BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 976|
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THIRD READING
Bill No: AB 976
Author: Hall (D)
Amended: 8/6/12 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 8-1, 6/11/12
AYES: Padilla, Berryhill, De León, DeSaulnier, Emmerson,
Rubio, Strickland, Wright
NOES: Fuller
NO VOTE RECORDED: Corbett, Kehoe, Pavley, Simitian
SENATE APPROPRIATIONS COMMITTEE : 7-0, 7/2/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
ASSEMBLY FLOOR : 62-9, 5/31/11 - See last page for vote
SUBJECT : Public contracts: consulting services:
community choice aggregation
SOURCE : Coalition of California Utility Employees
DIGEST : This bill prohibits an individual or business
that has been contracted to advise a local government on
establishing a Community Choice Aggregation (CCA) from
bidding on subsequent contracts that were influenced by
their previous contract.
ANALYSIS :
CONTINUED
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Existing law:
1. Provides that electricity customers may elect to
aggregated their electricity load and receive
electricity service through a local CCA.
2. Provides that a CCA may solicit bids, broker, and
contract for electricity and energy services for those
customers. The CCA may enter into agreements for
services to facilitate the sale and purchase of
electricity and other related services.
3. State law currently prohibits an entity from who has
been awarded a consulting services contract, from a
State agency, from submitting a bid for, receiving an
award for a contract for the provision of services,
procurement of goods or supplies, or any other related
action which is required, suggested, or otherwise deemed
appropriate in the end product of the consulting
services contract.
Background
CCA is a program available within the service areas of
investor-owned utilities, which allow cities and counties
to purchase and/or generate electricity for their residents
and businesses. Local governments exploring the
feasibility of forming a CCA often seek the expertise and
advice of third party energy consultants to assist them in
their decision making process.
Comments
According to the author's office, firms hired by local
governments to make recommendations to local governments on
forming a CCA often seek contracts to implement their
project recommendations. These firms can provide local
government information on the potential costs and benefits
of forming a CCA. The author's office points out that
there is a conflict of interest that generally would
benefit the consulting firm and that existing law does not
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adequately protect the interests of the taxpayers or
ratepayers affected. State law currently prohibits an
entity who has been awarded a consulting services contract,
from a state agency, from submitting a bid for, receiving
an award for a contract for the provision of services,
procurement of goods or supplies, or any other related
action which is required, suggested, or otherwise deemed
appropriate in the end product of the consulting services
contract.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/7/12)
Coalition of California Utility Employees (source)
California State Pipe Trades Council
International Brotherhood of Electrical Workers
Western States Council of Sheet Metal Workers
OPPOSITION : (Verified 8/7/12)
Cities of Arcata, Mill Valley, and San Jose
Climate Protection Campaign
Kings River Conservation District
Kyoto USA
LEAN Energy US
Marin Clean Energy
Public Utilities Commission
Santa Cruz County Planning Department
Sierra Club California
ARGUMENTS IN SUPPORT : The Coalition of California
Utility Employees, the sponsor of this bill, writes in
support:
It is a crime for a public official to have a financial
interest in a contract made by that official or by the
governing board on which the member sits. A willful
violation can result in a fine or prison time, plus a
lifetime ban on holding public office. According to
court decisions and opinions by the Attorney General,
independent contractors and consultants who exercise
judgment on behalf of public entities are also covered
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by the Section 1090 conflict-of-interest statute.
Unfortunately, "energy consultants" that advise local
governments on the feasibility of creating a CCA
District have violated the spirit and letter of the law.
Local governments exploring the feasibility of forming a
CCA often seek the advice of third party energy
consultants. But due to the extremely technical nature
of energy policy, many local jurisdictions are
ill-equipped to question the assumptions and findings of
these private consultants. Not only do these large
corporations and for-profit consulting firms often
mislead local governments with rosy scenarios of cheap
renewable power, often times their recommendations only
serve to advantage themselves for future contracts.
They often recommend that local governments embark on
overly ambitious proposals that result in more work for
them in the future.
AB 976 would prohibit an individual or business who has
been awarded a contract to advise a local government on
establishing a CCA from bidding on any subsequent
contract that was influenced by their previously awarded
contract. This bill follows decades of case law and
Attorney General Opinions that have affirmed this
position.
ARGUMENTS IN OPPOSITION : The Climate Protection Campaign
writes:
AB 976, which would prohibit a community choice
aggregator ÝCCA] from procuring electricity or energy
services from any entity that provided analyses, advise,
consultation or other services to that CCA prior to the
30-day notice to the incumbent utility of commencement
of service to customers.
This bill, under the guise of good government, unfairly
singles out CCA programs and creates a significant
barrier to their formation in California. This bill
does not apply to other local public entities nor does
it apply to investor owned utilities that have
vigorously fought CCAs.
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AB 976 would make the launch of a CCA program extremely
difficult by limiting a prospective CCA's ability to
obtain information critical to its power supply
agreement for program launch. In this way, AB 976 acts
as a "poison bill" to a CCA because a power supply
agreement must be in place to begin serving customers.
ASSEMBLY FLOOR : 62-9, 5/31/11
AYES: Achadjian, Alejo, Allen, Atkins, Bill Berryhill,
Block, Blumenfield, Bonilla, Bradford, Brownley,
Buchanan, Butler, Charles Calderon, Campos, Carter,
Cedillo, Cook, Davis, Eng, Fletcher, Fong, Fuentes,
Furutani, Beth Gaines, Galgiani, Garrick, Gatto, Gordon,
Hagman, Halderman, Hall, Harkey, Roger Hernández, Hill,
Huber, Hueso, Jeffries, Jones, Lara, Bonnie Lowenthal,
Ma, Mendoza, Miller, Mitchell, Morrell, Nestande,
Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, John A. Pérez
NOES: Ammiano, Donnelly, Feuer, Grove, Hayashi, Huffman,
Logue, Mansoor, Yamada
NO VOTE RECORDED: Beall, Chesbro, Conway, Dickinson,
Gorell, Knight, Monning, Wieckowski, Williams
RM:k 8/8/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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