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.
          
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          |Version: August 18, 2015        |Policy Vote: E., U., & C. 7 - 3 |
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          |Urgency: No                     |Mandate: Yes (see staff         |
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          |Hearing Date: August 24, 2015   |Consultant: Marie Liu           |
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          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  
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          (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  








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          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. 


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