BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 48 (Hill) - Public Utilities Commission. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 6, 2015 |Policy Vote: E., U., & C. 9 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 18, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 48 would make various changes to the internal governance, annual reporting requirements, and meeting requirements of the California Public Utilities Commission (CPUC). Fiscal Impact: Ongoing annual costs in the tens of thousands of dollars and possibly into the low thousands to the Public Utilities Reimbursement Account (special) to have at least six meetings in Sacramento instead of San Francisco. One-time costs of $160,000 annually for two years followed by estimated annual costs of $360,000 to the Public Utilities Reimbursement Account (special) to seek views of interested persons. Unknown possible legal costs to the Public Utilities Reimbursement Account (special) to respond to claims under the Bagley-Keene Open Meeting Act. SB 48 (Hill) Page 1 of ? Minor and absorbable costs to the Public Utilities Reimbursement Account (special) for additional meetings in order for the commission to direct the executive director, attorney, and staff. Background: The CPUC is established in the California Constitution and is governed by five full-time commissioners, appointed by the governor and confirmed by the Senate, and staffed by approximately 1,000 individuals who, together, regulate privately owned electric, natural gas, telecommunications, water, railroad, rail transit, and passenger transportation companies. CPUC staff includes four personal advisors to each commissioner, except five 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. The CPUC is subject to the Bagley-Keene Open Meeting Act, which requires a state body to take actions only at a public meeting following the public posting of an agenda describing the item for proposed action at least 10 days prior to the meeting. Any private congregation of a majority of the members of a state body at the same time and place to hear, discuss, or deliberate upon any item that is within its jurisdiction is unlawful. However, only the Supreme Court and the court of appeal have the jurisdiction over any order or decision of the CPUC, including Bagley-Keene Open meeting requirements. Proposed Law: This bill would make various changes to the operation and internal governance of the CPUC. Specifically, this bill would: Allow actions to enforce the Bagley-Keene Open Meeting Act or the California Records Act to be brought to the superior court. Remove the president's ability to solely direct the executive director, the attorney, and other staff of the commission and instead require the staff to be directed by the entire commission. SB 48 (Hill) Page 2 of ? Require that the CPUC hold at least six sessions annually in Sacramento. Require that all written testimony submitted in a formal proceeding of the CPUC to be posted on its website. Require the commission to include performance criteria for the commission and executive director as well as an evaluation of the executive director for the past year based on those criteria in its annual workplan. Expand the existing required annual report regarding cases before the agency to also include information on the number of scoping memos issued in each proceeding and a description of the commission's timeliness in resolving cases. Subject the commission's adjudication proceedings to the Administrative Adjudication Code of Ethics (GOV§11476 et seq.) Explicitly require the commission to seek the views of those who are likely to be affected by a proceeding, except in adjudication cases, and to describe these efforts in the text of the order instituting the investigation or proceeding. Related Legislation: SB 215 (Leno) would make similar revisions to the CPUC in regards to the powers of the president and would establish the criteria for when an administrative law judge should be excused from a proceeding. SB 215 is currently in the Senate Energy, Utilities, and Commerce Committee. SB 660 (Leno, Hueso) would make various changes to the ex parte communication laws related to ratesetting and SB 48 (Hill) Page 3 of ? quasi-legislative proceedings at the CPUC. SB 660 is set to be heard in the Senate Appropriations Committee on May 18, 2015. SB 33 (Peace) Chapter 509, Statutes of 1999 put the executive director and general counsel directly under the control of the president and authorize the Governor to appoint the president. Staff Comments: In order to have at least six meetings in Sacramento instead of San Francisco, the CPUC estimates costs in the tens of thousands of dollars to the low hundreds of thousands of dollars. The costs in the low range would include travel costs for approximately 40 people including CPUC staff and the commissioners for six meetings. The higher range would be include facility costs should no state or complimentary facilities that meet the CPUC's needs be available. The CPUC notes that the meeting facility would need to be of sufficient size, have a space for closed meetings, be compatible with the CPUC's video/audio contractor as all meetings are webcasted and audiocasted. This bill would require the CPUC to actively seek the views of parties that could be affected by an rulemaking, including those that might benefit from the rulemaking. To implement this requirement, the CPUC would need a proceeding to establish the rules so that the outreach is performed uniformly and transparently. There would also be ongoing costs to implement the outreach. These implementation costs would depend on the process established by the rulemaking, but the CPUC anticipates that would need one analyst for every five proceedings. Given that there were 15 proceedings in 2014, it anticipates needing three Public Utilities Regulatory Analysts III to carry out the outreach annually plus some supervisorial assistance and legal support for an annual cost of approximately $360,000 annually. Staff notes that according to the author's office, this language was modeled after an Executive Order issued by President Obama aimed at improving regulation and regulatory review by ensuring that regulations are adopted in a process that involves public opinion. It is open to interpretation on what level of effort is called for by this bill. Arguably it is possible to fulfill the requirements of this provision with a notice in the major SB 48 (Hill) Page 4 of ? newspapers as well as a more intensive effort that involved individually contacting known interest groups. The proceeding establishing these rules would define the necessary level of effort, though staff believes it is reasonable to assume that the CPUC would be compelled to take a relatively more involved effort in its outreach efforts as a result of this bill. This bill would make it easier to bring forward an action against the CPUC under the Bagley-Keene Open Meeting Act by allowing such actions to be brought to the superior court in addition to the court of appeal and the Supreme Court. If the CPUC is complying with the requirements of the Bagley-Keene Open Meeting Act, there should seemingly be minimal costs associated with this provision. However, the CPUC notes that it may have costs associated with baseless claims that may be filed in order to undermine or delay CPUC proceedings. Staff notes that while it may be reasonable to assume that a party may use baseless claims as a strategic move especially given that the CPUC addresses controversial issues, any estimate of such costs would be speculative. This bill will change the internal governance of the CPUC by specifying that the executive director, chief counsel, and staff operated under the direction of the commission as a whole, not just the president. The CPUC notes potential costs, ranging from minimal to hundreds of thousands of dollars, associated with this change as more decisions would need to be made in meetings in order for the commission to provide direction. Staff notes that historically the commission was responsible for directing the staff. This changed in 1999 with the passage of SB 33 (Peace) which gave the president the sole power to direct staff in an attempt to improve accountability. Given that there were no potential savings anticipated with the empowering of the president when SB 33 was heard by the Assembly Appropriations Committee, staff assumes that the costs of removing the powers of the president are likely to be minor and absorbable. -- END -- SB 48 (Hill) Page 5 of ?