BILL ANALYSIS
AB 2803
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Date of Hearing: April 20, 2004
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Mark Ridley-Thomas, Chair
AB 2803 (Jerome Horton) - As Amended: April 14, 2004
SUBJECT : Public Utilities Commission: economic impact
analyses.
SUMMARY : Requires that when the Public Utilities Commission
(CPUC) determines that a ratemaking or quasi-legislative case
requires a hearing, then the assigned commissioner or the
assigned administrative law judge shall designate in the scoping
memo the need to perform an economic impact analysis.
Specifically this bill :
1)Requires that if an economic impact analysis is needed, then
the findings of the analysis shall be included as part of the
final written decision.
2)Prohibits costs resulting from the decision or the analysis to
be borne by ratepayers or the General Fund.
EXISTING LAW :
1)Establishes the Office of the Ratepayer Advocates (ORA) with
the mission to represent ratepayers so that they receive safe
and reliable utility service, at the lowest possible rates,
and to ensure that utility customers have access to the best
possible information about their options and choices.
2)States the intent of the Legislature is for the CPUC to assess
the economic effects or consequences of its decisions as part
of each ratemaking, rulemaking, or other proceeding.
3)Prohibits the CPUC from creating a separate office to evaluate
economic development consequences of CPUC activities.
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of the Bill : The CPUC regulates a varying array of
public utilities and activities, ranging from electricity and
natural gas to hot air balloons and railroad crossings. CPUC
AB 2803
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regulatory decisions can affect a broad range of issues. CPUC
regulations can promote low rates and consumer protection as
well advance reliable and high quality service. The CPUC also
has enforcement powers and can levy fines to punish companies
that defraud customers or intentionally offer subpar service.
As with any regulatory agency, consequences of CPUC actions
will most like also have economic development impacts.
Unlike most state agencies, all major decisions made at the
CPUC are completed through a trial like proceeding where all
parties are allowed to submit testimony and the final decision
is based on highly developed record. This procedure allows
all parties to submit testimony regarding all aspects of the
proceeding, including the economic impact of the action. This
bill additionally allows either the commissioner or the
administrative law judge of the trial to determine whether the
economic impact may be significant enough to require the CPUC
to perform a separate economic impact analysis to provide
additional information for a thorough decision to be made.
2)Need for Additional Analysis : As introduced, the bill would
have established an Office of Economic Development within the
CPUC to ensure that policies and regulations created at the
CPUC would enhance investment and development in California
and to assist the CPUC in assessing the economic impacts of
CPUC decisions. Concerns were raised in the Assembly
Utilities and Commerce Committee hearing regarding whether the
need for an economic analysis to be done requires the
establishment of an entire "office" given already strained
resources. The author took amendments in Committee that draws
upon the intent of the introduced language by requiring CPUC
to gather as much information as possible before making a
decision.
Supporters of the bill state that "the CPUC's decisions and
orders have the impact of dictating the allocation of
resources throughout the state. Their decisions impact
whether significant job creating capital investments are made
so that an electrical generation facility is built, a natural
gas pipeline is extended, water is supplied or the latest
communications technology is deployed. Further, for each of
these industries, sound policy needs to be adopted that
doesn't deter investment or increase costs resulting in job
loss." Additionally, supporters point to former Governor Gray
Davis' 2003 State of the State Address where he specifically
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said he would "ask the Public Utilities Commission to create
an Office of Economic Development. It will review all major
proceedings before the PUC to determine their benefit to the
economy, infrastructure and job creation."
Concerns raised when the bill was heard in Assembly Utilities
and Commerce Committee included the possibility of increased
legal action that may take place as a consequence of the
requirements made by this bill. By requiring the CPUC to
conduct a study when seen appropriate, it may allow entities
to hold the CPUC legally accountable if a CPUC decision
results badly and they made the decision despite the economic
impact analysis warnings. Committee members may question the
need to require a study on the economic effects of decisions,
when there is already a process for studies to be submitted
during the proceeding.
3)Double Referral : On Monday, April 12, the Assembly Utilities
and Commerce Committee passed this bill with a vote of 10-0.
The author took amendments deleting the establishment of an
Office of Economic Development within the CPUC and inserting
current language requiring an economic impact analysis when
determined necessary.
REGISTERED SUPPORT / OPPOSITION :
Support
American States Water Company
California Chamber of Commerce (Sponsor)
Cingular Wireless
Southern California Water Company
Verizon
Opposition
None on file.
Analysis Prepared by : Annie Chang / J., E.D. & E. / (916)
319-2090