BILL ANALYSIS Ó SB 660 Page 1 SENATE THIRD READING SB 660 (Leno and Hueso) As Amended September 4, 2015 Majority vote SENATE VOTE: 29-7 -------------------------------------------------------------------- |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+-----------------------+---------------------| |Utilities |15-0 |Rendon, Patterson, | | | | |Achadjian, Bonilla, | | | | |Burke, Dahle, Eggman, | | | | |Cristina Garcia, | | | | |Hadley, | | | | | | | | | | | | | | |Roger Hernández, | | | | |Obernolte, Quirk, | | | | |Santiago, Ting, | | | | |Williams | | | | | | | |----------------+-----+-----------------------+---------------------| |Appropriations |17-0 |Gomez, Bigelow, Bloom, | | | | |Bonta, Calderon, | | | | |Chang, Nazarian, | | | | |Eggman, Gallagher, | | SB 660 Page 2 | | | | | | | | | | | | |Eduardo Garcia, | | | | |Holden, Jones, Quirk, | | | | |Rendon, Wagner, Weber, | | | | |Wood | | | | | | | | | | | | -------------------------------------------------------------------- SUMMARY: Proposes reforms to the governance and operations of the California Public Utilities Commission (CPUC). Specifically, this bill: 1)Requires the CPUC to appoint a Chief Administrative Law Judge (ALJ) to be responsible for executive and administrative management and oversight of the Administrative Law Division. Authorizes the CPUC to delegate management and oversight functions to committees of two commissioners. 2)Requires the Chief ALJ, rather than the CPUC President, to keep a true and full record of all Commission proceedings. 3)Requires the CPUC to adopt procedures for the disqualification of commissioners due to bias or prejudice. Requires a commissioner or ALJ to be disqualified from ratesetting or adjudicatory proceedings for bias or prejudice based on specified criteria. 4)Authorizes the CPUC to delegate management and oversight functions to committees of two commissioners, and requires the full Commission to vote in an open meeting when assigning commissioners to a new proceeding. SB 660 Page 3 5) Modifies and expands ex parte communication rules and prohibitions. 6)Authorizes the CPUC to impose civil penalties on anyone who violates ex parte provisions. Authorizes the Attorney General to bring enforcement actions on CPUC decisionmakers and employees in the San Francisco Superior Court. 7)Makes other technical and clarifying changes to address chaptering out conflicts. FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill would have increased CPUC costs of an estimated $900,000, including $430,000 limited-term and $470,000 ongoing costs, to implement and enforce the provisions of the bill and hold additional public meetings, as necessary. COMMENTS: 1)Author's Statement: "[The] 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 operations of the [CPUC]. These emails have amply demonstrated that the relationships between the Commission and its regulated utilities are too close, and too informal, to inspire confidence that rate payers and non-utility interests are adequately represented by the Commission? In this high-powered, high-stakes environment, we must protect the impartiality of the Commission, not only in adherence to basic fairness, but also to ensure public confidence in CPUC decisions. What we face today is an erosion of public trust in the institution Californians rely upon to protect life safety and to keep utility monopolies in check. SB 660 will SB 660 Page 4 crack down on abuses of power, biased decisions, and secret communications; and bring new ethical standards and meaningful change to the CPUC." 2)Background: California Constitution Article XII establishes the CPUC and grants it the authority to regulate public utilities. The CPUC is governed by five full-time commissioners appointed by the Governor and confirmed by the State Senate. Commissioners are appointed for six-year terms and can only be removed by the Legislature. Beginning in 2014, Pacific Gas & Electric began releasing over 65,000 emails from a five-year period between utility executives and CPUC officials. The emails revealed discussions on subjects the CPUC was deliberating within a number of proceedings, many of which arguably violated CPUC's rules governing ex parte communications, including emails pertaining to the selection of ALJs for ratesetting cases. This bill proposes a suite of reforms on the governance and operations of the CPUC, including the delegation of oversight functions to commissioners and the Chief ALJ, as specified. In addition, this bill would require the CPUC to adopt procedures for the disqualification of commissioners due to bias or prejudice, as specified. 3)Ex Parte Communications: Ex parte communication is defined under the Public Utilities Code as "any oral or written communication between a decision maker and a person with an interest in a matter before the Commission concerning substantive, but not procedural issues, that does not occur in a public hearing, workshop, or other public proceeding, or on the official record of the proceeding on the matter." The purpose of ex parte communications is to ensure fairness and transparency in a decision-making process by preventing one party from gaining an unfair advantage. For regulatory agencies, ex parte communications are necessary to maintain SB 660 Page 5 the integrity of the decision-making process and the public's perception of fairness. This bill modifies and expands ex parte communication rules and prohibitions, and specifies penalties for violations. Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083 FN: 0002167