BILL ANALYSIS Ó SB 215 Page 1 SENATE THIRD READING SB 215 (Leno and Hueso) As Amended August 18, 2016 Majority vote SENATE VOTE: 37-0 -------------------------------------------------------------------- |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+-----------------------+---------------------| |Utilities |14-0 |Gatto, Patterson, | | | | |Burke, Chávez, Eggman, | | | | |Cristina Garcia, | | | | |Eduardo Garcia, | | | | |Hadley, | | | | | | | | | | | | | | |Roger Hernández, | | | | |Obernolte, Quirk, | | | | |Santiago, Ting, | | | | |Williams | | | | | | | |----------------+-----+-----------------------+---------------------| |Appropriations |15-0 |Gonzalez, Bigelow, | | | | |Bloom, Bonilla, Bonta, | | | | |Chang, Eggman, Eduardo | | | | |Garcia, Jones, | | SB 215 Page 2 | | |Obernolte, Quirk, | | | | |Santiago, Weber, Wood, | | | | |McCarty | | | | | | | | | | | | -------------------------------------------------------------------- SUMMARY: Provides a variety of changes to address issues of governance and accountability of the California Public Utilities Commission (CPUC). Among other provisions, this bill: 1)Requires the CPUC to adopt procedures for the disqualification of Commissioners due to bias or prejudice. Requires a Commissioner or Administrative Law Judge (ALJ) to be disqualified from ratesetting or adjudicatory proceedings for bias or prejudice based on specified criteria. Prohibits CPUC procedures from authorizing a Commissioner or ALJ to rule on a motion to disqualify oneself from presiding over a proceeding. 2)Recasts and revises laws relating to ex parte communications with regard to CPUC proceedings including the explicitly ban of the practice of "one-way" ex parte communication. 3)Authorizes the Attorney General to bring an enforcement action in Superior Court against a decision-maker or employee of the CPUC for knowingly and willfully violating or failing to comply with the ex parte communication requirements. 4)States legislative intent that anyone seeking to influence CPUC actions is subject to all legal and ethical standards under the Political Reform Act (PRA). 5)States that the technical rules of evidence need not apply in SB 215 Page 3 the hearings, investigations, and proceedings of the commission and also states that no informality in the manner of taking testimony shall invalidate a decision of the commission. FISCAL EFFECT: According to the Assembly Appropriations Committee, increased CPUC costs in the range of $250,000 to $600,000 (Public Utilities Reimbursement Account). COMMENTS: 1)Purpose: In 2010, the City of San Bruno experienced a pipeline explosion that caused horrible suffering and loss of life. According to the author, a release of emails related to the San Bruno disaster and the San Onofre nuclear plant closing has revealed serious flaws in the management structure and operation of the CPUC. The author further contends these emails amply demonstrate the relationships between the CPUC and its regulated utilities are too close, and too informal, to inspire confidence that ratepayer and non-utility interests are adequately represented. This bill provides reforms to the operations of the CPUC, including the regulation of ex parte communications. 2)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. The CPUC regulates privately-owned electric, natural gas, telecommunications, water, railroad, rail transit, and SB 215 Page 4 passenger transportation companies. CPUC staff includes four personal advisors to each of four Commissioners, five to the President. Additional staff include 42 judges of the Administrative Law Division and numerous attorneys, engineers and accountants who prepare the docket for all CPUC official filings, including maintenance of the official record of proceedings. 3)CPUC Deficiencies: The CPUC has recently undergone a number of audits related to its budget, transportation program, natural gas pipeline safety program, and other internal functions. The audit findings raised questions regarding the CPUC's ability to manage its core functions. An audit by the State Auditor in March of 2014 found the Commission lacks adequate process for the sufficient oversight of utility balancing accounts to protect ratepayers from unfair rate increases. A recent report commissioned by the CPUC found ex parte communications to be frequent, pervasive, and at least sometimes outcome-determinative in ratesetting cases. This bill requires reports of ex parte communications to include substantive information on oral communications. This bill addresses audit findings of mismanagement ex-parte communication violations, and failed governance. 4)Technical Rule of Evidence: This bill includes a statement that the technical rules of evidence need not apply in the hearings, investigations, and proceedings of the commission and also states that no informality in the manner of taking testimony shall invalidate a decision of the commission. This provision is substantially similar to existing statute, Public Utilities Code 1701 except that it adds the word "evidence" and limits this provision only to quasi-legislative proceedings. SB 215 Page 5 Analysis Prepared by: Sue Kateley / U. & C. / (916) 319-2083 FN: 0004480