BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 1678 - Gordon Hearing Date:
June 17, 2014 A
As Amended: June 4, 2014 FISCAL B
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DESCRIPTION
Current law directs the California Public Utilities Commission
(CPUC) to require each electrical, gas, water, and telephone
corporation, and each wireless telecommunications service
provider, with gross annual revenues exceeding $25 million, to
submit annually a plan for increasing procurement with women,
minority, and disabled veteran business enterprises, generally
known as the Supplier Diversity program. (Public Utilities Code
� 8283)
This bill requires this annual plan to also increase procurement
with lesbian, gay, bisexual, or transgender (LGBT) enterprises.
Current law requires each utility to submit an annual report to
the CPUC regarding implementation of its Supplier Diversity
program and requires the CPUC to annually report to the
Legislature on the progress of utilities in implementing these
programs. (Public Utilities Code � 8283)
This bill requires the CPUC's report to the Legislature to
include information about LGBT procurement starting with the
2016 report.
Current law requires the CPUC to adopt criteria for verifying
eligibility of women and minority enterprises and the Department
of General Services to verify disabled veteran enterprises.
(Military and Veterans Code � 999.2)
This bill requires the CPUC to adopt criteria for verifying
eligibility of LGBT enterprises in consultation with LGBT
chambers of commerce and other entities with relevant expertise.
Current law makes a person or corporation subject to a fine of
up to $5,000 and jail for up to one year for falsely
representing a business as eligible for the Supplier Diversity
program.
This bill would make those provisions apply to any false
representation of being a LGBT enterprise.
BACKGROUND
Supplier Diversity Program - Beginning in 1986, the Legislature
enacted a series of statutes, and the CPUC adopted General Order
(GO) 156, to establish a Supplier Diversity program to encourage
the award of a fair proportion of all utility contracts for
products and services to diverse enterprises. Each electrical,
gas, water, and telephone corporation (including wireless
telecommunications providers), with gross annual revenues
exceeding $25 million, and their CPUC-regulated subsidiaries and
affiliates, are required to participate. CPUC-regulated water
utilities originally were not required to participate in the
program but were added in 2009. AB 1386 (Bradford, 2011)
encouraged voluntary participation by cable television
corporations and direct broadcast satellite providers, which are
not generally subject to CPUC jurisdiction.
The utilities are required to annually submit a detailed and
verifiable plan, with goals and timetables, for increasing
supplier diversity in all procurement categories, including
technology, equipment, supplies, services, materials, and
construction. A separate annual report on progress made in
meeting those goals also is required. GO 156 specifies
guidelines for the utilities to follow in meeting diversity
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. 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 Supplier Diversity program goals.
In May 2011, the CPUC issued a decision (D.11-05-019)
reaffirming its support of the policy goals of GO 156,
particularly the economic benefits to ratepayers and
communities, and amended GO 156 to enhance transparency and
accountability of the program. In March 2014, the CPUC reported
that companies participating in its Supplier Diversity program
achieved a new record in 2013, procuring approximately $8.5
billion in goods and services from diverse suppliers, an
increase of about $500 million over 2012 procurement. According
to the CPUC, more than 30 companies participate in the program,
with the following doing the most business with diverse firms in
2013:
Pacific Gas and Electric Company: $2.3 billion, or 42.1
percent;
Southern California Edison: $1.4 billion, or 40.99
percent;
AT&T: $1.2 billion, or 51.57 percent;
AT&T Wireless: $999 million, or 27.74 percent;
Sprint: $546 million, or 41.88 percent;
San Diego Gas & Electric: $453 million, or 44.88
percent;
Southern California Gas Company: $428 million, or 45.38
percent;
Verizon: $115 million, or 48.84 percent; and
Comcast $64 million, or 22.35 percent.
LGBT Certification - According to the National Gay & Lesbian
Chamber of Commerce (NGLCC), there are an estimated 1.4 million
LGBT-owned businesses in the United States, although less than
10% currently contract with state or local governments. The
NGLCC has established a process to certify enterprises that are
at least 51% owned, operated, managed, and controlled by an LGBT
person or persons who are either U.S. citizens or lawful
permanent residents. Qualifiers of LGBT status include:
Certified copy of domestic partnership registration,
civil union certification, or marriage certification;
Proof of domestic partnership health insurance
utilization;
Evidence of completed or attempted parenting and family
building efforts made by LGBT applicant and same sex
partner;
Apartment lease, automobile title, financing agreement,
or utility bills with name of applicant and partner listed;
Proof of joint property ownership;
Physician or attorney letter on official letterhead
attesting to the LGBT status of the applicant; and
Legal petition for name change (for transgender
applicants).
NGLCC reports that there are currently 96 certified LGBT
businesses nationwide, with about 60 in the process of being
certified.
Pacific Gas & Electric Company (PG&E) leadership decided to
include LGBT-owned business enterprises certified by the NGLCC
to its Supplier Diversity program at the end of 2012. Last
October, PG&E hosted the first Supplier Diversity business
development workshop for LGBT business owners in collaboration
with the Golden Gate Business Association and the NGLCC.
COMMENTS
1. Author's Purpose . According to the author, the CPUC's
Supplier Diversity program has been effective in
encouraging utilities to contract with diverse suppliers
that may not have the knowledge or expertise to initiate
such a partnership. The estimated 1.4 million LGBT-owned
businesses in the United States have a low rate of
contracting with state or local governments currently,
although 80% of LGBT businesses responded to a survey that
they would like that opportunity. It is important to
recognize the contributions LGBT businesses, large and
small, have had and continue to have on California's
economy and to ensure that these businesses also have the
opportunity to participate in the state's success.
2. Evolving Program . The Supplier Diversity program began
in the late 1980s with efforts to increase utility
contracting with women- and minority-owned businesses.
Disabled veterans were added in 1990. Adding LGBT
enterprises to the program reflects a policy choice to
extend the benefits of the Supplier Diversity program to
another distinct group with a history of limited
participation in utility contracting.
3. Related Legislation . AB 2760 (Bradford) defines
"renewable energy" for purposes of the CPUC Supplier
Diversity program. Status: Set for hearing in the Senate
Committee on Energy, Utilities and Communications June
23rd.
ASSEMBLY VOTES
Assembly Floor (54-20)
Assembly Appropriations Committee (12-5)
Assembly Utilities and Commerce Committee
(10-3)
POSITIONS
Sponsor:
National Gay and Lesbian Chamber of Commerce
Support:
AT&T
Ace Mailing
Blue Wave Solutions, Inc.
California Communities United Institute
California Small Business Association
Desert Business Association
Design Work Place, Inc.
Envirolution, Inc.
Golden Gate Business Association
Green Viking Consulting, LLC
InSight Consulting Partners, Inc.
Landis Communications Inc.
London Guest Suites
Long Beach Gay & Lesbian Chamber of Commerce
Los Angeles Gay & Lesbian Chamber of Commerce
OutSmart Office Solutions, Inc.
OutThink Partners
Rainbow Chamber of Commerce Silicon Valley
Riviera Advisors, Inc.
San Francisco Small Business Network
Small Business California
Southern California Edison
Vaughan Benz
WriteAway Communications Corporation
Many Individuals
Oppose:
None on file
Jacqueline Kinney
AB 1678 Analysis
Hearing Date: June 17, 2014