BILL ANALYSIS Ó
AB 2168
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ASSEMBLY THIRD READING
AB
2168 (Williams)
As Amended April 4, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Utilities |15-0 |Gatto, Patterson, | |
| | |Burke, Chávez, Dahle, | |
| | |Eggman, Cristina | |
| | |Garcia, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Hadley, | |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | |Obernolte, Quirk, | |
| | |Santiago, Ting, | |
| | |Williams | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |20-0 |Gonzalez, Bigelow, | |
| | |Bloom, Bonilla, | |
| | |Bonta, Calderon, | |
AB 2168
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| | |Chang, Daly, Eggman, | |
| | |Gallagher, Eduardo | |
| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Jones, Obernolte, | |
| | |Quirk, Santiago, | |
| | |Wagner, Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Revises California Public Utilities Commission (CPUC)
reporting requirements on inspections and audits and modifies
current auditing requirements. Specifically, this bill:
1)Deletes the requirement for the CPUC's to furnish reports on
inspections and audits and other pertinent information to the
Board of Equalization (BOE) and instead requires the CPUC to
post the specified documents on its Internet Web site.
2)Requires the CPUC to develop a risk-based approach for
periodically reviewing balancing accounts to ensure that
ratepayer funds are used for allowable purposes and are
supported by appropriate documentation. Requires the CPUC to
maintain an inventory of the balancing accounts.
3)Requires the CPUC to require public utilities to record all
related costs and revenues in the balancing accounts, unless
specific costs or revenues are exempted by the CPUC.
4)Requires the CPUC to adopt balancing account review procedures
that prioritize certain types of accounts, as specified.
5)Requires the CPUC to forego the required balancing account
review if the Office of Ratepayer Advocates or an independent
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Auditor plans to review or audit the account. Requires the
CPUC to retain sole responsibility for the results of the
delegated reviews or audits.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, additional costs are absorbable within existing
resources.
COMMENTS:
1)Purpose: According to the author, this bill codifies the
State Auditor's recommendations to the Legislature regarding
the CPUC's review of utility balancing accounts and the
release of utility audit and inspection reports.
2)Background: In March 2014, the State Auditor issued a report
in response to a request by the Joint Legislative Audit
Committee concerning the CPUC oversight of the utility
balancing accounts of the entities it regulates. The Auditor
found the CPUC lacked adequate oversight over balancing
accounts, and did not always comply with legal audit
requirements. Additionally, for over three decades, the CPUC
failed to provide audit results to the BOE for tax purposes.
This bill addresses the audit findings and implements its
recommendations.
3)Balancing Accounts: A balancing account is a tracking
mechanism used to ensure a utility recoups from ratepayers any
costs the CPUC has authorized. The balancing account also
ensures ratepayers do not pay more than they should. If a
balancing account has a balance indicating an over- or
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under-collection from ratepayers, the utility will generally
seek to adjust future rates to either refund or recoup the
balance.
7)Checking to see if the work was done: An important gap that
is not addressed by auditing and reviewing balancing accounts
is a requirement for the CPUC to verify that expenditures for
the work it has authorized is actually completed.
When the utilities ask for funding from ratepayers it presents
papers and testimony to justify the request for funding from
ratepayers. In the areas of maintenance and operations, these
requests are typically detailed on the number of poles to be
replaced, miles of wires to replace, and transformers to
replace in the case of an electrical corporation. Similarly,
the gas corporations submit testimony on gas pipeline
maintenance and operations. Once the CPUC has approved the
requests for funding the CPUC allows the regulated companies
to redirect spending. There may be unknown safety
consequences if, for example, a utility redirected funds and
failed to replace aging power poles. In the next cycle of
funding requests the utility could again request funds for
replacing poles, wires, and transformers. The CPUC might not
know that the funds it had previously authorized for replacing
those poles, wires and transformers were redirected to another
purpose.
If the analysis of balancing accounts is based solely on
impacts related to unfair rate changes it might not see the
impact on future rates due to power outages or facility
failures, possibly a result of redirecting funds away from
maintenance and operations.
It is unclear if the review of safety-related program
expenditures will occur during balancing account audits or if
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there will be additional reviews of the same balancing
accounts at some later date. The CPUC may want to consider
coordinating or consolidating these activities so that safety
and ratepayer protection are addressed simultaneously.
Analysis Prepared by:
Sue Kateley / U. & C. / (916) 319-2083 FN:
0002761