BILL ANALYSIS Ó SB 1222 Page 1 Date of Hearing: June 29, 2016 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Mike Gatto, Chair SB 1222 (Hertzberg) - As Amended June 16, 2016 SENATE VOTE: 39-0 SUBJECT: Public Utilities Commission: reports: financing orders SUMMARY: Makes several changes to reports required of the California Public Utilities Commission (CPUC) to be provided to the Legislature, including: 1) changes the date by which the CPUC must submit specified reports; 2) changes the contents of and adds specified reports; 3) repeals provisions requiring the CPUC to submit specified reports; 4) extends the sunset date of the CPUC financing authority; 5) amends the Penal Code to constrain CPUC authority to exercise the power of arrest and serve warrants to enforce the Public Utilities Code; 6) updates the list of current reporting requirements imposed on public entities published by Legislative Counsel. Specifically, this bill: 1)Changes dates by which the CPUC must submit specified reports, including: a) Moves from January 10 to February 1 the annual report to the Legislature regarding all sources, funding amounts and expenditures related to specified CPUC-initiated SB 1222 Page 2 nonprofits in Public Utilities Code Section 910.4. b) Moves from January 1 to February 1 of each year the CPUC report to the Governor and Legislature on the CPUC's recommendations for a smart grid and related specified information noted in Public Utilities Code Section 913.2. c) Makes the quarterly report required in Public Utilities Code Section 913.5 an annual report on the progress each electrical corporation is making to meet the Renewable Portfolio Standard (RPS). d) Moves the date from January 1 to February 1 for the biennial report to the Legislature required in Public Utilities Code Section 913.10 and repeals the mention of the net-energy meeting pilot program. 2) Changes and additions to the contents of specified reports, including: a) Combining requirements from Sections 913.3, 913.4, and 913.6, in order to streamline and eliminate duplicative reports. b) Adds Public Resources Code Section 25229 and requires the CEC, rather than the CPUC, to annually report on recommendations to the CPUC regarding ratepayer-funded energy efficiency programs that are similar to those administered by the CPUC, California Energy Commission (CEC), the California Air Resources Board (ARB), California Advanced Energy and Transportation Fund Authority (CAETFA), the California Infrastructure and Economic Development Bank, the Department of Community SB 1222 Page 3 Services and Development Agency. c) Adds Public Utilities Code Section 380.3 and requires the CPUC to review CEC recommendations related to Public Resources Code Section 25229, added by this bill. d) Removes certain reporting requirements as specified in Public Utilities Code Section 454.55 and Public Utilities Code Section 454.56 and consolidates these requirements in Public Utilities Code Section 913.10. e) Adds Public Utilities Code Section 913.8 requiring the CPUC to report to the Legislature information related to various energy efficiency programs including those designed to benefit disadvantaged households as specified. Public Utilities Code Section 2870 is amended to reference these requirements. f) Adds Public Utilities Code Section 913.12 requiring the CPUC to report to the Legislature information related to the California Solar Initiative as specified. g) Amends Public Utilities Code Section 918.1 allowing the CPUC to hire an independent entity to assess the Transportation Enforcement Branch, as specified, and report to the Legislature regarding the assessment no later than February 1, 2017, and July 1, 2017, certain information. h) Amends Public Utilities Code Section 1046 to remove reference to a report within the definition of limousine. SB 1222 Page 4 i) In several areas, replaces references to the former Consumer Services Division of the CPUC which used to house investigators, who are now housed in other divisions, and replaces with more appropriate personnel references, including "railroad investigators" or "persons employed as investigators by the CPUC." 3) Repeals provisions requiring the CPUC to submit specified reports, including: a) Public Resources Code Section 25403 requires the CEC to submit the CPUC and to publicly owned electric utilities, recommendations designed to reduce wasteful, unnecessary, or uneconomic energy consumption resulting from rate structures, cost of service allocations, the disallowance of business expense and others. Requires the CPUC and publicly owned electric utilities to consider such recommendations within six months after the date it receive them. b) Public Utilities Code Section 318 requires the CPUC to conduct a zero-based budget by January 2015 for the entire agency. c) Public Utilities Code Section 350 required CAISO, in consultation with the CEC, CPUC, WECC, and concerned agencies in the western states to provide a report to the Legislature and the Oversight Board within six months of FERC that includes specified information. d) Public Utilities Code Section 353.13 (b) that requires the CPUC to prepare and submit a report to the Legislature, on or before, June 1, 2002, describing its proposed methodology for determining the new electric SB 1222 Page 5 rates required by January 1, 2003. e) Public Utilities Code Section 353.15(c) requires the CPUC, in consultation with the ARB or appropriate local air quality management district, and CEC, to evaluate the efficiency, emissions, and reliability of distributed energy resources with a capacity greater than 10 kilowatts and submit a report to the Legislature by 2003. f) Public Utilities Code Section 365.1(e) giving permissive authority of the CPUC to report to the Legislature on the efficacy of authorizing individual end-use residential customers to enter into direct transactions, including appropriate consumer protection. g) Public Utilities Code Section 454.1 required one-time reports due in 2003. h) Public Utilities Code Section 740.5(e) requires each electrical corporation participating in the "21st Century Energy System Decision" Decision 12-12-031 to submit a report to the CPUC by December 1, 2013. i) Public Utilities Code Section 747.5 requires the CPUC to review its policies concerning pricing of utility service and assess whether the pricing promotes energy efficiency by customers and report to the Legislature as soon as practicable. j) Public Utilities Code Section 910.5 requires the CPUC to report to the Legislature regarding specified activities of the California Public Utilities Foundation. SB 1222 Page 6 aa) Public Utilities Code Section 913.3 requires specified information related to implementing the RPS, including information related to workforce training/recruitment. bb) Public Utilities Code Section 913.6 requires a biennial report from the CPUC, in consultation with the CEC, to the Legislature on activities related to procurement, siting, permitting, transmission and other specified information, of the RPS. cc) Public Utilities Code Section 913.8 requires the CPUC to include information in the triennial report required in Section 913.7 related to how each electrical and gas corporation is implementing residential energy efficiency program in Public Resources Code §95943. dd) Public Utilities Code Section 913.9 to annually report to the Legislature on its efforts to identify ratepayer funded energy efficiency programs that are similar to those administered by the CEC, ARB, CAETFA in its annual report required in Section 913. ee) Public Utilities Code Section 913.11 requires the CPUC to provide a progress report to the Legislature of each odd-numbered year concerning policies on rates, equipment, and infrastructure implemented by the CPUC and other state agencies, to facilitate the use of electricity to power and natural gas to fuel low-emission vehicles. ff) Public Utilities Code Section 913.13 requires the CPUC to annually report to the Legislature on its implementation of Public Utilities Code Section 785. SB 1222 Page 7 gg) Public Utilities Code Section 918.2. The contents of this code section are consolidated into 918.1 to decrease duplicative language in the code. hh) Public Utilities Code Section 956 required one-time reports due in 2013. ii) Public Utilities Code Section 2714.5 required one-time reports due in 2008. jj) Public Utilities Code Section 2827.3 required one-time reports due in 2013. aaa) Public Utilities Code Section 2845 required one-time reports due in 2011. bbb) Public Utilities Code Section 2867.1 required one-time reports due in 2010 and 2014. ccc) Public Utilities Code Section 2872.5 required one-time reports due in 2008. ddd) Public Utilities Code Section 2892.1 required one-time reports due in 2008. eee) Public Utilities Code Section 3346 requires California Consumer Power and Annual Conservation Financing Authority to submit annual budget reports to fiscal committees of the Legislature as specified. SB 1222 Page 8 fff) Public Utilities Code Section 3368 required certain reports, as specified, that have since been submitted to the appropriate authority. ggg) Public Utilities Code Section 5371.4 required one-time reports due in 1992. hhh) Public Utilities Code Section 5381.5 required one-time reports due in 2014. 4)Extends the authority of the CPUC to issue financing orders from December, 2016 to June, 2022. 5)Amends the Penal Code to constrain CPUC authority to exercise the power of arrest and serve warrants to enforce the Public Utilities Code, as specified: a) Amends Penal Code Section 830.11 to allow only investigators and investigator supervisors this authority pending CPUC approval and training, as specified. b) This change is mirrored in amendments to Public Utilities Code Section 308.5. 6)Updates and revises the list Legislative Counsel prepares, publishes, and maintains of all reports that state and local agencies are required or requested by law to prepare and file with the Governor and/or the Legislature to reflect changes in reporting requirements made by this bill. EXISTING LAW: SB 1222 Page 9 1) Establishes the CPUC consisting of five members appointed by the Governor and approved by the Senate and that the Legislature has plenary power, unlimited by the other provisions of the Constitution but consistent with this article, to confer additional authority and jurisdiction upon the CPUC, to establish the manner and scope of review of CPUC action in a court of record. (California Constitution, Article XII, Section 1 et seq.) 2) Requires the CEC to submit to the CPUC and to publicly owned electric utilities, recommendations designed to reduce wasteful, unnecessary, or uneconomic energy consumption resulting from rate structures, cost of service allocations, the disallowance of business expense and others. Requires the CPUC and publicly owned electric utilities to consider such recommendations within six months after the date it receive them. (Public Resources Code Section 25403) 3) Requires the CPUC to conduct a zero-based budget for all of its programs by January 10, 2015. (Public Utilities Code Section 318) 4) Requires the California Independent Systems Operator (CAISO), in consultation with the CEC, CPUC, Western Electricity Coordinating Council (WECC), and concerned agencies in the western states to provide a report to the Legislature and the Oversight Board within six months of the Federal Energy Regulatory Commission (FERC) that includes specified information. (Public Utilities Code Section 350) 5) Requires the CPUC to prepare and submit a report to the Legislature, on or before, June 1, 2002, describing its proposed methodology for determining the new electric rates SB 1222 Page 10 required by January 1, 2003. (Public Utilities Code Section 353.13(b)) 6) Requires the CPUC, in consultation with the ARB or appropriate local air quality management district, and CEC, to evaluate the efficiency, emissions, and reliability of distributed energy resources with a capacity greater than 10 kilowatts and submit a report to the Legislature by 2003. (Public Utilities Code Section 353.15 (c)) 7) Requires each electrical corporation participating in the "21st Century Energy System Decision" Decision 12-12-031 to submit a report to the CPUC by December 1, 2013. (Public Utilities Code Section 740.5) 8) Requires the CPUC to review its policies concerning pricing of utility service and assess whether the pricing promotes energy efficiency by customers and report to the Legislature as soon as practicable. (Public Utilities Code 747.5) 9) Requires the CPUC to report to the Legislature regarding specified activities of the California Public Utilities Foundation. (Public Utilities Code Section 910.5) 10)Requires the CPUC to annually review the e-complaints program to ensure continued effectiveness. (Public Utilities Code Section 910.6) 11)Requires specified reporting by the CPUC, by each May 1, to the Legislature related to implementing the RPS including information related to costs, revenues, workforce training/recruitment and others. (Public Utilities Code Section 913.3) SB 1222 Page 11 12)Requires the CPUC to provide a quarterly report of the progress of each electrical corporation in meeting the RPS and other specified information. (Public Utilities Code Section 913.5) 13)Requires the CPUC, in consultation with the CEC, to report to the Legislature every January 1 of every even numbered year on the progress and status of procurement, permitting and siting, transmission facilities and other specified information related to the RPS. (Public Utilities Code Section 913.6) 14)Requires the CPUC to provide a report every three years to the Legislature on the energy efficiency and conservation programs it oversees, including authorized utility budgets. The report shall include information regarding each electrical corporation's and each gas corporation's implementation of energy efficiency for residential buildings. (Public Utilities Code Sections 913.7 and 913.8) 15)Requires the CPUC to annually report to the Legislature on its efforts to identify ratepayer funded energy efficiency programs that are similar to those administered by the CEC, ARB, and CAETFA in its annual report required in Section 913. (Public Utilities Code Section 913.9) 16)Requires the CPUC to provide a progress report to the Legislature of each odd-numbered year concerning policies on rates, equipment, and infrastructure implemented by the CPUC and other state agencies, to facilitate the use of electricity to power and natural gas to fuel low-emission vehicles. (Public Utilities Code Section 913.11) FISCAL EFFECT: Unknown. SB 1222 Page 12 COMMENTS: 1)Author's Statement: According to the author, "Senate Bill 1222 clarifies reporting obligations of the CPUC. This bill modifies the date reports are due to reflect the timing when report data is available, and to better conform with implementation cycles. Additionally, this bill augments CPUC efficiency for certain repetitive reports and reassigns to the CA Energy Commission the duty of preparing an annual statewide report on energy efficiency and the myriad statewide programs. SB 1222 also extends the sunset date on the CPUC's authority to refinance the costs from electric deregulation. In 1995, the state issued 20-year bonds to cover certain costs associated with that transition that are paid back by utility ratepayers. In recent years, interest rates have declined substantially and the short term finance rates stand near 0%. The CPUC has used this authority to save ratepayers money." 2)Background: There are several dozen reports required of the CPUC by the Legislature ranging from an annual work plan report, to triennial reports on energy efficiency programs, to quarterly reports related to the states progress in meeting the RPS. Unfortunately, many of these report requirements have been scattered throughout the Public Utilities Code and several are now outdated, with deadlines that have long passed. In an effort to better organize the Public Utilities Code and to have all required reports of the CPUC to the Legislature located in one area, last year, the CPUC sponsored legislation, SB 697 (Hertzberg), Chapter 612, Statutes of 2015, to shift many of these requirements to one location within the code, in the 910s area. This bill builds off the efforts from last year's bill. SB 1222 Page 13 This bill repeals many of the reports for which deadlines have passed, in many instances by over 10 years. However, this bill also includes some recent additions, such as the 2013 Budget statute requiring the CPUC to conduct a zero-based budget for all its programs by January 10, 2015. Although that exercise resulted in mixed results, there does not seem to be much appetite from the Senate Budget Committee to require another zero-based budget from the CPUC. Other report requirements are no longer applicable, such as the report regarding expenditures of the California Public Utilities Commission Foundation. REGISTERED SUPPORT / OPPOSITION: Support California Public Utilities Commission (Sponsor) Opposition None on file. SB 1222 Page 14 Analysis Prepared by:Darion Johnston / U. & C. / (916) 319-2083