BILL ANALYSIS                                                                                                                                                                                                    Ó



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          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.









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          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  








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            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) 









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          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.  








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            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:










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          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).   








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            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  








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            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
















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