BILL NUMBER: AB 2303	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 23, 2004
	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   executive bonuses  .
   (1) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities  , and 
 .  Existing law  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
  a  public utility  , as defined 
 that has ceased to pay its debts in the ordinary course of
business , 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.    The bill would exempt from these
requirements a bonus that is specifically defined in a standard
employee compensation contract. 
   (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
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. 

   451.5.  (a) Any expense resulting from a bonus paid to an
executive officer of a public utility that has ceased to pay its
debts in the ordinary course of business shall not be recoverable
either directly or indirectly in rates and shall be borne exclusively
by the shareholders of the public utility.  This prohibition shall
be operative for a period of no less than two years after the public
utility resumes paying its debts in the ordinary course of business,
and shall be operative for any additional time period as determined
by the commission.
   (b) The requirements of subdivision (a) do not apply to a bonus
that is specifically defined in 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  subject to the approval of the board of directors
 , 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.