BILL ANALYSIS �
SB 900
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Date of Hearing: June 23, 2014
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
SB 900 (Hill) - As Amended: May 27, 2014
SENATE VOTE : 35-0
SUBJECT : Utilities: rate case application: safety
SUMMARY : Requires the California Public Utilities Commission
(PUC) to develop formal procedures to consider safety in a rate
case application by an electrical or gas corporation.
Specifically, this bill :
1)Specifies the procedures shall include a means by which safety
information acquired by the PUC through monitoring, data
tracking and analysis, accident investigation, and audits of
an applicant's safety programs may inform the PUC's
consideration of a rate application made by an electrical or
gas corporation.
2)States the intent of the Legislature is that the PUC assess
the economic effects or other consequences of its decisions as
a part of each ratemaking, rulemaking, or other proceeding,
and that this be accomplished using existing resources within
existing PUC structures.
3)States the PUC shall not establish a separate office or
department for the purpose of evaluating economic development
consequences of PUC activities.
4)States the PUC shall take all necessary and appropriate
actions to assess and mitigate impacts of its decisions on
customer, public, and employee safety.
EXISTING LAW :
a)Requires that the PUC and each gas corporation place safety of
the public and gas corporation employees as the top priority
and further requires that PUC take all reasonable and
appropriate actions necessary to carry out safety as a
priority consistent with the principle of just and reasonable
cost-based rates. (Public Utilities Code � 963)
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b)Requires, in any ratemaking proceeding in which the PUC
authorizes a gas corporation to recover expenses for the
maintenance and repair of transmission pipelines, that the PUC
require the gas corporation to establish and maintain a
balancing account for the recovery of those expenses. (Public
Utilities Code � 969)
c)Defines quasi-legislative proceedings as those that establish
policy including rulemakings and investigations which may
establish rules affecting an entire industry. (Public
Utilities Code � 1701.1)
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, "though for at least two
years the Commission has recognized the need to scope safety
into its proceedings, the development of effective procedures
for doing so has been slow.
The CPUC is moving in the right direction in its proceeding to
include safety into rate cases but needs to ensure that it
informs those rate case decisions with safety information is
collects through its audits, safety investigations, and other
surveillance means.
As the Commission has yet to incorporate risk management tools
into the scoping of its policy-making proceedings, it cannot
claim to have an effective means by which to examine safety
considerations. The purpose of this legislation is to ensure
that the CPUC incorporates safety risk management procedures in
determining if and to what extent safety needs to be included in
proceedings and determining the appropriate actions to take to
eliminate, reduce, or mitigate the risks, and to have an
effective means to monitor the effectiveness of any risk
controls incorporated into a decision."
1)Safety in PUC rate cases : In response to the San Bruno gas
pipeline explosion, the PUC established The Independent Review
Panel that studied the explosion and found in a June 2011
report that safety had not been effectively included in PUC
decision making, particularly in general rate cases (GRC).
The report opined that the PUC should "consider a more
proactive role for the safety staff in utility rate filings."
Also noted, it should "improve the interaction between the gas
safety organization and the Division of Ratepayer Advocates of
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the PUC so there is an enhanced understanding of the costs
associated with pipeline safety."
In response, the PUC held a workshop in January 2012 on this
matter and in March 2012 ordered Pacific Gas & Electric (PG&E)
to pay for an independent safety review of its GRC
application.
In October 2013 the Senate Subcommittee on Gas and Electric
Infrastructure Safety released a report titled "Slow Progress
Toward Safety: Improving Performance and Priorities in the
Safety Plan of the California Public Utilities Commission"
which highlighted the lack of further discussion on the issue
despite the imminent filing of the Southern California Edison
(SCE) GRC application.
In November 2013, the PUC opened a rulemaking to integrate
safety into rate case proceedings (R.13-11-006).
This bill compels the PUC to integrate safety information
pertaining to a utility's existing safety performance within a
GRC and in its general decision making proceedings.
2)Incorporating safety into PUC proceedings : This bill
implements a recommendation in the October 2013 Senate
Subcommittee report which states:
"CPUC decisions and resolutions should include
safety-related findings. The record developed to support
these findings should be facilitated by including safety
considerations in proceeding scoping. Procedures by which
to accomplish proceeding scoping should be developed in
each industry division with the assistance of Public Policy
Division and the risk assessment units. Procedures should
be written and readily accessible to staff."
The policy proposed by this bill is appropriate and largely
corresponds with current efforts at the PUC. As the PUC
renders decisions in general proceedings, many times safety
implications, appropriate procedures are warranted in order to
determine the extent of potential safety risks or to mitigate
such risk, and assign responsibility for monitoring and
managing that risk.
3)Technical amendment : The bill adds the term "other" into
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321(a). If the author is referring to safety, then the
committee may wish to strike the phase "economic effects or
other," and add the assessment of economic effects and the
safety language as subsections to 321.1(a).
321.1. (a) It is the intent of the Legislature that the
commission assess the economic effects or other consequences
of its decisions as part of each ratemaking, rulemaking, or
other proceeding, and that this be accomplished using existing
resources and within existing commission structures. The
commission shall not establish a separate office or department
for the purpose of evaluating economic development
consequences of commission activities, The assessment of the
consequences of its decisions shall include:
(1) An assessment of economic effects.
(2) Assess and mitigate impacts on customer, public, and
employee safety.
(b) The commission shall take all necessary and appropriate
actions to assess and mitigate the impacts of its decisions on
customer, public, and employee safety.
4)Support and opposition. In support, the PUC Office of
Ratepayer Advocates states support for efforts to assist the
PUC in determining how best to consider safety in its decision
making process. ORA further claims information gathered from
monitoring, data tracking, audits, investigations, and other
PUC activities should be carefully considered in proceedings
where utilities request recovery of costs from ratepayers.
There is no opposition on file.
REGISTERED SUPPORT / OPPOSITION :
Support
Office of Ratepayer Advocates (ORA)
Opposition
None on file.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083
SB 900
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