BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 2758 - Bradford Hearing Date: June
29, 2010 A
As Amended: June 1, 2010 FISCAL B
2
7
5
8
DESCRIPTION
Current law requires the California Public Utilities Commission
(CPUC) to require each electrical, gas, water, and telephone
corporation with gross annual revenues exceeding $25 million to
submit annually a detailed and verifiable plan for increasing
women, minority, and disabled veteran business enterprise
(WMDVBE) procurement in all categories and short- and long-term
goals and timetables for that procurement.
This bill specifies that these procurement categories include
renewable energy, wireless telecommunications, broadband, smart
grid, and rail projects.
Current law requires each electrical, gas, water, and telephone
corporation with gross annual revenues exceeding $25 million to
submit an annual report to the CPUC regarding implementation of
its WMDVBE program.
This bill requires these corporations to also provide
information to the CPUC about which procurements are made with
WMDVBEs that have at least a majority of their workforce in
California.
Current law requires the CPUC to annually report to the
Legislature on the progress of utilities in implementing their
WMDVBE programs.
This bill requires that this CPUC report to the Legislature
include information about which procurements are made with
WMDVBEs that have at least a majority of their workforce in
California.
Current law specifies measures that a utility may consider to
increase its WMDVBE procurement, including amendment of
performance bond requirements when past performance within a
specified area of business justifies that consideration.
This bill would specify that a utility may consider an amendment
to performance bond requirements so that they do not
prohibitively burden WMDVBEs from procuring utility contracts.
This bill makes legislative findings about the economic benefits
of regulated utilities contracting with women, minority, and
disabled veteran businesses, especially in connection with
renewable energy, wireless telecommunications, broadband, smart
grid, and rail projects.
BACKGROUND
Beginning in 1986, the Legislature enacted a series of statutes,
and the CPUC adopted General Order (GO) 156, to encourage the
award of a fair proportion of all utility contracts for products
and services to WMDVBEs. Commission-regulated water utilities
originally were not required to participate in the program but
were added in 2009. These entities are required to annually
submit a detailed and verifiable plan, with goals and
timetables, for increasing WMDVBE procurement in all categories
of procurement, including technology, equipment, supplies,
services, materials, and construction. A separate annual report
on progress made in meeting those goals also is required. There
is no penalty for failure of a utility to meet its goals. The
CPUC is required to make an annual report to the Legislature on
utility progress in meeting WMDVBE goals.
GO 156 specifies guidelines for the utilities to follow in
meeting WMDVBE requirements, including the following procurement
goals: 5% of all procurement from woman-owned business
enterprises; 15% from minority-owned business enterprises, and
1.5% for disabled veteran-owned businesses enterprises. The
CPUC is required to adopt criteria for determining which
enterprises count toward these goals. GO 156 requires woman-
and minority-owned business enterprises to be certified by the
CPUC's Utility Diversity Supplier Program clearinghouse, and
disabled veteran-owned businesses enterprises to be certified by
the Department of General Services pursuant to DVBE
certification established under the California Disabled Veteran
Business Enterprise Program. Utilities subject to the WMDVBE
requirements are assessed a charge based on intrastate revenues
to support operation of the clearinghouse.
The CPUC currently has an open rulemaking to review the impact
of GO 156 and its success in encouraging regulated utilities to
seek the full and fair participation of WMDVBEs in their
procurement programs (R.09-07-027).
The California Constitution prohibits the State from
discriminating against, or granting preferential treatment to,
any individual or group on the basis of race, sex, color,
ethnicity, or national origin in the operation of public
employment, public education, or public contracting. According
to the CPUC, nothing in GO 156 authorizes or permits a utility
to use set-asides, preferences, or quotas in administration of
its WMDVBE program and utilities retain the authority to use
legitimate business judgment to select a supplier for a
particular contract.
COMMENTS
1)Author's Purpose . According to the author, emerging
industries that are vital to economic recovery have
historically left minority- and women-owned businesses behind.
This bill identifies renewable energy, wireless
telecommunications, broadband, smart grid, and rail projects
as emerging technologies that utilities should focus on in
their WMDVBE procurement programs. The bill requires
utilities to include these sectors in their annual plans and
goals for WMDVBE procurement that are submitted to the CPUC.
The author claims that this will improve inclusion of WMDVBEs
in emerging technology sectors and demonstrate the
contributions of WMDVBEs to these sectors.
2)Level Playing Field . While the goal of the WMDVBE program is
to increase diversity in utility procurement, the program
requirements translate into reporting obligations for utility
corporations. The original purpose of this bill was to extend
WMDVBE requirements to cable television corporations, thereby
making them subject to the same requirements as telephone
corporations with which they compete for customers. That
provision was removed from the bill after strong opposition
from the cable industry. Thus, the bill in its current form
does not extend the WMDVBE requirements to a broader range of
service providers, but instead increases the scope of WMDVBE
requirements on those to whom they already apply. The end
result is increased requirements for telephone corporations
that compete with cable providers for customers.
3)Rail Projects as Emerging Sector . The bill includes "rail
projects" on the list of emerging technology sectors that
should be included in utilities' WMDVBE annual plans and
goals. According to the CPUC, it is not a common practice
for electrical, gas, water, and telephone corporations - the
utilities subject to WMDVBE requirements - to procure services
for "rail projects." While railroad corporations are
utilities, the CPUC's jurisdiction over them is limited to
rail safety. The author may wish to consider amending the
bill to more clearly identify the type of emerging technology
"rail projects" referenced, to add railroad corporations to
the list of utilities subject to WMDVBE requirements, or to
delete "rail projects" from the bill.
4)California Workforce Data . This bill requires each utility to
include in its annual report on WMDVBE implementation, and the
CPUC to include in its annual report to the Legislature,
information about which WMDVBE contractors have at least a
majority of their workforce in California. The author states
that this requirement may further the goal of keeping jobs in
California.
5)Performance Bonds . The bill provides that among the measures
a utility may consider to increase WMDVBE procurement is
amendment of performance bond requirements so that they do not
prohibitively burden WMDVBEs from procuring utility contracts.
The author states that this change makes it more explicit
that a utility could impose less restrictive performance bonds
for WMDVBE contractors and thereby improve procurement with
WMDVBEs.
6)DVBE Certification . Current law requires the CPUC to adopt
criteria for determining which businesses qualify to count
toward a utility's WMDVBE procurement goals. GO 156 requires
woman- and minority-owned business enterprises to be certified
by the CPUC's Utility Diversity Supplier Program, and disabled
veteran-owned businesses enterprises to be certified by the
Department of General Services (DGS) pursuant to DVBE
certification established under the California Disabled
Veteran Business Enterprise Program. The Elite SDVOB Network
Northern California Chapter recommends that use of DGS
certification of DVBEs be required in statute, claiming this
will create more certainty and predictability for DVBE
certification. The CPUC supports this change in law. AB 1918
(Davis), which also makes changes to the WMDVBE program, has
been amended to require DGS certification of DVBEs. The
author may wish to consider amending this bill to require that
DVBEs be certified by DGS for utility procurement and to avoid
any conflict with AB 1918.
7)Related Legislation . AB 1918 (Davis) requires each "wireless
communications service provider" with gross annual revenues
exceeding $25 million to meet the WMDVBE requirements and
requires that DVBEs be certified by DGS for utility
procurement.
ASSEMBLY VOTES
Assembly Utilities & Commerce 9-2
Assembly Appropriations 12-5
Assembly Floor 53-21
POSITIONS
Sponsor:
The Greenlining Institute.
Support:
Greenlining Institute (sponsor)
American GI Forum of California
Asian Business Association
Black Business Association
Black Economic Council (BEC)
California Black Chamber of Commerce
California Journal for Filipino Americans
California Public Utilities Commission
CHARO Community Development Corporation
Community Union Inc
Economic Business Development, Inc. (EBD)
Hispanic Chamber of Commerce Alameda County
Inland Empire Latino Coalition
Korean Center, Inc
Latino Business Chamber of Greater Los Angeles
Mabuhay Alliance
National Association of Filipino American Associations
Orange County Black Chamber of Commerce
OurWeekly
TELACU
Oppose:
None on file.
Jackie Kinney
AB 2758 Analysis
Hearing Date: June 29, 2010