BILL ANALYSIS Ó
AB 2381
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
AB 2381
(Roger Hernández) - As Amended April 11, 2016
SUBJECT: Electricity: power outages: bill credits
SUMMARY: Requires an electrical corporation to establish a
utility service guarantee program to provide bill credits for
customer that experience power outages for over 24 hours.
Specifically, this bill:
1)Requires an electrical corporation to establish a utility
service guarantee program, by July 1, 2017, that do the
following:
a) Automatically provide each customer that experiences an
outage for a continuous 24 hour period a $30 bill credit
for each 24-hour period that the customer was without
power.
b) Require the California Public Utilities Commission
(CPUC), to adjust the amount of the bill credit by the
annual percentage increase in the Consumer Price Index
(CPI) for the prior calendar year, beginning January 1,
2018.
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2)Requires that any expense incurred by the program to be borne
exclusively by the shareholders of the electrical corporation
and prohibits such expenses to be recoverable either directly
or indirectly in rates.
3)Requires an electrical corporation to engage in public
outreach and educate the public about the program to increase
public awareness.
4)Requires an electrical corporation to report to the
Legislature on the number of customers provided a bill credit
and the total amount credited to customers through the
program, on or before July 2, 2018, and annually thereafter.
5)Requires an electrical corporation that, on or before January
1, 2017, has a program that provides a bill credit to each
customer that experiences an outage to update its program as
specified.
6)Specifies that the program requirement does not apply to
outages under any of the following circumstances:
a) The outage is planned and for maintenance.
b) The outage is caused by a moderate, severe, or
catastrophic storm condition.
c) The facilities, lines, equipment, or other property
necessary to restore power are inaccessible or are deemed
unsafe to access.
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d) The outage occurs during a declared emergency event or
cause related to force majeure.
e) The affected service location is vacant.
EXISTING LAW:
1)Gives the CPUC regulatory authority over public utilities,
including electrical corporations and gas corporations, as
defined. (Public Utilities Code Sections 218 and 222, et.
seq.)
2)Defines an "electrical corporation" to include every
corporation or person owning, controlling, operating, or
managing any electric plant for compensation within the state,
as specified. (Public Utilities Code Section 218)
3)Defines "local publicly owned electric utility" as a
municipality or municipal corporation operating as a "public
utility" furnishing electric service, a municipal utility
district furnishing electric service, a public utility
district furnishing electric service, an irrigation district
furnishing electric service, or a joint powers authority that
includes one or more of specified agencies and that owns
generation or transmission facilities, or furnishes electric
services over its own or its member's electric distribution
system. (Public Utilities Code Section 224.3)
4)Requires the CPUC to adopt inspection, maintenance, repair,
and replacement standards for distribution systems of
electrical corporations, as well as standards for operation,
reliability, and safety during periods of emergency and
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disaster, as specified. (Public Utilities Code Section 364)
5)Requires the CPUC to establish standards for disaster and
emergency preparedness plans, as specified. (Public Utilities
Code Section 768.6)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "There have been several recent power
outages that have left utility customers without power for
extended periods of time. Whether in Long Beach, or El Monte
in my Assembly District, individuals should not have to suffer
due to extended power outages. Despite existing programs to
reimburse customers for their losses, residents have told me
that these programs are difficult to access, and that they
cannot always document their losses. However, two utility
companies have existing automatic bill credit programs that
offer some relief. This bill builds off of the success of
these programs, and allows the state to codify and enforce
these programs."
2)Background: Power outages are not an uncommon occurrence and
can sometimes last a few hours to a few days. Such outages
not only create an inconvenience for residents and businesses,
but can also cause health and safety issues, as well as
economic damages to businesses and communities. Under current
law, the CPUC is required to adopt inspection, maintenance,
repair, and replacement standards for electric distribution
systems, as well as standards for operation, reliability, and
safety during periods of emergency and disaster. The CPUC is
also required to establish standards for disaster and
emergency preparedness plans.
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3)Major power outages in Southern California: There have been
several major power outages that have affected the Southern
California area, including the Southwest Power Outage and the
Southern California Windstorm Power Outages in 2011, and the
Long Beach power outages in 2015. On September 8, 2011, work
being performed on a transmission line in Arizona, caused a
power outage that affected approximately 1.4 million
electricity customers in California, Arizona, and Mexico.
Power was fully restored within 12 hours. In addition, from
November 30 to December 1, 2011, hurricane force winds caused
a power outage thought the Southern California region that
affected approximately 430,000 electric customers in Southern
California Edison's (SCE) territory. Power was not fully
restored until December 8, 2011. More recently, fires in
underground electric vaults caused two power outages that
affected thousands of residents and business in the downtown
Long Beach area. The two separate fires on July 15, 2015, and
July 30, 2015 took out power for Long Beach residents for
several days.
4)Outages and claims: In most cases, electric utilities provide
businesses and residents reimbursements if they suffered a
loss or damage due to a service interruption as a result of
the utility. Utilities judge each claim individually. For
example, according to SCE's Web site, SCE evaluates each claim
individually, and determines: a) if loses occurred due to
their negligence; b) how the incident happened; c) the extent
of damages; and d) what the law considers fair compensation.
Customers must submit proof and documentation to verify their
claims along with the application.
5)Existing Programs: Currently, both Pacific Gas and Electric
(PG&E) and SCE have established service guarantee programs.
PG&E's service guarantee program provides a $30 credit if it
fails to meet its service guarantees, including guarantees
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related to electric service disruptions and restoration.
PG&E's electric service disruption guarantee guarantees that
it will respond to customer calls reporting electric service
interruptions within four hours by restoring service or by
informing the customer when service is expected to be
restored, or it will automatically credit the customer $30.
PG&E's electric service restoration guarantee guarantees that
PG&E will restore electric service within 24 hours, or it will
provide the customer a $30 credit. Such guarantees do not
apply in certain circumstances such as when access to an area
is not available, during serious emergencies and/or storm
conditions, planned service interruptions, etc.
SCE's service guarantee program also provides a $30 credit if
it fails to meet its guarantees, including guarantees that
electric service will be restored within 24 hours or a $30
credit will be applied, with additional credits applied for
each succeeding 24 hour period without service. General
exceptions to SCE's guarantee also include denial of access by
public authority, maintenance outages, storm conditions,
emergency events, etc. The San Diego Gas & Electric Company
currently does not have a service guarantee program.
This bill requires an electrical corporation to establish a
utility service guarantee program, by July 1, 2017, that
automatically provides each customer that experiences an
outage for a continuous 24 hour period a $30 bill credit for
each 24-hour period that the customer was without power. This
bill requires an electrical corporation that, on or before
January 1, 2017, has an existing program that provides a bill
credit to each customer that experiences an outage to update
its program as specified.
The author may wish to consider an amendment to delay
implementation for those electrical corporations currently
without a program until 2018.
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6)Consumer Price Index (CPI): The CPI is a measure of the
average change in prices over time consumers pay for goods and
services. Beginning January 1, 2018, this bill requires the
CPUC, to adjust the amount of the bill credit by the annual
percentage increase in the CPI for the prior calendar year.
However, unlike wages, in which the purchasing power of a
worker increases or decreases as the price of goods and
services fluctuate with the economy, the credit proposed under
this bill arguable is more of a penalty in which the utility
pays a fee to the customer for its failure to uphold certain
service guarantees.
The author may wish to consider an amendment striking the
requirement for the CPUC to adjust the credit by the annual
percentage increase in the CPI.
7)Suggested Amendments:
Amend Section 740.13 as follows:
740.13. (a) An electrical corporation, on or before July 1,
2018 2017 , shall establish a utility service guarantee
program. The program shall do all of the following:
(1) Automatically provide each customer that experiences an
outage for a continuous 24-hour period a thirty-dollar ($30)
bill credit for each 24-hour period that the customer was
without power.
(2) The commission shall, beginning January 1, 2018, adjust
the amount of the bill credit by the annual percentage
increase in the Consumer Price Index for the prior calendar
year.
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740.13 (d) An electrical corporation, on or before July 2,
2019 2018 , and annually thereafter, shall report to the
Legislature on the number of customers provided a bill credit
and the total amount credited to customers through this
program.
8)Related Legislation:
AB 1800 (Hadley) 2016: Requires an electric utility to post
specified information relating to utility outage compensation
claims on its Internet Web site. Pending in the Assembly
Utilities and Commerce Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
Opposition
None on file.
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Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083