the public utility to record all
related costs and revenues in the balancing account, unless those
costs or revenues are specifically exempted by the commission.
   (e) The commission shall adopt balancing account review procedures
that prioritize the review of the following balancing accounts:
   (1) Balancing accounts with a quarter-end balance with more than a
 10 percent   10-percent  differential
from the balancing account's authorized revenue amount.
   (2) Balancing accounts with an authorized revenue amount that is
in the top 25th percentile of all balancing accounts.
   (3) Balancing accounts that have experienced volatile fluctuations
in their quarterly balances over time.
   (4) Balancing accounts that have not been reviewed in the previous
three years.
   (f) The commission may  forego   forgo 
the review of a balancing account pursuant to this section if the
Office of Ratepayer Advocates or an independent auditor plans to
review or audit the balancing account. The  balancing account
review procedures adopted pursuant to subdivision (e) do not apply to
the Office of Ratepayer Advocates, and the  commission shall
retain sole responsibility for the results of those reviews or audits
conducted by the Office of Ratepayer Advocates or by independent
auditors.