BILL ANALYSIS Ó AB 2271 Page 1 Date of Hearing: May 18, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2271 (Quirk) - As Amended March 17, 2016 ----------------------------------------------------------------- |Policy |Utilities and Commerce |Vote:|14 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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: AB 2271 Page 2 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 AB 2271 Page 3 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. AB 2271 Page 4 Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081