BILL ANALYSIS �
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Alex Padilla, Chair
BILL NO: AB 2661 HEARING DATE: 6/17/14
AUTHOR: BRADFORD ANALYSIS BY: Darren Chesin
AMENDED: 4/30/14
FISCAL: YES
SUBJECT
Political Reform Act of 1974: conflicts of interests: Energy
Commission
DESCRIPTION
Existing law establishes the California Energy Commission (CEC),
which is comprised of five members appointed by the Governor,
and specifies that the members have the following backgrounds:
One member with a background in the field of engineering or
physical science who has knowledge of energy supply or
conservation systems;
One member who is an attorney and a member of the State Bar of
California with administrative law experience;
One member with background and experience in the field of
environmental protection or the study of ecosystems;
One member who is an economist with a background and
experience in the field of natural resource management; and,
On member from the public at large.
Existing law prohibits a person from being a member of the CEC
if, during the two years prior to appointment to the CEC, the
person received any substantial portion of his or her income
directly or indirectly from any electric utility or engaged in
the sale or manufacture of any major component of any facility.
"Electric utility" is defined as any person engaged in, or
authorized to engage in, generating, transmitting, or
distributing electric power by any facilities, including, but
not limited to, any such person who is subject to the regulation
of the Public Utilities Commission (PUC). "Facility" is defined
as any electric transmission line or thermal power plant, or
both electric transmission line and thermal power plant,
regulated according to specified provisions of the Public
Resources Code (PRC).
Existing law prohibits a person while serving as a member of the
CEC, and for two years after being a member of the CEC, from
being employed by an electric utility or by any person who
engages in the sale or manufacture of any major component of any
facility.
Existing law specifies that the Secretary of the Resources
Agency and the President of the PUC are ex officio members of
the CEC and, with the exception of these two positions,
prohibits members of the CEC from holding any other elected or
appointed public office or position.
Existing law provides for the Fair Political Practices
Commission (FPPC) and makes it responsible for the impartial,
effective administration, and implementation of the Political
Reform Act (PRA). Pursuant to the PRA, a public official is
prohibited from making, participating in making, or in any way
attempting to use his or her official position to influence a
governmental decision in which the official has a financial
interest. Violations of the PRA are subject to criminal, civil,
and administrative penalties.
This bill moves the conflict of interest provisions related to
the CEC from the PRC into the PRA. This bill also revises the
limitations on appointments to the CEC if the appointee received
income from a load serving entity in the two years prior to his
or her appointment. Specifically, this bill provides for all of
the following:
1)Moves the following conflict of interest provisions that are
applicable to the CEC from the PRC to the PRA, and gives the
FPPC, instead of the Attorney General, the authority to waive
these provisions if the interest is not sufficiently
substantial to affect the integrity of services that the state
may expect:
a) Prohibits a person from being a member of the CEC if,
during the two years prior to appointment to the CEC, the
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person received any substantial portion of his or her
income directly or indirectly from any electric utility or
engages in the sale or manufacture of any major component
of any facility.
b) Prohibits members of the CEC from holding any other
elected or appointed public office or position.
c) Prohibits members and employees of the CEC from
maintaining specified relationships with any person who
acts as an attorney, agent, or employee for a person, other
than the state, in connection with a matter in which the
CEC is a party or has a direct and substantial interest.
2)Expands the prohibition described in (1)(a) above, by
additionally prohibiting the appointment of an individual who
received a substantial portion of his or her income directly
or indirectly from any load serving entity, as defined, or
from any person who has received a substantial portion of his
or her income, directly or indirectly, from either generating,
transmitting, or distributing electricity in the state, or the
sale or manufacture of any major component of a facility
located in the state.
3)Repeals the prohibition on a member or employee participating
personally and substantially in his or her official capacity
in a proceeding in which any of the following has a direct or
indirect financial interest:
a)The member or employee;
b)The member or employee's spouse or minor child;
c)The member or employee's partner; or,
d)An organization for which the following are true:
i) The organization is not a governmental
organization or an educational or research
institution that qualifies as a nonprofit
organization; and,
ii) The member or employee is serving or has
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served as an officer, director, trustee, partner, or
employee while serving as a member or employee of the
CEC or, for members of the CEC, during the two year
period prior to the member's appointment.
4)Defines the following terms:
a) "Facility" as the structure or equipment necessary for
generating, transmitting, or distributing electricity,
including electric transmission lines and thermal, wind,
hydroelectric, and photovoltaic plants.
b) "Load serving entity" means an electrical corporation,
electric service provider, community choice aggregator, or
a person who has received a substantial portion of his or
her income, directly or indirectly, from selling or
providing electricity to end users located in the state.
c) "Major component" to mean any product or equipment
integral to facility construction or operation or to
electrical generation, transmission, or distribution.
5)Provides that the term "income," for the purposes of the
conflict of interest provisions that are specific to the CEC,
includes the following payments that are not otherwise
considered income for the purposes of the PRA: salary and
reimbursement for expenses or per diem; social security,
disability, or other similar benefit payments received from a
state, local, or federal government agency; and, reimbursement
for travel expenses and per diem received from a nonprofit
entity exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code.
BACKGROUND
The CEC . The CEC was created by the Legislature in 1974 as the
state's primary energy policy and planning agency. The CEC's
responsibilities include: forecasting future energy needs;
setting appliance and building efficiency standards; supporting
energy research; developing renewable energy resources and
alternative renewable energy technologies for buildings,
industry and transportation; licensing thermal power plants 50
megawatts or larger; and, planning for and directing state
response to energy emergencies. The CEC, collaboratively with
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the PUC, is also tasked with implementing the state's Renewables
Portfolio Standard (RPS), which requires investor-owned
utilities (IOUs) and retail sellers of electricity, as
specified, to achieve a 33 percent renewable energy portfolio by
2020 and establishes a detailed process and standards for
renewable energy procurement.
When the CEC was created with specific conflict of interest
requirements, the FPPC did not yet exist, and the state did not
have the conflict of interest rules that were enacted in the
PRA. The PRC was voted into law through Proposition 9 in June
1974, just weeks after the CEC was created. In addition to its
own conflict of interest rules, the conflict of interest
provisions in the PRA apply generally to all public officials
and public agencies, including the CEC.
COMMENTS
1.According to the Author : The conflicts of interest statute in
the Public Resources Code specifies incompatible activities
applicable to only Commissioners of the California Energy
Commission (CEC).
The section was adopted when the CEC was established, in 1974,
prior to statutes that created competitive electricity
markets. Also in 1974, voters enacted the Political Reform
Act which, along with other later-enacted statutes, addresses
the same issues that are the focus of this section of the
Public Resources Code.
The law may have made sense at the time of its adoption, but
the subsequent adoption and development of generally
applicable laws regarding conflicts, changes in the
electricity market structure, and the ambiguity of many of its
terms render it obsolete.
AB 2661 harmonizes conflict-of-interest and
incompatible-activity provisions applicable to members of the
California Energy Commission with similar provisions of the
Political Reform Act. Further, AB 2661 extends existing
restrictions on who can become a member of the CEC to include
the broad range of electricity producers active in the energy
market today.
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2.Switch Ramifications . This bill moves the majority of the
CEC's conflict of interest requirements to the PRA. This move
will give the FPPC jurisdiction over the enforcement and
interpretation of the CEC's conflict rules. Additionally,
violations of the CEC's conflict of interest rules will no
longer be subject only to felony penalties and will instead be
subject to the same penalties that apply to other violations
of the PRA, namely misdemeanor criminal penalties, or civil or
administrative fines. This bill also broadens existing
restrictions on who can become a member of the CEC to include
former employees of entities that sell or manufacture any
major component of electric transmission lines and thermal,
wind, hydroelectric, and photovoltaic plants.
PRIOR ACTION
Assembly Elections and Redistricting Committee: 6-0
Assembly Natural Resources Committee 8-0
Assembly Appropriations Committee: 17-0
Assembly Floor: 78-0
POSITIONS
Sponsor: Author
Support: None received
Oppose: None received
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