BILL ANALYSIS
SB 960
Page 1
PROPOSED CONFERENCE REPORT NO. 1 - (August 28, 1996)
SB 960 (Leonard)
As Amended August 28, 1996
SENATE: 0-36 (June 24, 1996) ASSEMBLY: 46-12(June 20, 1996)
SENATE CONFERENCE: 3-0 ASSEMBLY CONFERENCE: 3-0
Ayes: Peace, Leonard, Sher Ayes: Conroy, Kuykendall,
Martinez
Original Committee Reference: U&C
SUMMARY: Reforms the California Public Utilities Commission's,
PUC, by enhancing Commissioner involvement in decisionmaking, and
improving the quality and timeliness of commission decisions.
Specifically, the conference committee amendments:
1) States the intent of the Legislature to enhance commissioner
involvement in decisionmaking and intent to establish
reasonable time periods for resolution of proceedings.
2) Establishes an advocacy division with a director appointed by
and serving at the pleasure of the Governor, subject to Senate
confirmation, and would require the division's budget to be
separately identified.
3) Authorizes the commission to determine whether a proceeding
requires a hearing.
4) Authorizes the commission to assign one or more commissioners
and administrative law judges to oversee cases.
5) Prescribes separate procedures that the commission determines
are either quasi-legislative, adjudication, or ratesetting
cases.
6) Requires the commission to submit various reports regarding
needed revisions of law, case management matters, and
categorization of cases.
7) Provides that specified provisions become operative on January
1, 1997, and would be repealed January 1, 2002.
FISCAL EFFECT: Unknown, minor cost to the PUC.
EXISTING LAW:
1) Grants the PUC broad responsibilities for the regulation of
public utilities including electricity, gas,
telecommunications, and water companies.
2) Requires the PUC to create a Consumer Advocacy Division.
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AS PASSED BY THE SENATE, this bill:
1) Stated the intent of the Legislature to study several issues
including the
need for Energy Resources Conservation and Development Commission;
whether the regulatory authority over water corporations should
remain with the PUC; whether there should be more commissioners or
fewer commissioners serving the PUC; whether the PUC should
continue to have regulatory authority over all public utilities,
or whether each category of public utilities should be regulated
by a separate state agency; and the nature of ex-parte
communications with respect to the PUC.
2) Removed the PUC's regulatory authority over highway carriers.
3) Required the PUC to hold at least 50 percent of its conferences
in the City of Sacramento.
4) Required at least one commissioner to be present for the
opening and closing arguments for proceedings regarding policy
making investigations.
The Assembly Amendments removed most provisions of the bill.
Remaining was Legislative intent regarding restructuring and
reforming the PUC and requiring the commissioner who is assigned
to a case to be present during the proceedings.
BACKGROUND: With the evolving regulatory structure governing
public utilities, particularly with the deregulation of the
electricity, telecommunication, natural gas, and trucking
industries, the responsibilities of the commission are often
antiquated and unnecessary. While a few industries remain
monopolistic (e.g. water utilities), many have experienced
competitive forces introduced in their respective industries.
There have been many attempts to merge and streamline the PUC and
the California Energy Commission. Most recently, in January of
1995, the Assembly Utilities and Commerce Committee and the Senate
Energy, Utilities and Communications Committee conducted several
workshops and informational hearings regarding PUC reform. In
July of 1995, feeling pressure from the Legislature, the PUC
conducted Vision 2000 workshops which were to identify the
strengths and weaknesses and strategies for improving the
effectiveness of the PUC.
During these proceedings several key issues surfaced including:
removing the PUC from the constitution, increasing the number of
commissioners, making the commissioners more accountable in
decision making, moving the the Division of Ratepayer Advocacy to
another agency, and several other concerns.
Beginning January 1, 1998, this bill implements a four year
experimental procedure focusing on making commissioners more
accountable for the decisions they render.
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The current process generally incudes the following steps: (1) A
prehearing conference, presided over by an Administrative Law
Judge (ALJ), may be held to identify the parties involved and the
major issues that need to be addressed; (2) An assigned
commissioner (selected by the President of the PUC) and ALJ are to
preside over the hearing where witnesses present supporting or
opposing testimony. In practice, commissioners rarely become
actively involved in the case until the ALJ submits the proposed
decision to the commissioner; (3) Upon completion of the hearing
the ALJ issues a draft decision which is circulated for comments
among the parties. After comments have been received and
incorporated into the proposed decision, the commissioner issues
the decision which is presented to full commission for approval;
(4) Parties dissatisfied
with the decision can apply for a petition for modification or a
petition for rehearing.
In the new experimental process, consistent with due process, the
commission will determine if a proceeding requires a hearing. At
that time the commission determines if the case is
quasi-legislative, adjudication, or ratesetting.
Quasi-legislative cases are cases that establish policy.
Adjudication cases are enforcement cases and complaints.
Ratesetting cases are those cases which establish rates.
Adjudication cases shall be heard by an ALJ or a commissioner with
ex parte communications prohibited. If the ALJ's or
commissioner's decision is appealed the commissioners may meet in
a closed hearing to consider the decision that is being appealed
but the vote on that decision must be in a public hearing. The
decision must be based on the record and be resolved in 12 months.
Ratesetting cases shall be heard by either an ALJ or a
commissioner as the principal hearing officer. The principal
hearing officer shall be present in at least one-half of the
hearings. The assigned commissioner shall be present for the
closing arguments. Ex parte communications are prohibited except:
oral ex parte communications may be permitted by any commissioner
if all interested parties are invited and given three days notice;
and written ex parte communications may be permitted if copies of
that communication are transmitted on the same day.
Quasi-legislative cases shall be heard by a commissioner with the
ALJ acting as a the commissioner's assistant. The commissioner
shall attend all formal hearings and shall, with the assistance of
the ALJ, prepare the rule or order. The commissioner shall
present the proposed rule or order to the full commission in
public hearing. Ex parte communications shall be permitted
without any restrictions. Any party has the right to present
final oral arguments and a quorum of the commission shall be
present for final oral arguments.
This bill also creates a Division within the commission to
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represent consumer interests with a director appointed by the
Governor. This will give the Division independence from the
commission as a whole and allow them to better represent utility
customers.
This process is designed to make the commission more involved in
the decisions they are making. Having commissioners present at
the hearing and applying separate rules to the different types of
hearings the desired affects should produce a more efficient and
accountable commission.
ARGUMENTS IN SUPPORT: This bill represents a positive first step
in transforming an agency designed to regulate monopolies through
command and control regulation to one with procedures more suited
to the emerging competitive utility marketplace.
ARGUMENTS IN OPPOSITION: None
Analysis prepared by: Patrick Sullivan / auc / (916)445-4246
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