BILL ANALYSIS                                                                                                                                                                                                    Ó

                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 48 (Hill) - Public Utilities Commission.
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          |Version: May 6, 2015            |Policy Vote: E., U., & C. 9 - 0 |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 18, 2015      |Consultant: Marie Liu           |
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          This bill meets the criteria for referral to the Suspense File. 

          Summary:  SB 48 would make various changes to the internal  
          governance, annual reporting requirements, and meeting  
          requirements of the California Public Utilities Commission  

           Ongoing annual costs in the tens of thousands of dollars and  
            possibly into the low thousands to the Public Utilities  
            Reimbursement Account (special) to have at least six meetings  
            in Sacramento instead of San Francisco. 
           One-time costs of $160,000 annually for two years followed by  
            estimated annual costs of $360,000 to the Public Utilities  
            Reimbursement Account (special) to seek views of interested  
           Unknown possible legal costs to the Public Utilities  
            Reimbursement Account (special) to respond to claims under the  
            Bagley-Keene Open Meeting Act.


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           Minor and absorbable costs to the Public Utilities  
            Reimbursement Account (special) for additional meetings in  
            order for the commission to direct the executive director,  
            attorney, and staff.

          Background:  The CPUC is established in the California Constitution and is  
          governed by five full-time commissioners, appointed by the  
          governor and confirmed by the Senate, and staffed by  
          approximately 1,000 individuals who, together, regulate  
          privately owned electric, natural gas, telecommunications,  
          water, railroad, rail transit, and passenger transportation  
          companies. CPUC staff includes four personal advisors to each  
          commissioner, except five to the president, as well as the 42  
          judges of the Administrative Law Division - attorneys, engineers  
          and accountants who prepare the docket for all CPUC official  
          filings, including maintenance of the official record of  

          The CPUC is subject to the Bagley-Keene Open Meeting Act, which  
          requires a state body to take actions only at a public meeting  
          following the public posting of an agenda describing the item  
          for proposed action at least 10 days prior to the meeting. Any  
          private congregation of a majority of the members of a state  
          body at the same time and place to hear, discuss, or deliberate  
          upon any item that is within its jurisdiction is unlawful.  
          However, only the Supreme Court and the court of appeal have the  
          jurisdiction over any order or decision of the CPUC, including  
          Bagley-Keene Open meeting requirements. 

          Proposed Law:  
            This bill would make various changes to the operation and  
          internal governance of the CPUC. Specifically, this bill would:
           Allow actions to enforce the Bagley-Keene Open Meeting Act or  
            the California Records Act to be brought to the superior  

           Remove the president's ability to solely direct the executive  
            director, the attorney, and other staff of the commission and  
            instead require the staff to be directed by the entire  


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           Require that the CPUC hold at least six sessions annually in  

           Require that all written testimony submitted in a formal  
            proceeding of the CPUC to be posted on its website.

           Require the commission to include performance criteria for the  
            commission and executive director as well as an evaluation of  
            the executive director for the past year based on those  
            criteria in its annual workplan.

           Expand the existing required annual report regarding cases  
            before the agency to also include information on the number of  
            scoping memos issued in each proceeding and a description of  
            the commission's timeliness in resolving cases.

           Subject the commission's adjudication proceedings to the  
            Administrative Adjudication Code of Ethics (GOV§11476 et seq.)

           Explicitly require the commission to seek the views of those  
            who are likely to be affected by a proceeding, except in  
            adjudication cases, and to describe these efforts in the text  
            of the order instituting the investigation or proceeding.

           SB 215 (Leno) would make similar revisions to the CPUC in  
            regards to the powers of the president and would establish the  
            criteria for when an administrative law judge should be  
            excused from a proceeding. SB 215 is currently in the Senate  
            Energy, Utilities, and Commerce Committee. 

           SB 660 (Leno, Hueso) would make various changes to the ex  
            parte communication laws related to ratesetting and  


          SB 48 (Hill)                                           Page 3 of  
            quasi-legislative proceedings at the CPUC. SB 660 is set to be  
            heard in the Senate Appropriations Committee on May 18, 2015.

           SB 33 (Peace) Chapter 509, Statutes of 1999 put the executive  
            director and general counsel directly under the control of the  
            president and authorize the Governor to appoint the president.

          Comments:  In order to have at least six meetings in Sacramento  
          instead of San Francisco, the CPUC estimates costs in the tens  
          of thousands of dollars to the low hundreds of thousands of  
          dollars. The costs in the low range would include travel costs  
          for approximately 40 people including CPUC staff and the  
          commissioners for six meetings. The higher range would be  
          include facility costs should no state or complimentary  
          facilities that meet the CPUC's needs be available. The CPUC  
          notes that the meeting facility would need to be of sufficient  
          size, have a space for closed meetings, be compatible with the  
          CPUC's video/audio contractor as all meetings are webcasted and  
          This bill would require the CPUC to actively seek the views of  
          parties that could be affected by an rulemaking, including those  
          that might benefit from the rulemaking. To implement this  
          requirement, the CPUC would need a proceeding to establish the  
          rules so that the outreach is performed uniformly and  
          transparently. There would also be ongoing costs to implement  
          the outreach. These implementation costs would depend on the  
          process established by the rulemaking, but the CPUC anticipates  
          that would need one analyst for every five proceedings. Given  
          that there were 15 proceedings in 2014, it anticipates needing  
          three Public Utilities Regulatory Analysts III to carry out the  
          outreach annually plus some supervisorial assistance and legal  
          support for an annual cost of approximately $360,000 annually.  
          Staff notes that according to the author's office, this language  
          was modeled after an Executive Order issued by President Obama  
          aimed at improving regulation and regulatory review by ensuring  
          that regulations are adopted in a process that involves public  
          opinion. It is open to interpretation on what level of effort is  
          called for by this bill. Arguably it is possible to fulfill the  
          requirements of this provision with a notice in the major  


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          newspapers as well as a more intensive effort that involved  
          individually contacting known interest groups. The proceeding  
          establishing these rules would define the necessary level of  
          effort, though staff believes it is reasonable to assume that  
          the CPUC would be compelled to take a relatively more involved  
          effort in its outreach efforts as a result of this bill.

          This bill would make it easier to bring forward an action  
          against the CPUC under the Bagley-Keene Open Meeting Act by  
          allowing such actions to be brought to the superior court in  
          addition to the court of appeal and the Supreme Court. If the  
          CPUC is complying with the requirements of the Bagley-Keene Open  
          Meeting Act, there should seemingly be minimal costs associated  
          with this provision. However, the CPUC notes that it may have  
          costs associated with baseless claims that may be filed in order  
          to undermine or delay CPUC proceedings. Staff notes that while  
          it may be reasonable to assume that a party may use baseless  
          claims as a strategic move especially given that the CPUC  
          addresses controversial issues, any estimate of such costs would  
          be speculative.

          This bill will change the internal governance of the CPUC by  
          specifying that the executive director, chief counsel, and staff  
          operated under the direction of the commission as a whole, not  
          just the president. The CPUC notes potential costs, ranging from  
          minimal to hundreds of thousands of dollars, associated with  
          this change as more decisions would need to be made in meetings  
          in order for the commission to provide direction. Staff notes  
          that historically the commission was responsible for directing  
          the staff. This changed in 1999 with the passage of SB 33  
          (Peace) which gave the president the sole power to direct staff  
          in an attempt to improve accountability. Given that there were  
          no potential savings anticipated with the empowering of the  
          president when SB 33 was heard by the Assembly Appropriations  
          Committee, staff assumes that the costs of removing the powers  
          of the president are likely to be minor and absorbable.

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