BILL NUMBER: AB 2303	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 17, 2004
	AMENDED IN ASSEMBLY  APRIL 21, 2004
	AMENDED IN ASSEMBLY  APRIL 15, 2004

INTRODUCED BY   Assembly Member Leno

                        FEBRUARY 19, 2004

   An act to add Section 451.5 to the Public Utilities Code, relating
to public utilities.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2303, as amended, Leno.  Public utilities:  corporate taxation:
insolvency.
   (1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, and authorizes the
commission to fix just and reasonable rates and charges.
   This bill would require that any expense resulting from a bonus
paid to an executive officer, as defined, of an insolvent  public
 utility  , as defined,  be borne by the shareholders
of the  public  utility and would prohibit any expense
resulting from the payment of a bonus by an insolvent  public
 utility from being recovered in rates.   The bill would
require the commission to audit insolvent public utilities to ensure
that the bill is enforced. 
   (2) Under existing law, a violation of the Public Utilities Act or
an order of the commission is a crime.
   Because certain provisions of this bill would be a part of the act
and a violation of those provisions would be a crime, this bill
would impose a state-mandated local program by creating a new 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.  Section 451.5 is added to the Public Utilities Code, to
read:
   451.5.  (a) Any expense resulting from a bonus paid to an
executive officer of an insolvent  public  utility shall be
borne by the shareholders of the  public  utility. No
expense resulting from the payment of a bonus by an insolvent 
public  utility may be recovered in rates.   After a public
utility becomes insolvent, the commission shall perform an audit to
ensure that this section is enforced.   For purposes of this
section, "insolvent" means the  public  utility has 
ceased to pay its debts in the ordinary course of business, the
utility cannot pay its debts as they become due, or the utility's
liabilities exceed the utility's assets.   filed for
bankruptcy protection in a  United States Bankruptcy Court. 
   (b) The requirements of subdivision (a) do not apply to any bonus
that is part of a standard employee compensation contract.
   (c) For purposes of this section, "executive officer" means any
person who performs policy making functions and is employed by the
 public  utility, and includes the president, secretary,
treasurer, and any vice president in charge of a principal business
unit, division, or function of the  public  utility.
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B 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 XIII B of the California
Constitution.