BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 62|
|Office of Senate Floor Analyses | |
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UNFINISHED BUSINESS
Bill No: SB 62
Author: Hill (D) and Pavley (D)
Amended: 8/30/16
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE ENERGY, U. & C. COMMITTEE: (pursuant to Senate Rule
29.10) (ROLL CALL NOT AVAILABLE)
ASSEMBLY FLOOR: Not available
SUBJECT: Public Utilities Commission: Office of the Safety
Advocate
SOURCE: Author
DIGEST: This bill codifies the Office of Safety Advocate within
the California Public Utilities Commission (CPUC), until January
1, 2020, to advocate for the continuous, cost-effective
improvement of the safety management and safety performance of
public utilities.
Assembly Amendments amend out the previous language relating to
the student financial aid program, Assumption Program of Loans
for Education (APLE), Governor's Teaching Fellowships Program
and insert language related to codifying the CPUC Office of
Safety Advocate.
ANALYSIS:
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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)Establishes an Office of Ratepayer Advocates (ORA) to
represent and advocate on behalf of public utility customers
with a goal to obtain the lowest possible rate for service
consistent with reliable and safe service levels with a
primary focus on residential and small commercial customers.
(Public Utilities Code §309.5)
3)Establishes a division of the CPUC responsible for consumer
protection and safety with responsibility for inspections,
surveillance, and investigation of the rights-of-way,
facilities, equipment, and operations of railroads and public
mass transit guideways, and for enforcing state and federal
laws, regulations, orders, and directives relating to
transportation of persons or commodities, or both, of any
nature or description by rail. (Public Utilities Code §
309.7)
4)Specifies the CPUC may supervise and regulate every public
utility in the state and may do all things, whether
specifically designated in this part or in addition thereto,
which are necessary and convenient in the exercise of such
power and jurisdiction. (Public Utilities Code § 701)
5)Requires the CPUC to develop formal procedures to consider
safety in a rate case application by an electrical corporation
or gas corporation. The procedures shall include a means by
which safety information acquired by the CPUC through
monitoring, data tracking and analysis, accident
investigations, and audits of an applicant's safety programs
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may inform the CPUC's consideration of the application.
(Public Utilities Code §750)
6)Specifies that whenever the CPUC finds that the rules,
practices, equipment, appliances, facilities, or service of
any public utility, or the methods of manufacture,
distribution, transmission, storage, or supply employed by it,
are unjust, unreasonable, unsafe, improper, inadequate, or
insufficient, the CPUC shall determine, and, by order or rule,
fix the rules, practices, equipment, appliances, facilities,
service, or methods to be observed, furnished, constructed,
enforced, or employed. (Public Utilities Code §761)
This bill:
1)Establishes the Office of Safety Advocate within the CPUC to
advocate for the continuous, cost-effective improvement of the
safety management and safety performance of public utilities.
Requires the Office to do all the following:
a) Advocate, as a party to CPUC proceedings and on behalf
of the interests of public utility customers, effective
public utility safety management and infrastructure
improvements.
b) Recommend improvements to the CPUC's safety management
policy and procedures and its safety culture.
c) Inform the official record on safety-related risks in
applicable CPUC proceedings and assist the CPUC in its
efforts to hold public utilities accountable for their safe
operation.
2)Requires the Office of Safety Advocate to provide, by January
10 of each year, the chairpersons of the appropriate fiscal
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and policy committees of each house of the Legislature all of
the following information:
a) The actions taken by the Office to recommend
improvements of the CPUC's safety management policy and
procedures and its safety culture related to oversight of
utilities.
b) The actions taken by the Office to recommend
improvements to public utility safety management policy and
procedures and safety culture.
c) The proceedings in which the Office participated and a
brief description of the testimony filed.
3)Requires that this bill remain in effect only until January 1,
2020, and is repealed, unless a statute deletes or extends
that date.
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.
Audits reveal CPUC's efforts are lacking. In recent years, the
CPUC has undergone a number of audits related to its budget,
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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.
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.
Office of Ratepayer Advocates. Within the CPUC is an
independent ORA to represent and advocate on behalf of the
interests of public utility customers and subscribers within the
jurisdiction of the CPUC. ORA's goal is to obtain the lowest
possible rate for service consistent with reliable and safe
service levels. For revenue allocation and rate design matters,
the office primarily considers the interests of residential and
small commercial customers. ORA has a staff of 147 staff,
consisting of engineers, economists, scientists, and auditors
with expertise in regulatory issues related to the electricity,
natural gas, water, and communications industries in California.
ORA's staff performs in-depth review and analyses of regulatory
policy issues and utility proposals, for funding that totals in
the tens of billions of dollars, in order to determine whether
utility requests are in the interest of the ratepayers who fund
utility activities through their utility bills. In 2015, ORA
participated in 192 CPUC proceedings.
CPUC budget proposal. For the 2016-17 Fiscal Year, the CPUC
requested and the State Budget authorized 11 permanent positions
and $1.694 million in funding to create a Division of Safety
Advocates, an independent division within the CPUC. The CPUC
requested establishing a Division of Safety Advocates in
response to, according to the CPUC, "unprecedented failures of
utility infrastructure over the past five years that threaten
the safety of Californians." According to the CPUC, "Creation
of a Division of Safety Advocates would allow the CPUC to have a
division dedicated to establishing a safety focus, testifying in
hearings, and exclusively prioritizing and advocating for the
protection and safety of Californians as a party to CPUC
proceedings."
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Why is a bill needed? In 2014, SB 900 (Hill, Chapter 552) was
signed into law and requires the CPUC to consider safety in
electrical and gas general rate cases. However, the CPUC has
struggled to ensure safety is a prominent consideration within a
general rate case. In fact, CPUC President Picker has stated to
the Legislature his interest to establish an independent office
that is focused on advocating for safety issues within CPUC
general rate-making proceedings stating there are shortcomings
to the existing universe of participants. The CPUC has
responsibility for safety of utilities and has a division
dedicated to safety - the Safety and Enforcement Division (SED).
However, the CPUC notes that the SED is focused on enforcement
of existing regulations and rules and has limited capacity to
participate in the rate-making process. On the other hand, ORA
is very active within rate cases and guides its advocacy with
the "goal is to obtain the lowest possible rate for service
consistent with reliable and safe service levels." As such, it
is appropriate that this bill includes a sunset on the proposed
Office of Safety Advocates to ensure it is providing the
anticipated added value to the rate-making process.
Related/Prior Legislation
SB 900 (Hill, Chapter 552, Statutes of 2014) required the CPUC
to consider safety in electrical and gas general rate cases.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee, the fiscal
impact is unknown.
SUPPORT: (Verified8/31/16)
None received
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OPPOSITION: (Verified8/31/16)
None received
ARGUMENTS IN SUPPORT: According to the author, "SB 62 fixes
problems with the CPUC's proposal for an in-house advocate for
safety. As the funding for the proposal was approved in this
year's Budget, the Legislature must provide statutory policy
direction to: 1) ensure that the CPUC cannot shift
responsibility for safety onto this advocate, as responsibility
lies ultimately with the CPUC, to 2) advocate for the
transparency of safety-related performance, and to 3) sunset the
advocate, so that it can't limp on in perpetuity without action
by the Legislature."
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
8/31/16 21:29:07
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