BILL ANALYSIS Ó
AB 2902
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, Chair
AB 2902
(Committee on Utilities and Commerce) - As Introduced March 3,
2016
SUBJECT: Public Utilities Commission: staff offices
SUMMARY: Authorizes staff offices of the California Public
Utilities Commission (CPUC) to be located in Los Angeles,
Sacramento, or San Francisco. Specifically, this bill:
1)Clarifies existing law to state that CPUC staff shall be
located in Los Angeles, Sacramento, or San Francisco.
2)Clarifies that staff offices of the CPUC shall be located in
Los Angeles, Sacramento, or San Francisco if the location
meets the economic and efficiency requirements of the state,
as determined by the Department of Finance.
EXISTING LAW:
1)Establishes the CPUC with five members appointed by the
Governor and confirmed by the Senate, empowers it to regulate
privately-owned public utilities in California, and specifies
that the Legislature may prescribe additional classes of
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private corporations or other persons as public utilities.
(California Constitution Article XII and Public Utilities Code
Section 301)
2)Requires the CPUC to be located in the City and County of San
Francisco and hold its sessions at least once in each calendar
month in the City and County of San Francisco. (Public
Utilities Code Section 306)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Background and Historical Context: The California Constitution
Article XII establishes the CPUC and grants it the authority
to regulate public utilities. The Public Utilities Code
requires that the CPUC be centralized in San Francisco. The
CPUC was initially created in 1911 as the Railroad Commission
in an effort to address public concerns over the uncontrolled
power of the Southern Pacific railroad company. In 1912, the
Legislature passed the Public Utilities Act, expanding the
CPUC's regulatory authority to include natural gas, electric,
telephone, and water companies as well as railroads and marine
transportation companies. The impetus behind centralizing CPUC
power in San Francisco was to separate utility powers from
Sacramento to prevent further corruption. As a result, utility
executives relocated to San Francisco where they live and work
closely with the CPUC officials and staff.
2)CPUC Governance and Staff: The CPUC is governed by five
full-time commissioners appointed by the Governor and
confirmed by the State Senate. Commissioners are appointed
for six-year terms and can only be removed by the Legislature.
The CPUC is staffed by approximately 1,000 individuals who,
together, regulate privately-owned electric, natural gas,
telecommunications, water, railroad, rail transit, and
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passenger transportation companies. CPUC staff includes four
personal advisors to each commissioner, five personal advisors
to the president, as well as the 42 judges of the
Administrative Law Division - attorneys, engineers, and
accountants who prepare the docket for all CPUC official
filings, including maintenance of the official record of
proceedings.
3)San Bruno Pipeline Explosion: On September 9, 2010, a natural
gas pipeline owned by the Pacific Gas and Electric Company
(PG&E) exploded in a residential neighborhood in the City of
San Bruno, killing eight people, injuring dozens, and
destroying thirty-eight houses. The subsequent investigation
found that PG&E had been mismanaging their pipeline for
decades, and had failed to adequately test the strength and
durability of the pipeline. However, the incident also
exposed the CPUC's complete lack of oversight, allowing PG&E
to exploit a very lax system of regulation and review. As a
result of the investigation, the CPUC levied $2.25 billion in
fines against PG&E to be used to enhance safety practices and
oversight. PG&E protested this recommendation, and the CPUC
referred the proposed penalty against PG&E to the
Administrative Law Division for assignment to an
Administrative Law Judge (ALJ). The ALJ was to review the
recommendation and propose a final decision on the matter,
which the CPUC would later vote to adopt, modify, or reject.
4)Relationships between Utility Executives and CPUC Officials:
Beginning in 2014, PG&E began releasing over 65,000 emails
from a five year period between utility executives and CPUC
officials. The emails revealed discussions on subjects the
CPUC was deliberating within a number of proceedings, many of
which arguably violated CPUC's rules governing ex parte
communications, including emails pertaining to the selection
of ALJs for ratesetting cases. Many of the emails exposed
regular, private, familiar communications between PG&E and
certain CPUC commissioners, including former CPUC President
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Michael Peevey. In September 2015, the California Attorney
General opened an independent investigation on the CPUC over
issues relating to the 2010 San Bruno pipeline explosion and
the selection of an ALJ for a ratesetting case.
Transparency in governmental decision-making remains a
critical link to gaining the public's trust. It would be
beneficial to clarify that although the CPUC must be located
in San Francisco, staff may be located in other parts of the
state. This clarification will break down barriers to solving
transparency issues by helping to dilute the concentration of
CPUC officials and utility executives in the same region of
the state.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
Opposition
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None on file.
Analysis Prepared by:Darion Johnston / U. & C. / (916) 319-2083