BILL ANALYSIS �
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THIRD READING
Bill No: AB 1274
Author: Bradford (D)
Amended: 7/8/13 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMMITTEE : 8-0, 6/18/13
AYES: Padilla, Fuller, Corbett, DeSaulnier, Hill, Knight, Wolk,
Wright
NO VOTE RECORDED: Cannella, De Le�n, Pavley
SENATE JUDICIARY COMMITTEE : 6-0, 7/2/13
AYES: Walters, Anderson, Corbett, Jackson, Leno, Monning
NO VOTE RECORDED: Evans
ASSEMBLY FLOOR : 75-0, 5/9/13 - See last page for vote
SUBJECT : Privacy: customer electrical or natural gas usage
data
SOURCE : Author
DIGEST : This bill prohibits a business, as defined, from
sharing, selling, disclosing, or otherwise making accessible the
electrical or gas consumption data of a residential or small
business customer, except as specified.
ANALYSIS :
Existing law:
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1. Provides that, among other rights, all people have an
inalienable right to pursue and obtain privacy.
2. States that a local publicly owned utility (POU), an
electrical corporation, or gas corporation, shall not share,
disclose, or otherwise make accessible to any third party a
customer's electrical or gas consumption data, except as
specified or upon the consent of the customer. Also
prohibits these entities from selling a customer's utility
consumption data.
3. Provides that if an electrical or gas corporation or local
publicly owned electric utility contracts with a third party
for a service that permits a customer to monitor his/her
electricity or gas usage and the third party uses that
information for a secondary commercial purpose, the contract
between the utility and third party shall provide that the
third party prominently disclose that secondary commercial
purpose to the customer and require the third party to secure
the customer's consent prior to the use of the data for that
secondary commercial purpose.
4. States that a local POU, an electrical corporation, or gas
corporation, shall not provide an incentive or discount to
the customer for accessing the customer's utility consumption
data without the prior consent of the customer.
5. States that a local POU, an electrical corporation, or gas
corporation, shall use reasonable security procedures and
practices to protect a customer's unencrypted electrical or
gas consumption data from unauthorized access, destruction,
use, modification, or disclosure.
6. Does not preclude a local POU, an electrical corporation, or
gas corporation, from disclosing a customer's electrical or
gas consumption data to a third party for system, grid, or
operational needs, or the implementation of demand response,
energy management, or energy efficiency programs, provided
that, for contracts entered into after January 1, 2011, the
utility has required by contract that the third party
implement and maintain reasonable security procedures and
practices appropriate to the nature of the information, to
protect the personal information from unauthorized access,
destruction, use, modification, or disclosure, and prohibits
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the use of the data for a secondary commercial purpose not
related to the primary purpose of the contract without the
customer's prior consent to that use.
This bill:
1. Provides that unless otherwise required or authorized by
federal or state law, a business shall not share, disclose,
or otherwise make accessible to any third party a customer's
data without obtaining the express consent of the customer
and conspicuously disclosing to whom the disclosure will be
made and how the data will be used.
2. Provides that a business shall not provide an incentive or
discount to the customer for accessing the data without the
prior consent of the customer.
3. Provides that a business shall implement and maintain
reasonable security procedures and practices appropriate to
the nature of the information to protect the data from
unauthorized access, destruction, use, modification, or
disclosure.
4. Provides that a business that discloses data, with the
express consent of the customer, pursuant to a contract with
a nonaffiliated third party, shall require by contract that
the third party implement and maintain reasonable security
procedures and practices appropriate to the nature of the
information, to protect the data from unauthorized access,
destruction, use, modification, or disclosure.
5. Provides further that a business shall take all reasonable
steps to dispose, or arrange for the disposal, of customer
data within its custody or control when the records are no
longer to be retained by the business by (a) shredding, (b)
erasing, or (c) otherwise modifying the data in those records
to make it unreadable or undecipherable through any means.
6. Provides that a customer harmed by the release and
unauthorized use of his/her customer data, in violation of
the above provisions, may bring a civil action to recover
actual damages in an amount not to exceed $500 for each
willful violation.
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7. States that it shall not apply to an electrical corporation,
a gas corporation, or a local publicly owned electric utility
or a business that secures the data as a result of a contract
with an electrical or gas corporation or a local publicly
owned electric utility, as specified.
Background
California gas and electric utility providers are developing and
implementing advanced metering infrastructure across the state.
The "smart meter" is the most recognizable component of this new
infrastructure. Through a smart meter, a utility is able to
gather consumption data from a consumer in real time, allowing
it to offer new demand response and energy management programs
such as critical peak pricing, where utility rates fluctuate in
response to overall system demand. With this new technology and
access to real-time energy usage data has come an increased
interest in using this data for marketing and other purposes.
Responding to privacy concerns surrounding the use of utility
consumption data, the Legislature passed and Governor
Schwarzenegger signed SB 1476 (Padilla, Chapter 497, Statutes of
2010) which, among other things, prohibited a utility as defined
from sharing, disclosing, or otherwise making a consumer's
electrical or gas consumption data accessible to third parties,
except in specified instances. The bill also required that, in
cases where a utility contracts with a third party for a service
that allows a customer to monitor his/her electricity or gas
usage and the third party uses that information for a secondary
commercial purpose, the contract between the utility and the
third party must prominently disclose that purpose to the
customer. SB 1476 also permitted a utility to disclose a
customer's electrical or gas consumption data to a third party
for system, grid, or operational needs, or the implementation of
demand response, energy management, or energy efficiency
programs provided that the contract between the utility and that
third party prohibited the use of the data for a secondary
commercial purpose without the customer's consent. The
following year, the Legislature passed and Governor Brown
signed SB 674 (Padilla, Chapter 255, Statutes of 2011), which
amended the protections added by SB 1476 to make clear that a
customer's prior consent is required for the use and release of
the customer's data for a secondary purpose in both of the
instances described above. However, neither SB 1476 nor SB 674
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imposed restrictions on the use of a customer's utility
consumption data in situations when this data is acquired from a
source other than the utility provider or their third-party
contractors, or after this data has been transmitted to a third
party by the utility provider.
The development of "smart grid" infrastructure in California has
enabled utility customers to receive detailed, real-time
information about their energy usage. This new data about one's
utility consumption allows customers to better manage their
overall energy use and identify more precisely where energy is
being used in their home. For some customers, a device called a
"home area network" (HAN) is built into their "smart meter"
which allows the metering infrastructure to interface with an
existing home computer network. According to the Public
Utilities Commission (PUC), some of these HANs include
independent communications channels that can be controlled by
consumers, enabling the consumer to provide third-parties not
related or connected to the utility provider with access to
their utility consumption data through the Internet.
With this new technology and access to real-time energy usage
data has come an increased interest in using this data for
marketing purposes. The technology sector has revealed how
analysis of this data can, for instance, show that a consumer
owns a refrigerator that is an energy hog, giving this data a
high value in the marketplace. However, the information gained
through analysis of utility consumption data is potentially much
more revealing.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 7/8/13)
Division of Ratepayer Advocates
Public Utilities Commission
ARGUMENTS IN SUPPORT : The author writes:
Existing law prohibits utilities from selling or sharing
customer data on gas and electricity use unless ordered by
federal or state authorities.
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This bill prohibits a 3rd party from sharing, disclosing, or
otherwise making a customer's electrical or gas consumption
data accessible to another entity except with the consent of
the customer; it prohibits selling a customer's electrical or
gas consumption data, and it prohibits providing an incentive
or discount to the customer for accessing the customer's
electrical or gas consumption data without the prior consent
of the customer.
This bill provides remedies to the customer in the event that
they are damaged by the willful release of private
information.
Third party providers are not utilities and do not fall within
the scope of the PUC's regulatory oversight therefore they are
not subject to current data privacy laws. This bill addresses
that gap so that independent 3rd parties are required to
maintain privacy of customer data.
ASSEMBLY FLOOR : 75-0, 5/9/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell,
Gray, Hagman, Hall, Harkey, Roger Hern�ndez, Jones,
Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Torres, Wagner, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. P�rez
NO VOTE RECORDED: Grove, Holden, Logue, Waldron, Vacancy
JG:k 7/8/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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