BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: SB 512 Hearing Date: 1/13/2016
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|Author: |Hill |
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|Version: |1/4/2016 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Nidia Bautista |
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SUBJECT: Public Utilities Commission
DIGEST: This bill proposes a suite of reforms of the operations
and governance of the California Public Utilities Commission
(CPUC), including requiring the CPUC to hold no less than six
sessions per year in Sacramento, expand the information required
of the CPUC in its annual report and workplan to the Legislature
and Governor, require specific information on its website, apply
the Code of Ethics from the Administrative Procedures Act (APA)
to administrative law judges (ALJs), 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 office of the CPUC to be located in the City and
County of San Francisco. Requires the CPUC to hold at least
one session per calendar month in the City and County of San
Francisco. (Public Utilities Code §306)
3)Requires the CPUC to publish and maintain on its website
specified information, including a docket card that lists all
documents filed and all decisions or rulings issued in those
proceedings, as provided. (Public Utilities Code §311.5)
SB 512 (Hill) Page 2 of ?
4)Requires the CPUC to develop, publish and annually update an
annual workplan report that describes the scheduled ratemaking
proceedings and other decisions that may be considered during
the calendar year, along with other specified information to
be included in the workplan report. (Public Utilities §910)
5)Requires the CPUC to annually submit a report to the
Legislature on the number of cases where resolution exceeded
the time periods prescribed in scoping memos and days that
commissioners presided in hearings. (Public Utilities Code
§910.1)
6)Exempts the CPUC from the APA. (Public Utilities Code §1701)
This bill:
1)Requires the CPUC to hold its sessions at least one in each
calendar month in either the City and County of San Francisco
or the City of Sacramento, with no less than six sessions in
Sacramento each year.
2)Requires the CPUC to include in the required docket card all
public versions of all prepared written testimony and advice
letter filings, protests, and responses.
3)Requires the CPUC to make additional information available on
the internet, including operation of the office of public
advisor and information on how members of the public and
ratepayers can gain access to CPUC ratemaking process.
4)Reorganizes, clarifies and expands on the requirement for the
CPUC to publish an annual workplan report to the Legislature
and Governor. Specifically, this bill expands the report and
workplan to require the CPUC to establish performance criteria
for the CPUC and the executive director and an annual
evaluation of the performance of the executive director.
5)Expands the information required in the CPUC's annual report
to the Legislature to include information on the timeliness in
resolving cases, information on the disposition of
applications for rehearings, the number of scoping memos
issued in each proceeding, and the number of orders issued
extending the statutory deadlines.
6)Requires the CPUC to seek the view of those who are likely to
be affected by a proceeding prior to instituting a proceeding,
SB 512 (Hill) Page 3 of ?
except in adjudication cases.
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 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
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.
SB 512 (Hill) Page 4 of ?
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 512 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.
A more public "Public Utilities Commission." The often
legalistic processes at the CPUC can present a daunting
challenge for a resident to engage directly in proceedings. SB
512 attempts to improve the agency's efforts on public
engagement by requiring specified information on the website and
requiring the agency to seek out those who are likely affected
by potential proceedings and actions. The bill requires all
public versions of documents related to proceedings are included
in the docket card, which lists all documents for a given
proceeding. This bill also requires an annual performance
evaluation of the executive director by the CPUC based on the
established workplan. As well as information about how members
of the public can gain access to ratemaking proceedings.
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 512
proposes to apply the APA Code of Ethics to adjudication
proceedings of the CPUC to align with other state agencies. It's
SB 512 (Hill) Page 5 of ?
unclear the exact benefit of this change. However, considering
its largely universal use by agencies across the state and the
country, a move to align the CPUC towards more commonly used
practices and procedure is likely a better practice.
Prior/Related Legislation
AB 825 (Rendon, 2015) proposed a suite of reforms of the CPUC to
make the agency more accessible and transparent to the public.
The bill was vetoed by the Governor.
AB 1023 (Rendon, 2015) proposed to codify the summary log
requirements currently required at the CPUC for ratesetting
proceedings and extends those requirements to quasi-legislative
proceedings. The bill was vetoed by the Governor.
SB 48 (Hill, 2015) proposed a suite of reforms of the governance
and operations of the CPUC, including some of the same reforms
in SB 661 (Hill, 2015). The bill was vetoed by the Governor.
SB 215 (Leno and Hueso, 2016) proposes a suite of reforms of the
CPUC related to governance and operations, including
disqualification of commissioners to proceedings, reforming the
rules governing ex parte communications, and other reforms. The
bill is currently being considered in the Senate Committee on
Energy, Utilities and Communication.
SB 660 (Leno and Hueso, 2015) proposed reforms of the ex parte
communications laws related to ratesetting and quasi-legislative
proceedings, addresses the process for disqualifying a
commissioner from a proceeding, and other reforms of the CPUC.
The bill was vetoed by the governor.
SB 611 (Hill, as amended April 13, 2013) proposed reforms of the
CPUC, 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.: Yes Local: No
SUPPORT:
SB 512 (Hill) Page 6 of ?
None received
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: The author argues that "recent scandals
at the CPUC have highlighted the need for more visibility in the
interactions between commissioners and regulated utilities, and
a series of embarrassing audits of the CPUC's mismanagement of
public funds poor safety oversight point toward poor management
of the operation."
"SB 512 would reform the CPUC's governance structure, more
clearly outlining the roles and responsibilities of the
commissioners and staff, and it would end loopholes that allow
regulated utilities to influence CPUC commissioners outside the
public eye."
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