BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 853 (Roger Hernández) - Electrical and gas corporations: security of plant and facilities. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 18, 2015 |Policy Vote: E., U., & C. 7 - 3 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes (see staff | | |comment) | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 24, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 853 would require the California Public Utilities Commission (CPUC) to evaluate and consider approval of an electrical or gas corporation's utilization of persons not employed by the utility as part of that utility's general rate case application. Fiscal Impact: At least $200,000 from the Public Utilities Reimbursement Account (special) to consider advice letters or GRC petitions to allow the use of contract works. Background: Existing law establishes the CPUC to regulate privately-owned public utilities in California including the setting of rates. Requests to recover monies for distribution and generation costs from ratepayers are considered through a general rate case AB 853 (Roger Hernández) Page 1 of ? (GRC). GRCs are major regulatory proceedings and provide the CPUC an opportunity to perform an exhaustive examination of a utility's operations and costs. Usually performed every three years, the GRC allows the CPUC to conduct a broad and detailed review of a utility's revenues, expenses, and investments in plant and equipment to establish an approved revenue requirement. Through the GRC a utility forecasts how they will structure their operations and make investments for the next three years. Proposed Law: This bill would require an electrical corporation or gas corporation (IOU) to use direct employees for any work associated with the design, engineering, and operation of its nuclear, electrical, and gas infrastructure, including all computer and information technology systems unless it obtains written approval from the CPUC. An IOU must request approval for the use of non-direct employees through the utility's GRC in a separate stand-alone section. The IOU would be required to demonstrate that the work can be performed safely and securely and without jeopardizing the security of its nuclear, electrical, and gas infrastructure. The commission would be required to issue a written decision as part of the GRC that determines whether the utility can utilize non-direct employees. Staff Comments: Given the wide scope of the work that would require approval from the CPUC should non-direct employees be used, the CPUC assumes that every GRC would contain a review of the use of non-direct employees. To perform the additional review, the CPCU anticipates needing approximately $200,000 annually. Staff notes that the CPUC estimate may be considered a minimum. GRCs are typically considered every three years. This bill does not offer a process for which a utility could seek approval for the use of non-direct employees for work that was unanticipated at the time of the last GRC, including emergency work. A utility could file a Petition to Modify a previous GRC decision, which would result in workload not anticipated in the CPUC's estimate. Also, there may be additional costs to the extent that the AB 853 (Roger Hernández) Page 2 of ? requests to use non-direct employees result in extra complaints, data requests, and other motions. It is unclear to the extent the CPUC's estimates take into account these costs. This bill contains codified findings and declarations. In the interest of code clarity and efficiency, staff recommends this bill be amended to place the findings and declarations in an uncodified section of the bill. This bill amends the Public Utilities Code. As violations of the PUC are crimes, this bill modifies crimes thereby creating a local mandate. However, under the California Constitution, such mandates are not reimbursable. Proposed Author Amendments: The author has submitted amendments past the amendment deadline that would exclude the construction, alteration, demolition, installation, maintenance, or repair work on its nuclear, electrical, or gas infrastructure from the requirements of this bill. Also excluded from the requirement would be the design and engineering of standard equipment purchased from an outside vendor. The amendments would also make the requirements effective with the next GRC for each utility. -- END --