BILL NUMBER: SB 1511 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Morrow
FEBRUARY 20, 2002
An act to amend Section 783 of, and to add Section 784 to, the
Public Utilities Code, relating to public utilities.
LEGISLATIVE COUNSEL'S DIGEST
SB 1511, as introduced, Morrow. Gas and electrical corporations.
(1) Existing law requires the Public Utilities Commission to
continue to enforce rules in effect on January 1, 1982, governing the
extension of service by gas and electric corporations to new
residential, commercial, agricultural, and industrial customers,
except that the commission is required to amend those rules to permit
applicants for service to install extensions of service, using the
applicant's contractor, but in accordance with the commission's
regulations and any applicable specifications of the electrical or
gas corporation. Existing law requires the commission to request the
assistance of appropriate state agencies and departments in
conducting related proceedings and investigations.
This bill would permit applicants for the extension of service by
gas and electrical corporations to also design extensions in
accordance with these provisions. The bill would require the
commission's rules on the extension of gas and electrical service to
provide fair and equal opportunities for electrical and gas
corporations, as well as nonregulated design and installation service
providers. The bill would delete the provision requiring the
commission to request the assistance of appropriate state agencies
and departments in conducting related proceedings and investigations.
The bill would require the electrical or gas corporation to
provide a cost-based bid for requested design or installation costs
in advance, to allow the applicant to shop the bid with other
nonregulated providers of the same service. The electrical or gas
corporation's bid would be required to be comparable in scope to bids
of nonregulated service providers. The bill would authorize the
commission to review the bids.
The bill would provide that when the electrical or gas corporation
is the successful bidder for the design or installation of an
extension of service, only the bid amount is to be applied to the
electrical or gas corporation's rate base, to establish financial
treatment that is comparable to nonregulated service bidders. The
bill would also provide that when the nonregulated service provider
is the successful bidder, the electrical or gas corporation may only
apply to the rate base the lower of the electrical or gas corporation'
s bid or the verified actual cost provided by the applicant.
The bill would provide that if the cost of design and installation
of the extension of service is less than the revenue based allowance
of the electrical or gas corporation, the difference is to be passed
through to the benefit of ratepayers, but if the cost of design and
installation of the extension of service is greater than the revenue
based allowance of the electrical or gas corporation, then the
applicant pays the difference.
(2) Existing law requires the commission to prepare and adopt by
December 31, 1972, a statewide plan and schedule for the
undergrounding of all utility distribution facilities proposed to be
erected in proximity to a state scenic highway in accordance with the
rules of the commission relating to the undergrounding of
facilities. Existing law requires the commission to coordinate its
plan with local governments and require compliance with its adopted
plan.
This bill would also require the commission to allow cities,
counties, or cities and counties to better manage the funds allocated
by electrical corporations for converting overhead facilities to
underground facilities, by selecting fixed bid contracts for design
and installation from both electrical corporations and nonregulated
service provider bidders. The bill would require the savings
achieved by the use of competitive bidding to be used to reduce the
cost to the electrical corporation's ratepayers, to better allocate
funds related to the undergrounding project, and to provide the
opportunity to increase the amount of underground facilities that can
be installed for the same cost or allocation.
The bill would require the electrical corporation to provide a
cost-based bid for requested design or installation costs of an
undergrounding project in advance, to allow the applicant to shop the
bid with other nonregulated providers of the same service. The bill
would require the electrical corporation's bid to be comparable in
scope to the bids of nonregulated service providers and would
authorize the commission to review the bids in order to make a
determination of comparability with the bids of nonregulated service
providers.
The bill would provide that when the electrical corporation is the
successful bidder for an undergrounding project, only the bid amount
is to be applied to the electrical corporation's rate base and
deducted from the available allocated funds, to establish financial
treatment that is comparable to nonregulated service provider
bidders, but if the nonregulated service provider is the successful
bidder for an undergrounding project, the electrical corporation
would be required to only apply to the rate base the lower of the
electrical corporation's bid or the verified actual cost provided by
the city, county, or city and county.
The bill would require the electrical corporation to be
responsible for the inspection of the design and installation of the
underground system, for operation and reliability purposes, prior to
acceptance and energizing by the electrical corporation. The bill
would prohibit a fee for initial inspections of nonregulated service
provider designs or installations. Because under the Public
Utilities Act, a violation of an order or rule of the commission is a
crime, this bill would impose a state-mandated local program by
expanding the definition of a crime.
(3) The 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.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature in enacting the act
adding this section to do both of the following:
(a) Allow the cost savings achieved by the use of a competitive
bidding process in the design and installation of the extension of
service by gas and electrical corporations to benefit ratepayers and
applicants for new service.
(b) Allow the cost savings achieved by the use of a competitive
bidding process in the conversion of overhead electrical facilities
to underground electrical facilities to benefit ratepayers and
cities, counties, or cities and counties.
SEC. 2. Section 783 of the Public Utilities Code is amended to
read:
783. (a) The commission shall continue to enforce the rules
governing the extension of service by gas and electrical corporations
to new residential, commercial, agricultural, and industrial
customers in effect on January 1, 1982, except that the
commission shall amend the existing rules to and
permit applicants for service to design and install
extensions in accordance with subdivision (f)
(e) . The rules shall provide fair and equal
opportunities for electrical and gas corporations, as well as
nonregulated design and installation service providers. Except
for periodic review provisions of existing rules, and amendments to
permit designs and installations by an applicant's
nonregulated contractor, the commission shall not investigate
amending these rules or issue any orders or decisions which amend
these rules, unless the investigation or proceeding for the issuance
of the order or decision is conducted pursuant to subdivision (b).
(b) Whenever the commission institutes an investigation into the
terms and conditions for the extension of services provided by gas
and electrical corporations to new or existing customers, or
considers issuing an order or decision amending those terms or
conditions, the commission shall make written findings on all of the
following issues:
(1) The economic effect of the line and service extension terms
and conditions upon agriculture, residential housing, mobilehome
parks, rural customers, urban customers, employment, and commercial
and industrial building and development.
(2) The effect of requiring new or existing customers applying for
an extension to an electrical or gas corporation to provide
transmission or distribution facilities for other customers who will
apply to receive line and service extensions in the future.
(3) The effect of requiring a new or existing customer applying
for an extension to an electrical or gas corporation to be
responsible for the distribution of, reinforcements of, relocations
of, or additions to that gas or electrical corporation.
(4) The economic effect of the terms and conditions upon projects,
including redevelopment projects, funded or sponsored by cities,
counties, or districts.
(5) The effect of the line and service extension regulations, and
any modifications to them, on existing ratepayers.
(6) The effect of the line and service extension regulations, and
any modifications to them, on the consumption and conservation of
energy.
(7) The extent to which there is cost-justification for a special
line and service extension allowance for agriculture.
(c) The commission shall request the assistance of appropriate
state agencies and departments in conducting any investigation or
proceeding pursuant to subdivision (b), including, but not limited
to, the Business, Transportation and Housing Agency, the Department
of Food and Agriculture, the Department of Consumer Affairs, the
Department of Real Estate, the Department of Housing and Community
Development, and the Department of Economic and Business Development.
(d)
(c) Any new order or decision issued pursuant to an
investigation or proceeding conducted pursuant to subdivision (b)
shall become effective on July 1 of the year which follows the year
when the new order or decision is adopted by the commission, so as to
ensure that the public has at least six months to consider the new
order or decision.
(e)
(d) The commission shall conduct any investigation or
proceeding pursuant to subdivision (b) within the commission's
existing budget , and any state agency or department which
is requested by the commission to provide assistance pursuant to
subdivision (c) shall also provide the assistance within the agency's
or department's existing budget .
(f)
(e) An electrical or gas corporation shall permit any new or
existing customer who applies for an extension of service from that
corporation to design and install , or both, a
gas or electric extension in accordance with the regulations of the
commission and any applicable specifications of that electrical or
gas corporation.
(f) The electrical or gas corporation shall provide a cost-based
bid for requested design or installation costs in advance, to allow
the applicant to shop the bid with other nonregulated providers of
the same service. The electrical or gas corporation's bid shall
reflect all electrical or gas corporation costs related to the work
being performed, and shall be comparable in scope to private sector
bids. The commission may review the bids in order to make a
determination of comparability with the bids of nonregulated design
and installation service providers and may require a detailed
disclosure by the electrical or gas corporation of the related
utility charges being assessed by the electrical or gas corporation
to verify that any related utility charges are separate from the
cost-based bid. The bid price, not including the related utility
charges, shall be confidential and not a part of the detailed
disclosure.
(g) When the electrical or gas corporation is the successful
bidder, only the bid amount shall be applied to the electrical or gas
corporation's rate base, to establish financial treatment that is
comparable to the nonregulated service provider bidders. Design or
installation costs in excess of the electrical or gas corporations
revenue based allowance shall not be added to the electrical or gas
corporation's rate base. Additional charges by the electrical or gas
corporation shall only be permitted when an agreement of change has
been made in the scope of the job or when there is a request for
service that exceeds the lead-time stated in the bid and contractual
agreement.
(h) When the nonregulated service provider is the successful
bidder, the electrical or gas corporation shall only apply to the
rate base the lower of the electrical or gas corporation's bid or the
verified actual cost provided by the applicant.
(i) The electrical or gas corporation may not change the
comparability of bids by applying additional charges or fees for
designs or installations performed by nonregulated service providers,
that would not have been charged for designs or installations by the
electrical or gas corporation.
(j) The electrical or gas corporation shall approve the
manufactured material to be used by a nonregulated service provider
and allow the nonregulated service provider to purchase the materials
from the electrical or gas corporation and any other acceptable
suppliers.
(k) If the cost of design and installation of the extension of
service is less than the revenue based allowance of the electrical or
gas corporation, the difference shall be passed through to the
benefit of ratepayers. When the cost of design and installation of
the extension of service is greater than the revenue based allowance
of the electrical or gas corporation, then the applicant shall pay
the difference.
SEC. 3. Section 784 is added to the Public Utilities Code, to
read:
784. The commission shall allow cities, counties, or cities and
counties to better manage the funds allocated by electrical
corporations for converting overhead facilities to underground
facilities, by selecting fixed bid contracts from both electrical
corporations and nonregulated service provider bidders. The savings
achieved by the use of competitive bidding shall be used to reduce
the cost to the electrical corporation's ratepayers, to better
allocate funds related to the undergrounding project, and to provide
the opportunity to increase the amount of underground facilities that
can be installed for the same cost or allocation.
(b) An electrical corporation shall permit any applicant city,
county, or city and county to select the electrical corporation or
nonregulated service provider to design or install, or both, an
electric conversion project in accordance with the regulations of the
commission and any applicable specifications and inspection of that
electrical corporation.
(c) The electrical corporation shall provide a cost-based bid for
requested design or installation costs in advance, to allow the
applicant to shop the bid with other nonregulated providers of the
same service. The electrical corporation's bid shall reflect all
electrical corporation costs related to the work being performed, and
be comparable in scope to the bids of nonregulated service
providers. The commission may review the bids in order to make a
determination of comparability with the bids of nonregulated service
providers and may require a detailed disclosure by the electrical
corporation of the related utility charges being assessed by the
electrical corporation to verify that any related utility charges are
separate from the cost-based bid. The bid price, not including the
related utility charges, shall be confidential, and not part of the
detailed disclosure.
(d) When the electrical corporation is the successful bidder, only
the bid amount shall be applied to the electrical corporation's rate
base and deducted from the available allocated funds, to establish
financial treatment that is comparable to private nonregulated
service provider bidders. Additional charges by the electrical
corporation shall only be permitted when an agreement of change has
been made in the scope of the job or when there is a request for
completion that is sooner than the lead time stated in the bid and
contractual agreement.
(e) When the nonregulated service provider is the successful
bidder, the electrical corporation shall only apply to the rate base
the lower of the electrical corporation's bid or the verified actual
cost provided by the city, county, or city and county.
(f) The electrical corporation shall be responsible for the
inspection of the design and installation of the underground system,
for operation and reliability purposes, prior to acceptance and
energizing by the electrical corporation. The electrical corporation
shall not charge a fee for initial inspections of nonregulated
service provider designs or installations, in order to avoid a
financial disadvantage for the nonregulated service provider. The
nonregulated service provider shall be responsible for reimbursing
the electrical corporation the cost to re-inspect any corrections
that are needed.
(g) The electrical corporation shall approve the manufactured
material to be used by a nonregulated service provider and allow the
nonregulated service provider to purchase the materials from the
electrical corporation and any other acceptable suppliers.
SEC. 4. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.