BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 48|
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VETO
Bill No: SB 48
Author: Hill (D)
Amended: 9/9/15
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 9-0, 4/27/15
AYES: Hueso, Fuller, Cannella, Hertzberg, Hill, Leyva,
McGuire, Morrell, Wolk
NO VOTE RECORDED: Lara, Pavley
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SENATE FLOOR: 39-0, 6/1/15
AYES: Allen, Anderson, Bates, Beall, Block, Cannella, De León,
Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez,
Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu,
McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell,
Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak,
Wieckowski, Wolk
NO VOTE RECORDED: Berryhill
SENATE FLOOR: 38-1, 9/11/15
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,
Lara, Leno, Leyva, Liu, McGuire, Mitchell, Monning, Moorlach,
Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak,
Wieckowski, Wolk
NOES: Morrell
NO VOTE RECORDED: Mendoza
ASSEMBLY FLOOR: 79-0, 9/11/15 - See last page for vote
SUBJECT: Public Utilities Commission
SB 48
Page 2
SOURCE: Author
DIGEST: This bill proposes a suite of reforms of the governance
and operations of the California Public Utilities Commission
(CPUC), including, among others, requiring sessions in
Sacramento, applying the Code of Ethics from the Administrative
Procedures Act (APA) to administrative law judges (ALJs),
clarifying and augmenting the information the CPUC must provide
the Legislature in its annual report, and others.
ANALYSIS:
Existing law:
1)Establishes the CPUC with five members appointed by the
Governor and confirmed by the Senate and empowers it to
regulate privately owned public utilities in California.
(Article XII of the California Constitution; Public Utilities
Code §301 et seq.)
2)Requires the Governor to designate one of the commissioners as
president who is granted with certain authority not provided
to the other four commissioners. These powers include the
ability to direct the executive director, the general counsel
and staff, as well as, preside over all CPUC meetings, and
other powers. (Public Utilities Code §305)
3)Requires the CPUC to hold at least one hearing per calendar
month in the City and County of San Francisco. (Public
Utilities Code §306)
4)Authorizes the CPUC to appoint a general counsel to represent
the CPUC in all actions, to commence, prosecute or intervene
in proceedings as directed by the president, and to advise the
CPUC and each commissioner on all matters. (Public Utilities
Code §307)
5)Requires the president of the CPUC to annually appear before
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the appropriate legislative policy committees. (Public
Utilities Code §321.6)
6)Exempts the CPUC from the APA. (Public Utilities Code §1701)
7)Provides that the California Supreme Court and the court of
appeal of the CPUC shall be the venues to address appeals of
CPUC decisions. (Public Utilities Code §1701.6)
8)Establishes rules for state agencies to ensure meetings are
open, public and available to all, as noted in the
Bagley-Keene Open Meeting Act. Restricts a majority of members
of a state governing body from meeting without proper notice,
public access, and transparency. (Government Code §11120)
This bill:
1)Finds it is the intent of the Legislature that the CPUC should
be subject to the judicial review provisions of the
Bagley-Keene Open Meeting Act.
2)Requires the CPUC to make information about the operation of
the office of public advisor and other specified information
available on the Internet. Requires that information is
available regarding how the public and ratepayers can access
the CPUC's ratemaking process.
3)Requires the CPUC to hold no less than six sessions per year
in the City of Sacramento.
4)Directs the CPUC to modify their annual report, a document
that is published and provided to the Legislature by February
1st, to include performance criteria for both the CPUC and
executive director, and annually evaluate the executive
director based on the performance criteria, an accounting of
the CPUC's proceedings and other specified information.
5)Requires the CPUC to create a report regarding the cases
before the agency, including timeliness in resolving the
cases, approvals for rehearings, number of scoping memos
issued in each proceeding, number of orders issued, and other
items.
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6)Requires the ALJs to adhere to ethics provisions of the APA
for adjudicated proceedings.
7)Requires the CPUC to seek the views of those who are likely
affected by a decision or proceeding, except in adjudicated
cases, and requires the CPUC to demonstrate their efforts to
engage these residents within the text of the order.
8)Provides that actions to enforce the requirements of the
Bagley-Keene Open Meeting Act or the California Public Records
Act can be taken to the superior court.
9)Includes chaptering amendments related to AB 825 (Rendon,
2015) and the Budget Act of 2015.
Background
Fatal explosion in San Bruno. On September 9, 2010, a natural
gas pipeline owned by Pacific Gas and Electric Company (PG&E)
exploded in a residential neighborhood in the City of San Bruno.
Eight people died, dozens were injured, 38 houses were
destroyed and many more were damaged. The investigations by the
National Transportation Safety Board (NTSB) and an independent
review panel appointed by the CPUC found that PG&E mismanaged
their pipeline over decades, failed to adequately test the
strength of the pipeline and, more generally, valued profits
over safety. These same investigations also noted the CPUC's
inadequate oversight of PG&E.
Emails demonstrate "Culture of Conversation." During the summer
and fall of 2014, PG&E, bowing to legal pressure from the City
of San Bruno, began to release a growing number of emails
between the utility and CPUC officials. PG&E released 65,000
emails from over a five-year period many of which PG&E says it
believes "violated CPUC rules governing ex parte
communications." The initial release of emails exposed regular,
private, familiar communications between PG&E and certain CPUC
commissioners.
Criminal investigations opened. Since PG&E's initial release of
the emails, both the state Attorney General and the United
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States Department of Justice have opened investigations into
communications between the CPUC and regulated entities. PG&E
has fired three senior executives. A senior CPUC official has
resigned, while other top CPUC officials - including longtime
CPUC President Michael Peevey and Executive Director Paul
Clannon - have retired under pressure.
Audits reveal CPUC's efforts are lacking. In recent years, the
CPUC has undergone a number of audits related to its budget,
transportation program, natural gas pipeline safety program and
others. The findings of these audits have raised concerns about
the ability of CPUC to manage even some of its core functions.
A March 2014 audit by the State Auditor found that "the
commission lacks adequate processes for sufficient oversight of
utility balancing accounts to protect ratepayers from unfair
rate increases." The NTSB San Bruno investigation report and
subsequent audits found that CPUC's oversight of natural gas
pipeline safety efforts by the utilities needs improvements.
The CPUC quasi-independent, but still accountable to the
Legislature. The CPUC was established by constitutional
amendment as part of the sweep of progressive reforms in the
early 1900s. Then-Governor Hiram Johnson pushed for reforms of
the Railroad Commission, which became today's CPUC, as a largely
independent agency that would guard against the corrupting
influence of railroads. In demonstration of its independence,
the CPUC was located in San Francisco, a distance from the state
capitol in Sacramento. Article XII of the California
Constitution grants the CPUC authority to regulate public
utilities "subject to control of the Legislature" and grants the
Legislature "plenary power" to confer authority and jurisdiction
upon the CPUC, with the intent that the CPUC be accountable to
the Legislature.
Reporting to the Legislature. Current law requires the CPUC to
publish an annual workplan by February 1st and for the president
of the CPUC to appear annually before the relevant legislative
policy committees. SB 48 proposes several amendments to ensure
the CPUC's annual report more accurately reflects the agency's
progress related to timeliness of proceedings and the need to
ensure the work of the agency is evaluated based on establishing
annual goals and performance criteria. This bill also requires
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an annual performance evaluation of the executive director by
the CPUC based on the established workplan.
Code of ethics. Most state agencies follow the APA rules and
requirements for rulemakings and enforcement proceedings.
However, as a quasi-independent agency, the CPUC is exempt from
the APA and instead follows its own rules and procedures. SB 48
proposes to apply the APA Code of Ethics to adjudication
proceedings of the CPUC to align with other state agencies.
Appeals. A party wishing to appeal a decision of the CPUC can
appeal to the CPUC's own court or the California Supreme Court.
This unique limitation to CPUC processes means most decisions of
the agency stand as it is unlikely the Supreme Court will wish
to hear many of these cases. This bill proposes to allow any
action related to the Bagley-Keene Open Meetings Act or the
California Public Records Act to be petitioned at a superior
court, where there is greater opportunity to have a case heard.
Affected stakeholders. This bill proposes a requirement on the
CPUC to affirmatively seek out the views and input of those
impacted most by a proposed proceeding or investigation. One of
the many criticisms of the CPUC is the challenges of identifying
who may be interested and facilitating their participation as a
party in a proceeding. CPUC processes are legalistic and
archaic and can be off-putting to the average resident who wants
to participate. However, the CPUC should be encouraged to make
every feasible effort to connect with those most affected by
their decisions, whether it is a community affected by increased
water rates or low-income residents who can benefit from public
purpose programs.
Prior/Related Legislation
AB 825 (Rendon, 2015), which was vetoed, would have proposed a
suite of reforms of the CPUC to make the agency more accessible
and transparent to the public.
AB 1023 (Rendon, 2015), which was vetoed, would have proposed to
codify the summary log requirements currently required at the
CPUC for ratesetting proceedings and extends those requirements
to quasi-legislative proceedings.
SB 48
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SB 215 (Leno, 2015) proposed a suite of reforms of the CPUC
related to governance and operations, including disqualification
of commissioners to proceedings, modifying the role of the
president, and other reforms. Many of the provisions of this
bill were amended into SB 660. The bill is currently in the
Senate Energy, Utilities and Communications Committee.
SB 660 (Leno and Hueso, 2015), which was vetoed, would have
proposed reforms of the ex parte communications laws related to
ratesetting and quasi-legislative proceedings, addressed the
process for disqualifying a commissioner from a proceeding, and
other reforms of the CPUC.
SB 611 (Hill, as amended April 13, 2013) proposed some of the
same changes suggested in SB 48, including repealing some of the
powers of the president. The bill was successfully voted out of
Senate Committee on Energy, Utilities and Communications. It
was subsequently amended numerous times, and ultimately
chaptered into law with unrelated language regarding modified
limousines.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee:
1)Significant one-time information technology upgrades,
including contracting, systems development, staffing, and
implementation costs of approximately $7.5 million to fulfill
the public information requirements of this bill.
2)Ongoing annual costs of approximately $1.7 million to maintain
and operate the new information technology systems.
3)One-time costs of $120,000 a year for two years for a
proceeding to establish rules for outreach, and ongoing costs
of up to $400,000 per year to seek the views of interested
persons.
SB 48
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4)Ongoing annual legal costs of approximately $335,000 for the
workload associated with superior court reviews of
Bagley-Keene Open Meeting and Public Records Acts enforcement
actions.
5)Ongoing annual costs of up to $120,000 to hold at least six
meetings in Sacramento instead of San Francisco. This
includes the costs of meetings sites, equipment, and staff
travel.
6)Ongoing annual costs of $35,000 for increased reporting
requirements.
SUPPORT: (Verified10/21/15)
California Newspaper Publishers Association
Communications Workers of America, District 9 AFL-CIO
Sierra Club California
The Utility Reform Network
OPPOSITION: (Verified10/21/15)
None received
ARGUMENTS IN SUPPORT: The author argues that the current
governance structure, whereby the president of the CPUC is able
to direct the CPUC staff, is not working. The author cites a
string of incidents, including some involving management of
ratepayer money, management staff leadership failures, and
recent scandals, as evidence that the current system is broken.
The author commends the leadership of the CPUC for taking some
positive steps in recent months. However, he cautions these
changes should not be temporary. Therefore, permanent changes
are needed of the agency as defined in this bill.
ARGUMENTS IN OPPOSITION: The opponents expressed concerns
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that the current powers of the president should be preserved.
They argue that not having a strong president will result in the
ALJ having dominance in decision-making.
GOVERNOR'S VETO MESSAGE:
I am returning Senate Bill 18, Senate Bill 48 and Assembly
Bill 825 without my signature.
These bills include various provisions to increase
transparency and accessibility to the Public Utilities
Commission. I support the intent of these bills and many
of their proposed reforms, however some additional work is
needed to ensure that they achieve their intended purposes
and can be effectively implemented.
Allowing Bagley-Keene and Public Records Act lawsuits to be
brought against the Commission by any interested party in
Superior Court, rather than exclusively in the Courts of
Appeal and the California Supreme Court, will only result
in increased litigation and likely delay Commission
decision-making. It will not improve public access to
critical information about the actions of regulated
entities. Amending Section 583 of the Public Utilities
Code to require more information to be publicly available
is a much better way to ensure that the public is provided
with this information.
Moreover, the Commission needs sufficient funds to fully
accomplish some of these reforms, such as holding more
public meetings outside of San Francisco, shortening the
timeframe for concluding formal ratesetting and
quasi-legislative proceedings and expanding the scope of
the information required to be posted on the CPUC's web
site. I am directing the Commission to work with the
Legislature through the budget process to ensure the
necessary funds are dedicated to accomplish these needed
reforms.
ASSEMBLY FLOOR: 79-0, 9/11/15
SB 48
Page 10
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Wood, Atkins
NO VOTE RECORDED: Williams
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
11/4/15 14:11:57
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