BILL ANALYSIS
AB 1082
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Date of Hearing: May 10, 1999
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick Wright, Chair
AB 1082 (Calderon) - As Amended: May 6, 1999
SUBJECT : Public Utilities Commission: electric restructuring.
SUMMARY : Establishes that employee related transition costs
made pursuant to Section 375 of the Public Utilities Code are
deemed reasonable. Specifically, this bill :
Specifies that the recovery of employee related transition costs
as described in Section 375 of the Public Utilities Code are to
deemed reasonable unless the California Public Utilities
Commission (CPUC) makes a specific finding that those costs are
not reasonable.
EXISTING LAW authorizes CPUC to allow for the recovery of
reasonable employee related transition costs incurred as a
result of mitigation efforts related to potential negative
impacts related to electric industry restructuring.
Indicates that reasonable costs include those expended for
severance, retraining, early retirement, outplacement and
related expenses for the employees.
Authorizes those costs to be recovered through Competition
Transition Charges for a period not to extend beyond December
31, 2006.
Prohibits the recovery of employee related transition costs for
officers, senior supervisory employees and professional
employees performing predominantly regulatory functions.
FISCAL EFFECT : Unknown.
COMMENTS : The author has introduced this bill to establish a
clear process by which CPUC can oversee the investor owned
utilities (IOUs) application for treatment of employee related
transition costs pursuant to Section 375 of the Public Utilities
Code. The sponsors of this bill, the Coalition of California
Utility Employees and the Southern California Gas Workers
Council have indicated that this bill is needed because CPUC has
not yet ruled on the reasonableness of employee transition costs
AB 1082
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submitted by the IOU. This bill would require CPUC to make
specific findings as to the reasonableness of any transition
costs that were not deemed reasonable under Section 375 of the
Public Utilities Code.
The Office of Ratepayer Advocates (ORA) is opposed to this bill
because they believe that it shifts the burden of proof from the
applicant IOU to CPUC to demonstrate that the expenses are
reasonable. ORA believes that the applicant should have the
burden of proof in showing that expenses charged to customer are
reasonable. ORA indicates that this bill could impact current
proceedings where the utilities have sought recovery of funds
related to monies spent to retain employees in the face of
electricity restructuring. ORA is concerned that the IOUs did
not file sufficient information to determine whether the monies
spent were, in fact, reasonable.
This bill specifies that certain costs, such as severance,
retraining, early retirement, outplacement and related employee
expenses, identified in Section 375 of the Public Utilities Code
are reasonable. This bill further states that CPUC must
determine the reasonableness of any costs other than those
identified in Section 375 of the Public Utilities Code. The
retention bonuses described by ORA are not included in Section
375 of the Public Utilities Code. The current process, whereby
the IOUs must make application for recovery of employee related
transition costs, places the ultimate decision-making power in
CPUC. Pursuant to this bill, if the IOUs, as suggested by ORA
fail to provide relevant information upon which CPUC can make a
factual decision, any costs not specified of Section 375 of the
Public Utilities Code are subject to a finding of
unreasonableness. CPUC and not the IOU should be the ultimate
decision-maker as to any additional costs that will be included
in Competition Transition Charges.
REGISTERED SUPPORT / OPPOSITION :
Support
Coalition of California Utility Employees
Southern California Gas Workers Council
Opposition
Office of Ratepayer Advocates
AB 1082
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Analysis Prepared by : Carolyn Veal-Hunter / U. & C. / (916)
319-2083