BILL ANALYSIS                                                                                                                                                                                                    

          |SENATE RULES COMMITTEE            |                        SB 631|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 

          Bill No:  SB 631
          Author:   Hueso (D)
          Vote:     21  

           SENATE ENERGY, U. & C. COMMITTEE:  10-0, 4/7/15
           AYES:  Hueso, Fuller, Cannella, Hertzberg, Hill, Lara, Leyva,  
            McGuire, Pavley, Wolk
           NO VOTE RECORDED:  Morrell


           SUBJECT:   Public Utilities Commission:  fees

          SOURCE:    Author

          DIGEST:  This bill authorizes 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.  


          Existing law:

          1)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  


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            line or service. (Public Utilities Code 1001)

          2)Establishes a fee of $75 for the application of a CPCN.  
            (Public Utilities Code 1904)

          This bill:

          1)Repeals the $75 currently charged by the CPUC for a CPCN  
            application and instead authorizes the CPUC to assess a fee  
            that better captures the current reasonable costs of  
            processing an application. 

          2)Caps the amount the CPUC can assess to no more than $500 and  
            allows 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 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,  

          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. 


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          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.:YesLocal:   No

          SUPPORT:   (Verified4/22/15)

          None received

          OPPOSITION:   (Verified4/22/15)

          None received

          ARGUMENTS IN SUPPORT:  According to the author, 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 statute. 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 "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  
          or long-distance telephone corporations.    

          Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
          4/22/15 16:20:11

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