BILL ANALYSIS                                                                                                                                                                                                    

                               Senator Ben Hueso, Chair
                                2015 - 2016  Regular 

          Bill No:          SB 631            Hearing Date:    4/7/2015
          |Author:    |Hueso                                                |
          |Version:   |2/27/2015    As Introduced                           |
          |Urgency:   |No                     |Fiscal:      |Yes             |
          |Consultant:|Nidia Bautista                                       |
          |           |                                                     |

          SUBJECT: Public Utilities Commission:  fees.

            DIGEST:    This bill would authorize the California Public  
          Utilities Commission (CPUC) to update for inflation the fee  
          charged on an application for utility service from $75  
          established nearly half a century ago, with a cap of $500.  

             1.   Existing law requires a utility, including telephone  
               corporations, to obtain a certificate of public convenience  
               and necessity (CPCN) from the CPUC prior to construction or  
               extension of a line or service. (Public Utilities Code  
             2.   Establishes a fee of $75 for the application of a CPCN.  
               (Public Utilities Code 1904)

          This bill would repeal the $75 currently charged by the CPUC for  
          a CPCN application and instead authorize the CPUC to assess a fee  
          that better captures the current reasonable costs of processing  
          an application. The bill would cap the amount the CPUC can assess  
          to no more than $500 and allow the fee to continue to grow with  
          the rate of the consumer price index. 


          A CPCN is a permit issued by the CPUC to a utility that wants to  
          provide service or construct or extend facilities or  
          telecommunications services. For example, a CPCN is required for  
          a natural gas utility who plans to extend a transmission line and  


          SB 631 (Hueso)                                      Page 2 of ?
          a telephone corporation who wants to provide service. The fee on  
          CPCN applications was established in statute in 1969.  
          Applications for CPCNs are classified as proceedings by the CPUC,  
          and as such involve the participation of an administrative law  
          judge, CPUC staff, and commissioners. The application process is  
          a lengthy and in-depth public process involving review of  
          California Environmental Quality Act (CEQA) documents and  
          need/cost analysis, with required public workshops, hearing, etc.

          Prior/Related Legislation
          SB 711 (Padilla, 2014) proposed to authorize the CPUC to increase  
          the CPCN application fee to an amount that would reasonably cover  
          the costs of processing the fee with a cap of $500. The bill also  
          proposed to shift the revenues from the application fee from the  
          General Fund to the CPUC. The bill died in the Assembly Committee  
          on Utilities and Commerce. 

          AB 1409 (Bradford, 2013) proposed several changes to the Public  
          Utilities Code including increasing the CPCN application fee. The  
          bill was vetoed by the Governor due to last minute amendments  
          that were unrelated to the CPCN application fee. 

          FISCAL EFFECT:                 Appropriation:  No    Fiscal Com.:  
                            Yes          Local:          No


          None on file.


          None on file. 

          ARGUMENTS IN SUPPORT:    The costs of processing a CPCN  
          application are not well reflected in the $75 fee established in  
          law nearly half a century ago. However, the CPUC does not have  
          authority to revise the application fee without a change in the  

          In 2013, the CPUC adopted Decision (D.) 13-05-035 which  
          acknowledged the need to increase the CPCN fee with legislative  
          approval. In that decision, the CPUC stated that had the CPCN  


          SB 631 (Hueso)                                      Page 3 of ?
          "application fee been adjusted for inflation, the fee in 2013  
          would be $432."

          According to the CPUC, the estimation of staff time involved in  
          processing a CPCN application can range from $500 to several  
          thousand dollars. The $75 CPCN application fee is significantly  
          less than related application processes that are less involved  
          and require less staff time, such as $250 for non-dominant  
          interexchange carriers (NDIECs) or long-distance telephone  
          ARGUMENTS IN OPPOSITION:    None on file.
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