BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 215


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          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,         |                     |








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          |                |     |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  








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            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  








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            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.








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          Analysis Prepared by:                                             
                          Sue Kateley / U. & C. / (916) 319-2083  FN:  
          0004480