BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 1403 - Yee Hearing Date: April 24, 2012
S
As Introduced: February 24, 2012 FISCAL B
1
4
0
3
DESCRIPTION
The California Constitution provides that the California Public
Utilities Commission (CPUC) consists of five members appointed
by the Governor and approved by the Senate for staggered
six-year terms and grants the CPUC authority to regulate public
utilities subject to control by the Legislature.
Current law requires the Governor to designate a president of
the CPUC from among the five commissioners.
Current law provides that the commission, upon initiating a
hearing, shall assign one or more commissioners to oversee the
case and an administrative law judge where appropriate.
Current practice of the CPUC includes the president assigning a
commissioner to each CPUC proceeding.
This bill would require that a commissioner be assigned to each
proceeding by a majority vote of the full commission.
Current law authorizes the CPUC to appoint an executive director
who is required to be responsible for the commission's executive
and administrative duties as specified, plus additional duties
the president prescribes.
Current law authorizes the CPUC to appoint an attorney to
represent the commission in all actions and commence or
intervene in proceedings as directed by the president and
generally performs all duties and services the president may
require.
This bill requires the commission to direct the executive
director, the attorney and other commission staff and requires
the executive director and attorney to perform duties as
directed by the commission.
Current law authorizes the president to authorize the executive
director to dismiss complaints or applications when all parties
are in agreement.
This bill would authorize the commission to authorize the
executive director to dismiss complaints or applications when
all parties are in agreement.
Current law specifies the attorney's duties, as directed or
authorized by the president, as including advising the
commission and each commissioner on all matters in connection
with the CPUC's powers and duties.
This bill includes among the attorney's duties, as directed by
the commission, advising the commission and each commissioner on
all relevant matters, including settlements and investigations,
in connection with the CPUC's powers and duties.
BACKGROUND
CPUC Independent but Accountable to Legislature - The basic
structure of the CPUC was established in the early 1900s by
adding Article XII to the state constitution, which was one of
Governor Hiram Johnson's reform efforts to curb undue influence
of railroads in politics and government. Article XII grants the
CPUC authority to regulate public utilities "subject to control
of the Legislature" and grants the Legislature "plenary power"
to confer authority and jurisdiction upon the CPUC, with the
intent that the CPUC be accountable to the Legislature.
The CPUC has historically been afforded much independence.
Commissioners are appointed for staggered six-year terms to
limit the potential for a single governor to appoint a majority
of commissioners within a four-year term. The Legislature, not
the governor, may remove a commissioner. The CPUC has been
given broad latitude to set its own procedures, and any review
of CPUC decisions has historically been limited to review only
by the Supreme Court.
Changing Role of President - Legislation proposed over the
years, and some enacted, has been aimed at improving CPUC
accountability. Concurrent with 1996 electric restructuring, a
series of procedural reforms were enacted to improve the
accountability of individual commissioners to spend more time in
hearings and to take "ownership" of draft decisions.
SB 33 (Peace, 1999) attempted to address a perceived lack of
accountability by commissioners by centralizing more authority
with the president. Prior to that time, the CPUC president was
elected by commissioners. The commissioners also appointed the
attorney and executive director, who performed at the direction
of the commission. SB 33 put the executive director and general
counsel directly under the control of the president and
authorized the Governor to appoint the president.
Since then, a series of bills have sought to limit the power of
the CPUC President. AB 1157 (Ruskin, 2007) provided that the
president of the CPUC be elected by the members of the
commission, rather than be appointed by the Governor. AB 1973
(Ruskin, 2008) required Senate confirmation of the
Governor-appointed president of the CPUC, and had the executive
director and attorney take direction from the commission rather
than the president. AB 1315 (Ruskin, 2009) required, among
other things, that the Governor's appointment of a president be
subject to Senate approval and that the commission direct the
actions of the executive director, attorney, and other staff of
the commission, with the exception of Division of Ratepayer
Advocate staff. None of these bills were chaptered.
Commissioner Assignment to Proceedings - The duties of the
assigned commissioner varies with the type of proceeding. In
policy proceedings, such as a rulemaking or investigation, the
assigned commissioner creates the proposed decision. In
rate-setting and complaint proceedings, the Administrative Law
Judge (ALJ) heads up the proceedings, and the assigned
commissioner's duties are primarily administrative to ensure
that statutory deadlines are met. In any proceeding, any
commissioner can request a status conference or other
information along the way. The influence an assigned
commissioner may have on a proceeding is limited by the right of
any commissioner to propose an alternate decision, and the
requirement that a final decision be adopted by majority vote of
the full commission.
According to the CPUC, President approval of case assignments
has been the practice since the late 1980s, a duty the Chief ALJ
had before then. "Currently, a weekly report is sent to
Commission staff which includes all new filings processed within
the week. Commissioners, if they so desire, make a request to
the President for the assignment of a formal proceeding at the
time of the initial filing. The President and the Chief
Administrative Law Judge make the assignment of proceedings
considering Commissioners' request, case load, interest, subject
matter proceeding continuity, individual ALJ professional
development, training, and schedules."
Current Commissioners - The current Governor has appointed three
of the five current commissioners, a majority, as follows:
Michael R. Peevey, President, originally appointed by
Governor Davis in March 2002, appointed President by
Governor Davis in December 2002, reappointed by Governor
Schwarzenegger in December 2008.
Timothy Alan Simon, appointed by Governor Schwarzenegger
in February 2007.
Michael Florio, appointed by Governor Brown in January
2011.
Catherine J.K. Sandoval, appointed by Governor Brown in
January 2011.
Commissioner Mark J. Ferron, appointed by Governor Brown
in March 2011.
Public Meeting Required - The CPUC is subject to the
Bagley-Keene Open Meeting Act, which requires a state body to
take "action" (collective decision or an actual vote) only at a
public meeting following the public posting of an agenda
describing the item for proposed action at least 10 days prior
to the meeting. Any private congregation of a majority of the
members of a state body at the same time and place to hear,
discuss, or deliberate upon any item that is within its
jurisdiction is unlawful. Violations of the act can result in
members of the state body facing misdemeanor penalties and
action taken rendered invalid, with attorney's fees awarded to
prevailing plaintiffs.
San Bruno Tragedy - On the evening of September 9, 2010 a
30-inch natural gas transmission line ruptured in a residential
neighborhood in the City of San Bruno. The rupture caused an
explosion and fire which took the lives of eight people and
injured dozens more; destroyed 37 homes and damaged 70. Gas
service was also disrupted for 300 customers.
The National Transportation Safety Board (NTSB), which has
primary jurisdiction for investigating pipeline failures, issued
its Pipeline Accident Report on the San Bruno tragedy in August,
2011 and concluded that, in addition to numerous PG&E
violations, the CPUC's failure to detect the inadequacies of
PG&E's pipeline integrity management program contributed to the
accident. The CPUC has initiated three separate proceedings to
consider the alleged violations arising from the San Bruno
tragedy and whether to assess penalties that could easily be
hundreds of millions of dollars. President Peevey is the
assigned commissioner in these proceedings.
COMMENTS
1. Author's Purpose . According to the author, "the
President of the CPUC has attained too much power," and
this bill "will allow the newly installed majority at the
CPUC to have their views more fully represented if case
assignments are directed by a majority vote of the full
Commission" and "will allow all five Commissioners to
direct key staff at the CPUC." The author states the
following regarding the CPUC President:
"After the tragic San Bruno explosion, the current CPUC
President assigned himself the case to determine the
penalty assessed to PG&E for the San Bruno disaster. In
light of the National Transportation Safety Board's
criticism of the CPUC's lack of oversight of PG&E under the
current CPUC President, many people questioned the decision
of the current CPUC President to place himself in charge of
what penalty should be handed-out."
2. Public Meeting Required to Act . This bill's requirement
of a majority vote of the commission to assign cases would
trigger the Bagley-Keene Act, which requires state bodies
to take action only in a public meeting after the matter
for action is on a meeting agenda made available to the
public at least 10 days before the meeting. In addition,
this bill provides for the full commission, rather than
just the president, to direct the attorney and executive
director. To the extent this direction also constitutes an
"action" of the commission, this direction also would
trigger the Bagley-Keene Act public meeting and agenda
requirements.
3. Parties in Support . In support of the bill, TURN states
that the President's authority to assign cases and
supervise the executive and legal staff "undermines the
ability of the five constitutional officers of CPUC to
exercise their responsibility to regulate utility companies
in the public interest" and that this bill "will go a long
way to restoring public confidence" in the CPUC.
The South San Joaquin Irrigation District states that this
bill will ensure "that there is opportunity for discussion
and diverging opinions to be heard before action is taken"
and "is an important step to guarantee that the CPUC is
acting on behalf of all ratepayers in California."
4. CPUC Opposition . The CPUC opposes the bill, stating that
it would compromise the Commission's "ability to act
quickly and perform its duties" and "seems aimed more at
the current CPUC President than at affecting public
policy."
The CPUC cites to the following consequences of delay that
would result from the requirement to hold a public meeting
to assign cases and direct the attorney and executive
director:
Jeopardize the CPUC's ability to meet
statutory deadlines to resolve proceedings;
Delay resolution of billing disputes to the
economic detriment of ratepayers;
Delay resolution of issues related to safety,
service disconnections, and service quality;
Disproportionally affect the low-income
customers with limited resources to resolve conflicts;
Require amendment to CPUC's Rules of Practice
and Procedure and various resolutions; and
Add to the workload of the ALJ Division and
create the need for 10 new permanent positions.
1. Ratepayer Impact . The CPUC is funded by ratepayer funds.
Thus, any additional expense incurred by the CPUC to
implement this bill would require an increase in rates.
POSITIONS
Sponsor:
Author
Support:
South San Joaquin Irrigation District
The Utility Reform Network
Oppose:
California Public Utilities Commission
Jacqueline Kinney
SB 1403 Analysis
Hearing Date: April 24, 2012