BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 512|
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UNFINISHED BUSINESS
Bill No: SB 512
Author: Hill (D)
Amended: 8/19/16
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE PUBLIC SAFETY COMMITTEE: 4-2, 4/28/15
AYES: Hancock, Leno, McGuire, Monning
NOES: Anderson, Stone
NO VOTE RECORDED: Liu
SENATE ENERGY, U. & C. COMMITTEE: 10-0, 1/13/16
AYES: Hueso, Fuller, Cannella, Hertzberg, Hill, Lara, McGuire,
Morrell, Pavley, Wolk
NO VOTE RECORDED: Leyva
SENATE APPROPRIATIONS COMMITTEE: 7-0, 1/21/16
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SENATE FLOOR: 37-0, 1/26/16
AYES: Allen, Anderson, Beall, Berryhill, Block, Cannella, De
León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock,
Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno,
Leyva, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell,
Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak,
Wieckowski
NO VOTE RECORDED: Bates, Liu, Wolk
ASSEMBLY FLOOR: 61-12, 8/29/16 - See last page for vote
SUBJECT: Public Utilities Commission
SOURCE: Author
SB 512
Page 2
DIGEST: This bill proposes a suite of reforms of the operations
and governance of the California Public Utilities Commission
(CPUC), including allowing intervenor compensation for certain
local governments, requiring specified information is available
to the public, requiring specified reporting of the CPUC
regarding the timeliness of proceedings, applying the Code of
Ethics from the Administrative Procedures Act (APA) to
administrative law judges (ALJs), and others.
Assembly Amendments add provisions that allow certain local
governments to be paid intervenor compensation when they
intervene or participate in CPUC proceedings for the purpose of
protecting health and safety. The amendments also require the
CPUC Policy and Planning Division to study the outreach efforts
undertaken by other state or federal utility regulatory bodies
and make recommendations. Other amendments made further tweaks
to existing language in the bill.
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)
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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)
7) Authorizes intervenors involving electric, water, and
telephone utilities to be compensated for making a
substantial contribution to proceedings of the CPUC, as
determined by the CPUC. (Public Utilities Code §1801 et
seq.)
8) Requires intervenor compensation to be awarded to eligible
intervenors in a timely manner, within a reasonable period
after the intervenor has made the substantial contribution to
a proceeding that is the basis for the compensation award.
(Public Utilities Code §1801.3)
9) Defines "compensation" to mean payments for all or part, as
determined by the CPUC, of reasonable advocate's fees,
reasonable expert witness fees, and other reasonable costs of
preparation for and participation in a proceeding, and
includes the fees and costs of obtaining an award, as
specified, and of obtaining judicial review, if any. (Public
Utilities Code §1802)
10)Defines "customer" to mean any of the following:
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a) A participant representing consumers, customers, or
subscribers of any electrical, gas, telephone, telegraph,
or water corporation that is subject to the jurisdiction
of the CPUC;
b) A representative who has been authorized by a
customer; or
c) A representative of a group or organization authorized
pursuant to its articles of incorporation or bylaws to
represent the interests of residential customers, or to
represent small commercial customers who receive bundled
electric service from an electrical corporation. (Public
Utilities Code §1802)
d) States that "customer" does not include any state,
federal, or local government agency, any publicly owned
public utility, or any entity that, in the CPUC's opinion
was established or formed by a local government entity for
the purpose of participating in a CPUC proceeding.
(Public Utilities Code §1802)
11)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)
This bill:
1) Requires the CPUC to hold its sessions at least once in each
calendar month, without specifying the location.
2) Applies the Administrative Adjudication Codes of Ethics to
CPUC administrative law judges.
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3) Requires the CPUC to seek the participation of those likely
to be affected by a decision, prior to determining the scope
of a proceeding. This provision does not apply to
adjudication cases.
4) Requires the CPUC Policy and Planning Division to study the
outreach efforts undertaken by other state or federal utility
regulatory bodies and make recommendations.
5) Requires the CPUC to include a docket card that lists the
public versions of all prepared oral and written testimony
and advice letter filings, protests, and responses on its
Internet Web site.
6) Requires the CPUC to make additional information available
on the Internet, including information on how members of the
public and ratepayers can gain access to the CPUC's
ratemaking process.
7) Expands and recasts an existing annual reporting requirement
to the Governor and Legislature to include, among other
things, the description of all scheduled proceedings that may
be considered by the CPUC during the calendar year, the
outcomes, and the performance criteria for the CPUC and the
executive director.
8) Permits intervenor compensation to be paid to certain local
government entities that intervene or participate in
commission proceedings to the extent that their involvement
was for the purpose of protecting health and safety, under
specified circumstances.
9) Clarifies that intervenor compensation, in proceedings at
the CPUC, is allowed for intervenors who made a substantial
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contribution in a proceeding, regardless of whether or not a
settlement is reached.
Background
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. This 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 unclear the exact benefit of this change. However,
considering the largely universal use of the APA by agencies
across the state and the country, a move to align the CPUC
towards more commonly used practices and procedure is likely an
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improvement.
CPUC intervenor compensation. The CPUC initiated its intervenor
compensation program in 1981 and state law was enacted in 1984
to govern the program. The program is intended to ensure that
intervenors - individuals and groups that represent the
interests of utility ratepayers - have the financial resources
to bring their concerns and interest to the CPUC at its
proceedings. Intervenors advocate for a variety of ratepayers,
including residential and small-business customers, minority
groups, and the disabled. State law allows intervenors that
participate in CPUC proceedings involving utilities, such as
electric, gas, and water utilities, to request compensation for
the costs associated with that participation. Public utilities
generally pay these intervenor compensation awards from the
amounts they collect from their ratepayers. These awards affect
utility rates so that utilities can recoup any amounts they pay
to intervenors.
Intervenor compensation process. An intervenor planning to
claim intervenor compensation must get involved in the
proceeding by filing a notice of intent to claim compensation
that indicates the planned extent and estimated costs of the
intervenor's planned participation in a proceeding. In
addition, to be eligible for compensation, the intervenor must
show that it meets various mandates that state law imposes,
including the need to demonstrate substantial contribution to
the CPUC proceeding. When an intervenor participates in a
proceeding they are excepted to contribute via factual
contentions, legal arguments, or policy recommendations. These
efforts can be demonstrated by bringing witnesses, submitting
testimony from multiple witnesses, raising issues when it
cross-examines the utility's witnesses during evidentiary
hearings, working with other intervenors to achieve a settlement
and others. When the CPUC issues a final decision on a
proceeding, the intervenor may file a claim for intervenor
compensation. The CPUC reviews the claim and adjusts up or down
based on their assessment of the intervenor's participation.
Additionally, intervenors must show "significant financial
hardship" to receive compensation, by submitting documents
demonstrating either that the intervenor could not afford to
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participate without undue hardship or that the economic interest
of the individual members is small in comparison to the cost of
effective participation in the proceeding.
Office of Ratepayer Advocates (ORA). 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. ORA also
supports environmental policies that benefit customers and seeks
to ensure that utility actions comport with CPUC rules and
California environmental laws and policy goals. In 2015, ORA
participated in 192 CPUC proceedings.
Intervenor compensation - government agencies not eligible. The
statute governing intervenor compensation excludes state,
federal, or local government agency, any public utility, or any
entity formed by a local government agency for the purpose of
participating in a CPUC proceeding from the definition of
customer. This exclusion is premised on the fact that
government agencies are funded with public dollars and have the
ability to increase taxes or fees to fund their activities.
Government agencies can participate as a party in any CPUC
proceeding. However, the Senate Energy, Utilities,
Communications Committee approved AB 2120 (Weber) which would
have allowed county offices of education to collect intervenor
compensation for participation on ratemaking proceedings. At the
time, the committee discussed the potential slippery slope of
allowing schools to receive intervenor compensation. As was
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noted in the analysis: It may be difficult to allow K-12 schools
to participate in the intervenor compensation program, but not
allow other government agencies that may also face similar
challenges in their ability to raise revenues to cover costs to
participate in CPUC proceedings. Ultimately, it's ratepayers
who shoulder the costs of compensating intervenors. This bill
would make communities eligible for intervenor compensation that
have suffered a catastrophic loss related to utility
infrastructure, as was the case for the City of San Bruno who
experienced a catastrophic gas pipeline explosion that decimated
a neighborhood. In its letter on the bill, the City of San Bruno
stated:
As we embarked on our participation in three
investigations related to the explosion in our
community we were shocked to discover that?.such
compensation is not available to local government
organizations like ours. Cities and counties that have
suffered catastrophe are least able to devote their
limited resource to the arcane and expensive task of
participation in CPUC proceedings - they have more than
enough to do to just respond, to address the needs of
their residents and to rebuild and recover.
Intervenor compensation when no settlement is reached. This
bill clarifies that compensation is allowed for intervenors who
made a substantial contribution in a proceeding, regardless of
whether or not a settlement is reached. This provision is
intended to end the era of "go-along, get-along," a practice
instituted by former-CPUC President Peevey to encourage
intervenors to enter into settlements in order to receive
intervenor compensation. Those who did not settle would not be
deemed to have made a substantial contribution and then,
therefore, ineligible for intervenor compensation, whether or
not their contribution was, indeed, substantial.
Related/Prior Legislation
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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 by the Senate Floor.
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.
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 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.:YesLocal: Yes
According to the Assembly Committee on Appropriations, increased
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CPUC costs of up to $1.1 million annually (Public Utilities
Reimbursement Account) to comply with the provisions of this
bill.
Most of the costs are associated with providing intervenor fees
to local governments, in particular, determining eligibility.
According to the Legislative Analyst's Office, there are over
5,300 local government agencies. This is more than 100 times
greater than the number of eligible intervenors that
participated in CPUC proceedings during any given year.
SUPPORT: (Verified8/29/16)
California Farm Bureau
City of Carmel-by-the-Sea
City of Laguna Beach
City of San Bruno
Sierra Club California
OPPOSITION: (Verified8/29/16)
None received
ARGUMENTS IN SUPPORT: According to the author, 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 and poor safety oversight
point toward poor management of the organization. This bill is
intended to reform the CPUC's governance structure by clearly
outlining the roles and responsibilities of Commissioners and
providing transparency and accountability.
ASSEMBLY FLOOR: 61-12, 8/29/16
AYES: Alejo, Arambula, Atkins, Baker, Bloom, Bonilla, Bonta,
Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu,
Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Gallagher,
SB 512
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Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez,
Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden,
Irwin, Jones-Sawyer, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, McCarty, Medina, Mullin, Nazarian,
O'Donnell, Olsen, Quirk, Ridley-Thomas, Rodriguez, Salas,
Santiago, Mark Stone, Thurmond, Ting, Weber, Wilk, Williams,
Wood, Rendon
NOES: Achadjian, Travis Allen, Bigelow, Brough, Chávez, Beth
Gaines, Grove, Harper, Jones, Melendez, Obernolte, Waldron
NO VOTE RECORDED: Dahle, Frazier, Kim, Mayes, Patterson,
Steinorth, Wagner
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
8/31/16 9:27:24
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