BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2271


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          Date of Hearing:  May 18, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2271 (Quirk) - As Amended March 17, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill requires the California Public Utilities Commission  
          (PUC) to establish a procedure for the independent peer review  
          of research programs proposed by an electrical corporation.  
          Specifically, this bill:  








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          1)Requires the PUC to establish a procedure for independent peer  
            review of research programs proposed by an electrical  
            corporation to be conducted upon the PUC's receipt of a  
            proposed research program.


          2)Requires the PUC to make the results of the review, upon  
            approval of the research program, available to the public on  
            its website. 


          3)Specifies research programs do not include programs funded  
            pursuant to the Public Interest Energy Research,  
            Demonstration, and Development Program (PIER) or the Electric  
            Program Investment Charge program (EPIC).


          FISCAL EFFECT:


          The PUC will require additional permanent staff, at the cost of  
          about $390,000 per year, to identify proposals, administer  
          contracts with independent research entities, and ensure  
          researchers do not have conflicts of interest.  Additionally,  
          the PUC estimates expert review contract costs to be $250,000  
          per year for five years. 


          CEC and ARB costs are minor and absorbable.


          COMMENTS:


          1)Purpose.  According to the author, it is essential to have the  
            proper evaluation of the scientific and technical merits of  
            the research the PUC approves.  This bill will require an  








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            independent peer review to be conducted once the PUC receives  
            a proposed program. This bill will also require the results of  
            the review to be posted on the PUC 's website. 
            


            Research proposals likely subject to this requirement are  
            those conducted pursuant to many proceedings, including those  
            addressing electric vehicles, demand response, distribution  
            resource planning, and long term procurement planning. 


            


          2)Background.  PUC-regulated electrical corporations conduct and  
            administer research. These research programs are often  
            included in PUC rate cases to recover costs through rates. The  
            PUC may allow electrical corporations to use ratepayer funds  
            if it determines investments made with those funds will be in  
            the public interest and are just and reasonable. Between 2009  
            and 2014, the PUC approved about $400 million in ratepayer  
            funds for research and development. The majority of these  
            funds were approved without review by experts in the field of  
            research being funded, because the PUC does not have such a  
            process in place. Some funds have been awarded to sole-source  
            projects.



            By requiring an independent third-party review, this bill will  
            increase the quality of research performed, and provide  
            additional credibility to the research and funding process.  
            Further transparency will be added by publishing the results  
            of the review.  












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          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081