BILL ANALYSIS
SB 608
Page 1
Date of Hearing: June 27, 2005
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Lloyd E. Levine, Chair
SB 608 (Escutia) - As Amended: June 16, 2005
SENATE VOTE : 27-12
SUBJECT : Public Utilities Commission: Division of Ratepayer
Advocates: office of the public advisor.
SUMMARY : Expands and clarifies the role of the Office of the
Ratepayer Advocates (ORA), within the California Public
Utilities Commission (PUC). Specifically, this bill :
1)Changes the name of the Office of Ratepayer Advocates to the
Division of Ratepayer Advocates (DRA).
2)Makes the DRA Director a position that serves for a set
six-year term.
3)Requires the DRA to represent the interests of customers in
all significant proceedings and forums, rather than just
proceedings at the PUC.
4)Requires the DRA Director to develop the DRA budget, subject
to PUC approval.
5)Authorizes the DRA Director to appoint a lead attorney, who
serves at the pleasure of the Director, to represent DRA.
6)Clarifies that the PUC must provide the DRA with sufficient
legal support to ensure that customers' interests are
effectively represented.
7)Expands the PUC's public outreach program by requiring the
commission to publicize programs that encourage participation
in proceedings.
EXISTING LAW
1)Establishes the ORA at the PUC to represent the interests of
public utility customers and subscribers at all significant
proceedings at the PUC. The ORA Director is a pleasure
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appointment of the Governor, subject to Senate confirmation.
2)Establishes within the PUC an Office of the Public Adviser to
assist the public who desire to testify or present information
to the PUC.
FISCAL EFFECT : Unknown.
COMMENTS : In 1996, the Legislature created the ORA to
represent consumer interests at the PUC (SB 960 (Leonard),
Chapter 856, Statutes of 1996). This legislation formalized an
organizational structure created by the PUC that established a
consumer advocacy function separate from the PUC's
decision-making apparatus. The Legislature strengthened the
consumer advocacy function by making the ORA Director a
Governor's appointment and dealt with conflict of interest
concerns by requiring the creation of appropriate rules.
Concerns have been raised about shortcomings in the statutes
which could limit the ORA's effectiveness. Those concerns
include ORA's lack of a separate budget and spending authority
and ORA's requirement to use the PUC Legal Division's attorneys,
which can compromise the ORA's representations.
1) Control over budget : This bill attempts to strengthen the ORA
by giving the ORA Director more control over the resources
necessary to perform the work.
Currently, the ORA budget is included within the utility
regulation allocation of the entire PUC budget. As such, the PUC
possesses some flexibility to redirect resources toward other
utility oversight programs, such as utility safety and market
monitoring. The supporters of this bill believe that this
flexibility has allowed the PUC to transfer resources away from
the ORA to other programs and the PUC, leaving the ORA with
insufficient resources.
This bill attempts to address ORA's budgeting problem by: (1)
requiring the Director of the ORA to develop a budget for the
division subject to final approval by the PUC, (2) requiring the
PUC to assign personnel to the ORA, and (3) creating a separate
PUC Ratepayer Advocate Account in the General Fund.
This proposal however, may not provide the ORA any more fiscal
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autonomy than it has now. Requiring the ORA Director to
negotiate the annual budget with the PUC compromises ORA's
loyalties and provides the PUC ongoing leverage over ORA
decisions. While this bill attempts to improve ORA's
independence by permitting the Director to negotiate a budget
and expend funds out of a separate account, the PUC can renege
on its "negotiation" after the annual Budget Act is enacted. In
addition, a new separate account does not need to be created for
each function. The author and committee may wish to consider
deleting the provision that requires the Director of ORA to
negotiate its budget with the PUC and instead, require the
Director of ORA consult with the Department of Finance and/or
the State Controller's Office to separately schedule the ORA's
budget in the annual Budget Act. In addition, the author could
consider requiring the ORA to submit any requested changes in
its budgeted appropriation to the Department of Finance for
inclusion in the annual budget process, consistent with the
budget process used by other State entities.
The creation of another new fund may not be necessary and
increases the administrative maintenance of another new fund.
The author and committee may wish to request the Department of
Finance and/or the legislative budget committees to create a
separate item of appropriation in the annual Budget Act that
would permit the Legislature to annually appropriate funds for
the separate Division, and preclude the PUC from performing
intra-schedule transfers to other program areas .
2) Control over ORA's Attorneys: Currently, ORA is represented
by lawyers who serve under the PUC's General Counsel in the
PUC's legal division, who in turn report to the PUC President.
This means that ORA attorneys may actually have conflicts of
interest as they report to both the PUC's General Counsel and to
an entity that represents ratepayer interests in front of the
PUC itself. This bill attempts to resolve that conflict by
authorizing the ORA Director to appoint an attorney to represent
the ORA who reports to the Director and serves at the pleasure
of the Director. This is a significant step toward creating
legal independence for the ORA, but still leaves the rest of
ORA's attorneys responsible to both the PUC General Counsel and
to the ORA Director. If the goal is to provide ORA with truly
independent legal representation, further changes are necessary.
The author and committee may wish to consider clarifying that
all attorneys representing ORA shall report to and be directed
by the Director.
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3) Location, Location, Location : Under current law, the ORA only
has jurisdiction to represent ratepayers at significant
proceedings at the PUC. While any other party to a proceeding at
the PUC may appeal a final decision of the PUC in California
courts, the ORA does not have clear standing or jurisdiction to
appeal any final decisions of the PUC. This lack of standing
creates a situation in some proceedings where impacted utilities
can appeal a PUC decision, but there is no group representing
ratepayer interests that has the standing or the financial
ability to appeal the decisions.
Additionally, the ORA has no clear standing to represent
ratepayers in other venues including federal courts and federal
agencies. While the PUC, the California Electricity Oversight
Board, and the Attorney General all have standing to represent
ratepayers in various matters before federal courts and
agencies, the author believes that at times these groups may not
be acting in the best interest of ratepayers in their decisions
to or not to participate in matters in these venues. To deal
with a situation where one of these other state agencies may not
be acting in the ratepayers' best interest, this bill would
allow the ORA to represent ratepayers in these venues.
Opponents of this provision are concerned that granting the ORA
authority to participate in other venues outside of the PUC will
lead to duplicative representation of ratepayer interest, or
conflicting representation of ratepayer interests. To prevent
duplicative or conflicting representation of ratepayer interests
in other venues, the committee and the author may want to
consider amending the bill to leave the current rules on
standing in other jurisdictions in place .
4) True Independence: The purpose of this bill is to create more
autonomy for the ORA. However, as long as the ORA is a division
of the PUC and the PUC continues to control parts of the ORA's
staff and budget the ORA will never be a true independent voice
for consumers. Other states that have offices that advocate
solely for ratepayer interests, have placed those office in
agencies that are separate from the state's PUC, often times at
the Attorney General Office. Locating the ratepayer advocate's
office at another agency guarantees that it will not be subject
to control or influence by the state's PUC. If the desire is to
create true independence for the ORA the author and the
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committee may want to consider amending the bill to move the ORA
out of the PUC and to the Attorney General's office or the
office of another state agency .
REGISTERED SUPPORT / OPPOSITION :
Support
California Telephone Association (CTA) (support if amended)
Office of Rate Payer Advocates (ORA)
Opposition
California Public Utilities Commission (oppose unless amended)
Pacific Gas & Electric (oppose unless amended)
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083