BILL ANALYSIS                                                                                                                                                                                                    



                                                             


 ------------------------------------------------------------ 
|SENATE RULES COMMITTEE            |                    SB 33|
|Office of Senate Floor Analyses   |                         |
|1020 N Street, Suite 524          |                         |
|(916) 445-6614         Fax: (916) |                         |
|327-4478                          |                         |
 ------------------------------------------------------------ 
  
                              
                       THIRD READING
                              

Bill No:  SB 33
Author:   Peace (D)
Amended:  5/20/99
Vote:     21

  
  SENATE ENERGY, U.&C. COMMITTEE  :  6-3, 3/23/99
AYES:  Bowen, Baca, Hughes, Peace, Solis, Speier
NOES:  Brulte, Kelley, Mountjoy
NOT VOTING:  Alarcon, Vasconcellos

  SENATE APPROPRIATIONS COMMITTEE  :  7-5, 5/27/99
AYES:  Johnston, Alpert, Bowen, Burton, Escutia, Karnette,  
  Perata
NOES:  Johnson, Kelley, Leslie, McPherson, Mountjoy
NOT VOTING:  Vasconcellos
 

  SUBJECT  :    Public Utilities Commission:  president:   
advisers

  SOURCE  :     Author

 
  DIGEST  :    This bill transfers authority from the Public  
Utilities Commission (PUC) to the Governor to designate a  
president of the PUC and requires the president to direct  
the staff of the PUC, as specified.  The bill authorizes  
the Governor, until January 1, 2003, to appoint up to two  
advisers for each member of the PUC, and prohibits the  
total number of advisers exempt from civil service from  
exceeding 10.

  ANALYSIS  :    Current law specifies that the president of  
                                                 CONTINUED





                                                       SB 33
                                                       Page  
2

the California Public Utilities Commission (CPUC) shall be  
elected by its members.

Current law permits the CPUC to appoint its own attorney  
and executive director who perform at the direction of the  
commission.

This bill provides that the Governor shall designate a  
president of the CPUC from among its members and that the  
president shall direct the CPUC's attorney, executive  
director, and other staff, except for the staff which  
represent the interests of public utility customers and  
subscribers in commission proceedings.

Current law permits each commissioner to have one adviser  
who is exempt from civil service.

This bill provides that, until January 1, 2003, each  
commissioner may instead have up to two advisers who are  
exempt from civil service, and would prohibit the total  
number of advisers exempt from civil service from exceeding  
ten.

The bill requires the PUC to seek funding for the  
additional staffing through the annual Budget Act.

  Background
  
The basic structure of the CPUC was established early this  
century in response to the dominance of railroad interests  
into much of California's economic and political life.  As  
part of Governor Hiram Johnson's reform movement, a series  
of constitutional amendments were enacted, one of which  
established Article XII creating the CPUC.

The CPUC has historically been afforded much independence,  
in keeping with the turn of the century concerns about  
undue influence by the railroads.  Consequently,  
commissioners were appointed for staggered six-year terms  
to ensure that no single governor could appoint a majority  
of commissioners within that governor's four-year term.   
The governor has no power to remove a commissioner; only  
the Legislature has that power.  The CPUC has been given  
broad latitude to set its own procedures and any review of  







                                                       SB 33
                                                       Page  
3

CPUC decisions has historically been limited to review only  
by the Supreme Court.

Lately, some have viewed the CPUC's independence as less a  
virtue and more of a vice.  Rather than independent, the  
CPUC has been seen to be lacking in accountability.   
Supporters of this view cite the CPUC-initiated efforts to  
restructure the electric and gas markets, which were  
severely modified or curtailed after the Legislature found  
that the CPUC proposals failed to find the proper balance  
of the competing public interests.

Concurrent with the 1996 electric restructuring effort, a  
series of procedural reforms were enacted.  Central to  
those reforms was an effort to improve the accountability  
of individual commissioners by encouraging those  
commissioners to spend more time in hearings and to take  
"ownership" of draft decisions.  Those efforts have been at  
least partially successful in that commissioners are now  
more involved in the cases.  The limited judicial review of  
CPUC decisions was also broadened to permit appellate court  
review, rather than Supreme Court review.

This bill expands those reform efforts by doing two things.  
 First, it more explicitly centralizes accountability for  
the functioning of the CPUC with its president by putting  
the Commission's Executive Director and the General Counsel  
directly under the control of the president.  Second, it  
makes the president more directly accountable to the  
Governor because the Governor would appoint the president.

The Chief Administrative Law Judge, the Director of the  
Strategic Planing Division, and the Public Adviser all  
currently are directed by the commission and are unaffected  
by this bill.

This bill also provides for an expansion in the number of  
advisers each commissioner may have who are exempt from  
civil service rules.  Current law permits each commissioner  
to have one adviser who is exempt from civil service rules  
but does not limit the overall number of advisers that each  
commissioner may have.  Current practice provides each  
commissioner with one additional adviser, except for the  
president who has two additional advisers, all of whom are  







                                                       SB 33
                                                       Page  
4

subject to civil service rules.  Under this bill, each  
commissioner may, with the Governor's consent, have up to  
two advisers who are exempt from civil service rules.   
Consequently this bill increases the number of commission  
advisers and allows those advisers to be chosen from a  
broad talent pool.  
  
Comments  

1.The organizational structure created in this bill is very  
  similar to that used in the California Energy Commission  
  (CEC) where the Governor designates a chair and  
  vice-chair and the chair directs the executive director  
  and other staff.  

  The CEC organizational structure is common but by no  
  means universal.  For example, the Coastal Commission  
  elects its own chair and vice-chair and appoints its own  
  executive director, as does the Integrated Waste  
  Management Board.  At the Air Resources Board the  
  Governor appoints the chair and the board appoints its  
  own executive officer.

  Arguably the Governor has always had control over the  
  CPUC and its presidency, both in Republican and  
  Democratic administrations, because if the Governor had a  
  preference for the president then that preference was  
  honored.  Under that theory, this bill simply makes  
  explicit the implicit control that has been historically  
  exercised.  In the case of transitions, where a new  
  administration is assuming control, giving the Governor  
  the power to appoint a president would enhance the new  
  administration's influence within the CPUC. However, this  
  influence would not equate to control until the new  
  administration had appointed a majority of the  
  commissioners.

2.Increasing the number of commission advisers may be  
  justified because commissioners are stretched thinner as  
  a result of the recent reforms requiring greater  
  commissioner participation in hearings.  Expanding the  
  commissioners' personal staffs should make the  
  commissioners less reliant on the professional staff at  
  the CPUC, thus making it possible for CPUC decisions to  







                                                       SB 33
                                                       Page  
5

  reflect more of the values and judgements of the  
  commissioners and less of the professional staff.

  FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
Local:  No

Unknown, potentially up to $1,500,000 annually.  Costs  
could be offset by future staff reductions elsewhere within  
the PUC resulting from reduced workload.

The average cost in salary and benefits for the existing  
PUC advisers is approximately $100,000 annually per  
adviser.  Costs may be less.

  SUPPORT  :   (Verified  5/27/99)

American Federation of State, County And Municipal  
  Employees (AFSCME)
Coalition of California Utility Employees
Southern California Edison
Southern California Gas Workers Council

NC:sl  5/29/99   Senate Floor Analyses 

               SUPPORT/OPPOSITION:  SEE ABOVE

                      ****  END  ****