BILL ANALYSIS � 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
SB 711 - Padilla Hearing Date: January 14, 2014
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As Amended: January 6, 2014 FISCAL B
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DESCRIPTION
Current law requires any telephone corporation or other utility to
obtain from the California Public Utilities Commission (CPUC) a
certificate of public convenience and necessity (CPCN) before
constructing or extending facilities or telecommunications
services. (Public Utilities Code 1001)
Current law requires the CPUC to charge a fee of $75 for filing
each CPCN application. (Public Utilities Code 1904)
This bill would repeal the $75 application fee and instead permit
the CPUC to charge up to $500, not to exceed the reasonable cost
of processing an application. Going forward, the CPUC would be
authorized to adjust the fee based on the Consumer Price Index, to
track inflation.
This bill also clarifies that all fees and charges collected by
the CPUC be deposited into the Public Utilities Reimbursement
Account rather than into the state General Fund.
BACKGROUND
What is a CPCN? - A CPCN is a permit issued by the CPUC to a
service provider that wants to establish itself as a regulated
entity and/or construct or extend facilities or telecommunications
services. For example, an electrical corporation is required to
have a CPCN to construct a transmission line or a substation, a
water corporation must have one to build a water facility, and a
telephone corporation needs one to provide telephone service.
CPCN Application Review Process - The review of a CPCN application
is generally a lengthy, in-depth process that involves two
concurrent and parallel procedures: 1) environmental review
pursuant to the California Environmental Quality Act; and, 2)
need/cost review pursuant to Public Utilities Code 1001 et seq.
and General Order 131-D. The environmental review includes
scoping meetings, workshops, numerous comment periods, and
responses to the public's comments on the draft environmental
impact report. The review of project need and costs involves the
filing of responses and protests, a pre-hearing conference,
scoping memo, and evidentiary hearings and briefs. After the
30-day period for public review and comment has passed, the CPUC
votes on the proposed decision prepared by an administrative law
judge and any alternate decision(s) put forward by
commissioner(s). Given the numerous steps in this process,
processing a single CPCN application may require thousands of
dollars in staff and commissioner time, and take years to
complete.
CPCN Application Fee - The CPCN application fee was statutorily
set at $75 in 1969. Since then, the CPUC has not had the authority
to revise it to account for changes in the economy or regulatory
environment. According to the CPUC, inflation has increased 530.5%
since 1969. The Consumer Price Index estimates that $75 in 1969 is
equivalent to $476.30 in 2013, hence the proposed $500 cap.
COMMENTS
1. Author's Purpose . Given inflation, $75 does not reflect
the administrative cost of reviewing a CPCN application.
According to the CPUC, increasing the CPCN application fee is
necessary to "better reflect the cost of the initial license
review?cover the costs associated with the review of lease,
transfer, or assignment of CPCN transactions?and permit more
effective review and enforcement of certificate licensing
activities."
2. It's Not Just the Money . Pursuant to Decision 13-05-035,
the cost of processing a CPCN application ranges from $500 to
several thousands of dollars. According to the CPUC, the
purpose of the application fee is not to fully cover the
staff time necessary to review an application. Instead, the
fee is used to gauge an applicant's commitment to utilizing
the certificate, should it be granted. The CPUC considers the
current fee ($75) to be too low to accurately reflect an
applicant's commitment.
3. Fee Impacts . According to the CPUC, the State
Controller's Office issued a report in 2007 that termed the
$75 application fee "nominal." According to a survey cited by
the CPUC, other states charge from $0 to $3000 for the same
application. Therefore, increasing the fee from $75 to $500
is not expected to be an unreasonable financial burden on
corporations filing for a CPCN. This bill would result in
minor revenue increases (in the several thousand dollar
range) to the commission. Ratepayers would not be affected
directly, as this bill does not increase or decrease rates.
4. Prior Legislation . AB 1409 (Bradford, 2013) also proposed
an increased CPCN application fee and was originally
sponsored by the CPUC. That bill was vetoed because of
author's amendments made late in the process unrelated the
CPCN application fee.
POSITIONS
Sponsor:
Author
Support:
None on file.
Oppose:
None on file.
Alexis Erwin
SB 711 Analysis
Hearing Date: January 14, 2014