SB 48, as amended, Hill. Public utilities: research and development projects.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, gas corporations, heat corporations, and telephone corporations, as defined. Existing law authorizes the commission to fix the rates and charges for every public utility, and requires that those rates and charges be just and reasonable. Existing law authorizes electrical corporations, gas corporations, heat corporations, and telephone corporations to voluntarily adopt certain research and development programs and authorizes the commission to allow inclusion of expenses for research and development in rates. Existing law requires the commission to consider specified guidelines in evaluating the research, development, and demonstration programs proposed by electrical corporations and gas corporations.begin insert Existing law establishes the Energy Resources Programs Account and requires a specified surcharge on electricity usage to be transferred to the Energy Resources Programs Account.end insert
This bill wouldbegin insert authorize the commission to establish an advisory committee consisting of persons meeting specified requirements to evaluate whether proposed research and development projects meet the guidelines. The bill would, by July 1, 2016, require an electrical corporation with more than 100,000 customer accounts to create a peer review committee to evaluate whether projects meet the guidelines and to evaluate specific technical aspects of the proposed project. The bill would prohibit, except under specified conditions, the commission from approving the inclusion of expenses incurred by a project in electricity rates if the proposed project is not supplemented by a
written evaluation from the peer review committee. The bill would require the commission, upon appropriation by the Legislature, to reimburse the electrical corporation for costs incurred in creating and operating the peer review committee from the Energy Resources Programs Account. The bill wouldend insert require the commission, bybegin delete July 1,end deletebegin insert December 31,end insert 2015, andbegin insert by December 31 ofend insert every 3 years thereafter, tobegin delete require electrical corporations with more than 100,000 customer accounts, to file a 3-year research plan, which includes, among other things, proposals for specific research and development projects and the estimated costs of the projects to the ratepayers. The bill would require the Legislative Analyst’s Office to select members of a peer review to evaluate the 3-year research plan of each electrical corporation and
would require that the peer review consider specified matters. The bill would require the commission, by December 31, 2014, and by December 31 of each 3rd year thereafter, to prepare andend delete submit a report to the relevant policy and fiscal committees of the Legislature listing all research and development projects where the expenses of the project were or are recovered from ratepayers during the previous 3 years, including for each project the citations of all published papers, all oral and poster presentations given at public meetings, and all patents awarded for the funded research.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
end insertbegin insertBecause some electrical corporations would be required to create a peer review committee, a violation of which would be a crime, this bill would impose a state-mandated local program.
end insertbegin insertThe California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
end insertbegin insertThis bill would provide that no reimbursement is required by this act for a specified reason.
end insertVote: majority.
Appropriation: no.
Fiscal committee: yes.
State-mandated local program: begin deleteno end deletebegin insertyesend insert.
The people of the State of California do enact as follows:
begin insertSection 740.1 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is
2amended to read:end insert
begin insert(a)end insertbegin insert end insert The commission shall consider the following
4guidelines in evaluating the research, development, and
5demonstration programs proposed by electrical and gas
6corporations:
7(a)
end delete
8begin insert(1)end insert Projects should offer a reasonable probability of providing
9
benefits to ratepayers.
10(b)
end delete
11begin insert(2)end insert Expenditures on projectsbegin delete whichend deletebegin insert thatend insert have a low probability
12for success should be minimized.
13(c)
end delete
14begin insert(3)end insert Projects should be
consistent with the corporation’s resource
15plan.
16(d)
end delete
17begin insert(4)end insert Projects should not unnecessarily duplicate research
18currently, previously, or imminently undertaken by other electrical
19or gas corporations or research organizations.
20(e)
end delete
21begin insert(5)end insert Each project should also support one or more of the
22following objectives:
23(1)
end delete24begin insert(A)end insert Environmental improvement.
25(2)
end delete26begin insert(B)end insert Public and employee safety.
27(3)
end delete
28begin insert(C)end insert Conservation by efficient resource use or by reducing or
29shifting system load.
30(4)
end delete
P4 1begin insert(D)end insert Development of new resources and processes, particularly
2renewable resources and processesbegin delete whichend deletebegin insert thatend insert further supply
3technologies.
4(5)
end delete
5begin insert(E)end insert Improve operating efficiency and reliability or otherwise
6reduce operating costs.
7(b) The commission may establish an advisory committee to
8evaluate whether a research and development project meets the
9guidelines described in subdivision (a). The advisory committee,
10if established, shall be composed of persons who meet all of the
11following requirements:
12(1) Be independent of the person proposing the project.
end insertbegin insert
13(2) Be independent of the persons conducting the proposed
14project, if different from those persons proposing the project.
15(3) Be knowledgeable in the field of endeavor to which the
16proposed project pertains.
17(4) Be free of any financial or other interest that could
18significantly impair the ability of the person serving on the
19committee to be objective or that could create
an unfair competitive
20advantage of a person or organization.
21(c) The establishment of an advisory committee is not an
22unlawful delegation of the commission’s authority.
begin insertSection 740.12 is added to the end insertbegin insertPublic Utilities Codeend insertbegin insert,
24to read:end insert
(a) On or before July 1, 2016, an electrical
26corporation with more than 100,000 customer accounts shall, in
27consultation with the National Research Council, create a peer
28review committee to evaluate whether a research and development
29project proposed in an application for the inclusion of expenses
30for research and development in rates pursuant to Section 740
31meets the guidelines in Section 740.1 and to evaluate all of the
32following technical aspects:
33(1) The overall scientific or technical merits of the proposed
34project.
35(2) The extent to which the same or similar project could be
36performed by entities that the electrical corporation does not select.
37(3) The appropriateness of the level of requested funding in
38comparison to other projects by similarly experienced individuals
39using similar facilities performing in similar timeframes and
40circumstances.
P5 1(4) The likelihood that the proposed project can be accomplished
2within the proposed time and budget by the investigators or the
3technical staff, given their experience and expertise and available
4resources.
5(b) The peer review committee shall have a membership of no
6more than nine persons.
7(c) The composition and policies of the peer review committee
8described in subdivision (a) shall ensure that the evaluation of an
9application shall be performed by persons who meet all of the
10following requirements:
11(1) Be independent of persons submitting the proposed project
12that is included in the application.
13(2) Be independent of persons conducting the project, if different
14from those persons proposing the project.
15(3) Be knowledgeable in the field of endeavor to which the
16proposed project pertains.
17(4) Be free of any financial or other interest that could
18significantly impair the ability of the person serving on the
19committee to be objective or that could create an unfair competitive
20advantage for a person or organization.
21(d) The commission shall, upon appropriation by the Legislature,
22reimburse the electrical corporation for costs incurred by the
23electrical corporation in consulting with the National Research
24Council and in creating and
operating the peer review committee
25from the Energy Resources Programs Account.
26(e) The commission shall not approve the inclusion of expenses
27incurred by a research and development project in electricity rates
28pursuant to Section 740 for a proposed project that is not
29supplemented by a written evaluation from the peer review
30committee. In a decision to approve the inclusion of expenses
31incurred by research and development projects in electricity rates
32pursuant to Section 740, the commission shall make findings on
33how the written evaluation by the peer review committee informed
34the decision, including aspects of the proposed projects in which
35the opinion of the commission differs from the opinion of the peer
36review committee.
37(f) The requirement for a written evaluation pursuant to
38subdivision (e) may be waived by the commission for a proposed
39project listed in an application
submitted to the commission if both
40of the following conditions are satisfied:
P6 1(1) Substantial funding for the project is contingent upon
2approval by a state or federal agency.
3(2) Funding for the project may be awarded by the state or
4federal agency only after a review by persons who meet the criteria
5in subdivision (c).
begin insertSection 740.13 is added to the end insertbegin insertPublic Utilities Codeend insertbegin insert,
7to read:end insert
(a) On or before December 31, 2015, and,
9notwithstanding Section 10231.5 of the Government Code, on or
10before December 31 of every three years thereafter or more
11frequently as determined by the commission, the commission shall
12submit to the fiscal and relevant policy committees of the
13Legislature a report listing all research and development projects
14for which the costs of the projects were or are recovered from
15ratepayers during the previous three years, including, for each
16project the citations of all published papers, all oral and poster
17presentations given at public meetings, and all patents awarded
18for the funded projects.
19(b) The report submitted pursuant to subdivision (a) shall be
20submitted in compliance with Section 9795 of the
Government
21Code.
No reimbursement is required by this act pursuant to
23Section 6 of Article XIII B of the California Constitution because
24the only costs that may be incurred by a local agency or school
25district will be incurred because this act creates a new crime or
26infraction, eliminates a crime or infraction, or changes the penalty
27for a crime or infraction, within the meaning of Section 17556 of
28the Government Code, or changes the definition of a crime within
29the meaning of Section 6 of Article XIII B of the California
30Constitution.
Section 740.5 is added to the Public Utilities
32Code, to read:
(a) For purposes of this section, the following terms
34have the following meanings:
35(1) “Peer review” means a thorough, consistent, and objective
36examination based on preestablished criteria by persons who are
37independent of persons submitting an application, or conducting
38
the research and development, and who are knowledgeable in the
39field of endeavor to which the application or research and
40development pertains. Peer reviewers shall be free of any financial
P7 1or other interest which could significantly impair the individual’s
2objectivity or create an unfair competitive advantage for any person
3or organization.
4(2) “Research and development project” includes a research,
5development, and demonstration project or program.
6(b) The commission shall, no later than July 1, 2015, and
7triennially thereafter, require electrical corporations with more
8than 100,000 customer accounts to file a three-year research plan.
9The plan shall include:
10(1) The research areas in which the utilities intend to engage.
11(2) Proposals for specific research and
development projects,
12and the estimated costs of the projects to the ratepayers.
13(3) A proposed amount allocated for unspecified research.
14(c) The Legislative Analyst’s Office shall select members of a
15peer review to evaluate the three-year research plan of each
16electrical corporation. The peer review shall consider the electrical
17corporation’s research and development activities from the
18preceding three years in evaluating the electrical corporation’s
19proposed research and development projects and in providing
20guidance to the electrical corporation for improving the projects.
21Members of the peer review may add supplemental reviewers on
22an ad hoc basis to ensure the
reviewers have sufficient technical
23expertise to evaluate the projects. In their evaluation, the peer
24review shall consider the technical aspects of the electrical
25corporation’s project including, but not limited to:
26(1) The overall scientific or technical merits of the proposed
27research and development project.
28(2) The extent to which the same or similar research,
29development, and demonstration work could be performed by
30entities that the public utility does not select.
31(3) The appropriateness of the level of requested funding in
32comparison
to other projects by similarly experienced individuals
33using similar facilities performing in similar timeframes and
34circumstances.
35(4) The likelihood that the proposed work can be accomplished
36within the proposed time and budget by the investigators or the
37technical staff, given their experience and expertise and available
38resources.
39(d) The commission may waive the peer review requirements
40in subdivision
(c) for a research and development project that was
P8 1selected through an open solicitation of proposals or if the project
2is contingent upon a peer review by a public state or federal entity.
3(e) (1)
The commission shall prepare and submit a report to
4the relevant policy and fiscal committees of the Legislature listing
5all research and development projects where the expenses of the
6project were or are recovered from ratepayers during the previous
7three years, including for each project the citations of all published
8papers, all oral and poster presentations given at public meetings,
9and all patents awarded for the funded research. The first report
10shall be submitted by December 31, 2014, and subsequent reports
11shall be submitted by December 31 of every third year thereafter,
12notwithstanding Section 10231.5 of the Government Code.
13(2) A report to be submitted pursuant to paragraph (1) shall be
14submitted in compliance with Section 9795 of the Government
15Code.
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95