BILL ANALYSIS Ó SB 1222 Page 1 Date of Hearing: August 29, 2016 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Mike Gatto, Chair SB 1222 (Hertzberg) - As Amended August 19, 2016 SENATE VOTE: 39-0 SUBJECT: Public Utilities Commission: reports: financing orders SUMMARY: Makes various changes to the authorities of the California Public Utilities Commission (CPUC) and the reports required to be provided to the Legislature. Specifically, this bill: 1)Changes dates by which the CPUC must submit specified reports. 2)Changes and adds to the required contents of specified CPUC reports. 3)Repeals requirements for the CPUC to submit specified reports. 4)Extends CPUC's authority to issue financing orders from December 31, 2016, to June 30, 2022. SB 1222 Page 2 5)Limits CPUC's authority to serve warrants and make arrests to investigators. 6)Adds a January 1, 2023, sunset date to a specified reporting statute. This statute mandates electrical or gas corporations using ratepayer money to fund research and development projects report the findings of those projects to the Legislature. EXISTING LAW: 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.) Requires the California Energy Commission (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 receives them. (Public Resources Code Section 25403) 2)Establishes an "Electric Program Investment Charge" to collect funds for renewable energy programs and research, development, and demonstration programs. (Public Resources Code 25710) 3)Requires the CPUC to conduct a zero-based budget for all of SB 1222 Page 3 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 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 Section 747.5) SB 1222 Page 4 9)Establishes a Consumption Surcharge Fund to receive funds for public interest research and development, as specified. (Public Utilities Code Section 895) 10)Requires the CPUC to report to the Legislature regarding specified activities of the California Public Utilities Foundation. (Public Utilities Code Section 910.5) 11)Requires the CPUC to annually review the e-complaints program to ensure continued effectiveness. (Public Utilities Code Section 910.6) 12)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) 13)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) 14)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) 15)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. SB 1222 Page 5 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) 16)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, California Air Resources Board (CARB), and California Alternative Energy and Advanced Transportation Financing Authority in its annual report required in Section 913. (Public Utilities Code Section 913.9) 17)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: According to the Assembly Appropriations Committee: 1)Increases CEC costs of approximately $136,000 (1 personnel year) to compile information, conduct analysis, and prepare formal comments regarding energy efficient programs (Energy Resources Program Account or other special fund.) 2)No additional CPUC costs, potential minor savings. COMMENTS: SB 1222 Page 6 1)Purpose and Background: According to the author, this bill clarifies CPUC reporting obligations. According to the CPUC, there are several dozen reports required by the Legislature. Many of these report requirements have been scattered throughout the Public Utilities Code. Several are now outdated, with deadlines that have long passed. CPUC sponsored legislation last year, SB 697 (Hertzberg), Chapter 612, Statutes of 2015, shifted many reporting requirements to one location within the code in an effort to better organize the Public Utilities Code. This bill builds off efforts from last year. This bill also extends the sunset date on the CPUC's authority to refinance the costs of 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 are near zero percent. According to the CPUC, having refinancing authority saves ratepayers money. This bill extends that authority to June 30, 2022. 2)Report on Research and Development Projects: This bill was amended to require the CPUC to require each participating electrical corporation to jointly prepare and submit report on research and development projects, as specified. The report is to specifically provide information on the outcome of whether a project "resulted in any technological advancements or breakthroughs in promoting cyber security and grid integration." Following acceptance of a sufficient report by the CPUC, the report is to be submitted to the Legislature. This report appears to be the report specified in Public Utilities Code Section 740.5 (e)(2) that is required for research activities specified in Public Utilities Code Section 740.5 (a). A sunset date of January 1, 2023, is also included, similar to the sunset specified in Public Utilities Code Section 740.5(e)(3). SB 1222 Page 7 As written, the new section proposed in this bill appears as a stand-alone report. The striking of the reporting language in the existing code further delinks the relationship between this reporting requirement and the research and development activities specified in the current code. Without the reference to the research and development specified in Public Utilities Code Section 740.5, this bill could be referring to the cybersecurity and renewable integration research and development activities funded pursuant to Public Resources Code Section 25710, Public Utilities Code Section 895, shareholder-funded funded research and development activities related to cybersecurity and renewable integration, or all of the above. 3)Suggested Amendments: The author may wish to consider a clarifying amendment to reference the research and development projects specified in Section 740.5 to ensure that the language in this bill is not interpreted to create a new standalone report. The author may also with to consider chaptering out language to ensure that the code sections being amended in AB 1330 (Bloom, 2016) are not affected by the proposed amendments to the same code sections in this bill. 913.12. (a) The commission shall require each participating electrical corporation to prepare and submit to the commission, by 60 days following the conclusion of all research and development projects, a joint report summarizing the outcome of all funded projects pursuant to Section 740.5 , including an accounting of expenditures by the project managers and grant recipients on administrative and overhead costs and whether the project resulted in any technological advancements or breakthroughs in promoting cyber security and grid integration. The commission shall, within 30 days of receiving the joint report, determine whether the report is sufficient or requires revision and, upon determining that the SB 1222 Page 8 report is sufficient, submit the report to the Legislature. (b) This section shall remain in effect only until January 1, 2023, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2023, deletes or extends that date. REGISTERED SUPPORT / OPPOSITION: Support None on file. Opposition None on file. Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083 SB 1222 Page 9