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 thebegin delete Public Utilities Commissionend deletebegin insert commissionend insert 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 specifiedbegin delete attributes.end deletebegin insert
attributes and to annually provide the Legislature with an update on the status of its review of balancing accounts.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
P3 1relating to the operations of the Public Utilities Commission in
2recent years. Those include, among other recommendations, both
3of the following:
4(1) The Legislature should amend Section 314.5 of the Public
5Utilities Code to remove the requirement that the Public Utilities
6Commission provide audit reports to the State Board of
7Equalization (Report 2013-109, Recommendation 15).
8(2) To
ensure proper oversight of balancing accounts to protect
9ratepayers from unfair rate increases, the Legislature should amend
10Section 792.5 of the Public Utilities Code to require the Public
11Utilities Commission to develop a risk-based approach for
12reviewing all balancing accounts periodically to ensure that the
13transactions recorded in the balancing accounts are for allowable
14purposes and are supported by appropriate documentation, such
15as invoices (Report 2013-109, Recommendation 1).
16(b) It is the intent of the Legislature in enacting this act to codify
17the California State Auditor’s legislative recommendations
18described in subdivision (a) to ensure that the Public Utilities
19Commission continues to prioritize the protection of ratepayers
20and remains accountable to legislative oversight.
Section 314.5 of the Public Utilities Code is amended
22to read:
The commission shall inspect and audit the books and
24records for regulatory and tax purposes (1) at least once every
25three years in the case of every electrical, gas, heat, telegraph,
26telephone, and water corporation serving over 1,000 customers,
27and (2) at least once every five years in the case of every electrical,
28gas, heat, telegraph, telephone, and water corporation serving 1,000
29or fewer customers. An audit conducted in connection with a rate
30proceeding shall be deemed to fulfill the requirements of this
31section. The commission shall post reports of the inspections and
32audits and other pertinent information on its Internet Web site.
Section 792.5 of the Public Utilities Code is amended
34to read:
(a) Whenever the commission authorizes any change
36in rates reflecting and passing through to customers specific
37changes in costs, except rates set for common carriers, the
38commission shall require as a condition of the order that the public
39utility establish and maintain a balancing account reflecting the
40balance, whether positive or negative, between the related costs
P4 1and revenues, and the commission shall take into account by
2appropriate adjustment or other action any positive or negative
3balance remaining in the balancing account at the time of any
4subsequent rate adjustment.
5(b) The commission shall develop a risk-based approach for
6reviewing
all balancing accounts periodically to ensure that the
7transactions recorded in the balancing accounts are for allowable
8purposes and are supported by appropriate documentation.
9(c) The commission shall maintain an inventory of the balancing
10accounts established pursuant to this section.
11(d) The commission shall require the public utility to record all
12related costs and revenues in the balancing account, unless those
13costs or revenues are specifically exempted by the commission.
14(e) The commission shall adopt balancing account review
15procedures that prioritize the review of the following balancing
16
accounts:
17(1) Balancing accounts with a quarter-end balance with more
18than a 10-percent differential from the balancing account’s
19authorized revenue amount.
20(2) Balancing accounts with an authorized revenue amount that
21is in the top 25th percentile of all balancing accounts.
22(3) Balancing accounts that have experienced volatile
23fluctuations in their quarterly balances over time.
24(4) Balancing accounts that have not been reviewed in the
25previous three years.
26(f) The commission may forgo the review of a balancing account
27pursuant to this section if the Office of Ratepayer Advocates
or
28an independent auditor plans to review or audit the balancing
29account. The balancing account review procedures adopted
30pursuant to subdivision (e) do not apply to the Office of Ratepayer
31Advocates, and the commission shall retain sole responsibility for
32the results of those reviews or audits conducted by the Office of
33Ratepayer Advocates or by independent auditors.
begin insertSection 910.7 is added to the end insertbegin insertPublic Utilities Codeend insertbegin insert, to
35read:end insert
The commission shall annually provide the Legislature
37with an update on the status of its review of public utilities’
38balancing accounts pursuant to Section 792.5. The commission
39shall provide this update as part of its annual report published
P5 1pursuant to Section 910 or by posting it in a conspicuous area of
2its Internet Web site, or both.
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