BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 1908 - Canciamilla Hearing
Date: June 29, 2004 A
As Amended: June 16, 2004 FISCAL B
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DESCRIPTION
Current law requires the California Public Utilities
Commission (CPUC) to regulate the rates of investor-owned
water utilities.
This bill transfers the duty to regulate water utilities to
the Department of Water Resources (DWR) by January 1, 2006.
This bill makes numerous findings and declarations.
BACKGROUND
AB 2838 (Canciamilla), Chapter 1147, Statutes of 2002, was
designed to improve the CPUC's processing of water rate
cases by requiring regular review by the commission and
authorizing interim rate increases when final decisions are
delayed. Last week, the committee passed AB 1157
(Canciamilla), which removed the CPUC's discretion for
authorizing interim rate increases and applied its
provisions retroactively.
DWR's mission is to manage the state's water resources.
It's six major activities are:
q Preparing and updating the California Water Plan.
q Planning, designing, constructing, operating, and
maintaining the State Water Project.
q Protecting and restoring the Sacramento-San Joaquin
Delta.
q Regulating dams, providing flood protection, and
assisting in emergency management.
q Educating the public on the importance of water and its
proper use.
q Serving local water needs by providing technical
assistance.
COMMENTS
1.New Bill . Prior to June 16, this bill dealt with water
recycling.
2.Giving DWR A New Job . As noted above, DWR is tasked with
the job of managing the state's water resources. It has
no dealings with investor-owned water utilities, does not
deal with retail customers, and has no experience in
reviewing requests to raise retail water rates. If the
Legislature wants to move investor-owned water utility
rate regulation from the CPUC to DWR, it will need to
give DWR the money, the staff, and the expertise to
protect water company customers from excessive water
utility rates. Adding to the complexity, DWR will need
to develop processes for investigating rate increase
requests, holding public hearings, resolving complaints,
and much more.
3.Pick A Horse . As noted above, AB 2838 (Canciamilla),
Chapter 1147, Statutes of 2002, was designed to improve
the CPUC's processing of water rate cases by requiring
the CPUC to review the investor-owned water companies on
a regularly scheduled basis and authorizing interim rate
increases when final decisions are delayed. Last week,
the committee passed AB 1157 (Canciamilla), which removed
the CPUC's discretion for authorizing interim rate
increases, despite evidence the CPUC had approved 22 of
28 interim rate increase requests.
Now, less than 18 months after AB 2838 was enacted and
one week after AB 1157 passed its first policy committee,
this bill proposes to move investor-owned water utility
regulation from the CPUC to DWR.
4.Water Industry Decision Makes It Harder To Appeal CPUC
Decisions . To the extent water utilities have concerns
with CPUC decisions, there is an established process for
appeal and judicial review. Several years ago, the
judicial review process for CPUC decisions was revised to
make it more accessible to companies, but the water
utilities don't benefit from those changes because they
lobbied for and received an exemption from those changes.
Consequently, CPUC decisions in water utility cases can
only be reviewed by the California Supreme Court.
5.Findings & Declarations . Section 1 of this measure
includes a number of legislative "findings and
declarations" that appear to be unrelated to the
operative section of the measure. There are serious
accusations of illegal behavior which should be
documented before they are enshrined in a bill.
6.Related Legislation . AB 1157 (Canciamilla) allows
CPUC-reglated water companies to increase their rates
without CPUC approval in certain circumstances. That
bill was approved by this committee and is pending in the
Senate Appropriations Committee.
AB 1647 (J. Horton) allows CPUC-regulated water companies
to receive money from all voter-approved bond measures.
That bill is scheduled to be heard by this committee
today.
PRIOR VOTES
Assembly Floor (61-5)*
Assembly Water, Parks and Wildlife Committee(10-2)*
* Votes on a prior, unrelated version of the bill.
POSITIONS
Sponsor:
Author
Support:
None on file
Oppose:
None on file
Randy Chinn
AB 1908 Analysis
Hearing Date: June 29, 2004