Amended  IN  Assembly  May 16, 2024
Amended  IN  Assembly  April 08, 2024
Amended  IN  Assembly  March 21, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 2054

Introduced by Assembly Member Bauer-Kahan

February 01, 2024

An act to amend Section 25205 of the Public Resources Code, and to amend Sections 303 and 309.5 of, and to add Section 454.15 to, the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2054, as amended, Bauer-Kahan. Energy: employment, gifts, and rates.
(1) Existing law establishes the State Energy Resources Conservation and Development Commission (Energy Commission) consisting of 5 members appointed by the Governor subject to confirmation by the Senate. Existing law prohibits members of the Energy Commission from being employed by an electric utility or applicant or, within 2 years after the member ceases to be a member of the Energy Commission, by a person who engages in the sale or manufacture of a major component of a facility. A violation of this provision is punishable as a felony.
This bill would prohibit a member of the Energy Commission from being employed by an entity subject to regulation by the Energy Commission for a period of 3 years one year after ceasing to be a member of the Energy Commission. The bill would prohibit a member of the Energy Commission from accepting a gift from an entity subject to regulation by the Energy Commission. By expanding the application of an existing crime, this bill would impose a state-mandated local program.
(2) The California Constitution establishes the Public Utilities Commission (PUC), with jurisdiction over all public utilities, and provides for the composition and appointment of the PUC. Existing law prohibits an executive of a public utility from serving as a commissioner on the PUC within 2 years after leaving the employment of the utility.
This bill would prohibit a PUC commissioner from being employed by an entity subject to regulation by the PUC for a period of 3 years one year after the end of the commissioner’s term of office. The bill would prohibit a PUC commissioner from accepting a gift from an entity subject to regulation by the PUC.
(3) Existing law establishes within the PUC the independent Public Advocate’s Office of the Public Utilities Commission to represent and advocate on behalf of the interests of public utility customers and subscribers within the commission’s jurisdiction. Existing law requires the director of the Public Advocate’s Office to be appointed by, and serve at the pleasure of, the Governor, subject to confirmation by the Senate.
This bill would prohibit the director of the Public Advocate’s Office from being employed by an entity subject to regulation by the PUC for a period of 3 years one year after the end of the director’s term of office. The bill would prohibit the director from accepting a gift from an entity subject to regulation by the PUC.
(4) Existing law authorizes the PUC to fix the rates and charges for every public utility, and requires that those rates and charges be just and reasonable.
This bill would, in any instance where the PUC authorizes a forecast for a category of costs in a ratesetting proceeding and authorizes the recording of costs in an existing or new balancing account for potential rate recovery above the authorized forecast, require the public utility to submit an application for rate recovery and require the PUC, in a ratesetting proceeding, to determine if the recovery of costs above the authorized forecast is just and reasonable before the public utility is authorized to recover any costs above the authorized forecast. The bill would authorize any costs above the authorized forecast to be allocated between ratepayers and shareholders. The bill would require all proposed electrical corporation spending for wildfire expenses that is eligible for rate recovery to include a cost-benefit analysis of the proposed expenses and at least one credible alternative, as specified.
(5) Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because certain provisions of this bill would be part of the act and a violation of a PUC action implementing the bill’s requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 25205 of the Public Resources Code is amended to read:

25205.
 (a) (1) No person shall be a member of the commission who, during the two years before appointment on the commission, received any substantial portion of their income directly or indirectly from any electric utility, or who engages in sale or manufacture of any major component of any facility. A member of the commission shall not be employed by any electric utility, applicant, or, within two years after ceasing to be a member of the commission, by any person who engages in the sale or manufacture of any major component of any facility.
(2) A member of the commission shall not accept a gift, as defined in Section 82028 of the Government Code, from an entity subject to regulation by the commission.
(3) A member of the commission shall not be employed by an entity subject to regulation by the commission for a period of three years one year after ceasing to be a member of the commission.
(b) Except as provided in Section 25202, the members of the commission shall not hold any other elected or appointed public office or position.
(c) The members of the commission and all employees of the commission shall comply with all applicable provisions of Section 19990 of the Government Code.
(d) A person who is a member or employee of the commission shall not participate personally and substantially as a member or employee of the commission, through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise, in a judicial or other proceeding, hearing, application, request for a ruling, or other determination, contract, claim, controversy, study, plan, or other particular matter in which, to the member or employee’s knowledge, the member or employee, their spouse, minor child, or partner, or any organization, except a governmental agency or educational or research institution qualifying as a nonprofit organization under state or federal income tax law, in which the member or employee is serving, or has served as officer, director, trustee, partner, or employee while serving as a member or employee of the commission or within two years before appointment as a member of the commission, has a direct or indirect financial interest.
(e) A person who is a partner, employer, or employee of a member or employee of the commission shall not act as an attorney, agent, or employee for any person other than the state in connection with any judicial or other proceeding, hearing, application, request for a ruling, or other determination, contract, claim, controversy, study, plan, or other particular matter in which the commission is a party or has a direct and substantial interest.
(f) This section does not apply if the Attorney General finds that the interest of the member or employee of the commission is not so substantial as to be deemed likely to affect the integrity of the services that the state may expect from the member or employee.
(g) Any person who violates this section is guilty of a felony and shall be subject to a fine of not more than ten thousand dollars ($10,000) or imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code, or both that fine and imprisonment.
(h) The amendment of subdivision (d) of this section enacted by the 1975–76 Regular Session of the Legislature does not constitute a change in, but is declaratory of, existing law.

SEC. 2.

 Section 303 of the Public Utilities Code is amended to read:

303.
 (a) A public utilities commissioner shall not hold an official relation to, nor have a financial interest in, a person or corporation subject to regulation by the commission. If any commissioner acquires a financial interest in a corporation or person subject to regulation by the commission other than voluntarily, the commissioner’s office shall become vacant unless the commissioner divests themselves of the interest within a reasonable time.
(b) A public utilities commissioner shall not accept a gift, as defined in Section 82028 of the Government Code, from an entity subject to regulation by the commission.
(c) A public utilities commissioner, for a period of three years one year after the end of the commissioner’s term of office, shall not be employed by an entity subject to regulation by the commission.
(d) An executive of a public utility shall not serve as commissioner within two years after leaving the employment of the utility.
(e) The commission shall maintain an updated Conflict of Interest Code and Statement of Incompatible Activities in a manner consistent with applicable law.

SEC. 3.

 Section 309.5 of the Public Utilities Code is amended to read:

309.5.
 (a) There is within the commission an independent Public Advocate’s Office of the Public Utilities Commission to represent and advocate on behalf of the interests of public utility customers and subscribers within the jurisdiction of the commission. The goal of the office shall be to obtain the lowest possible rate for service consistent with reliable and safe service levels. For revenue allocation and rate design matters, the office shall primarily consider the interests of residential and small commercial customers.
(b) (1) The director of the office shall be appointed by, and serve at the pleasure of, the Governor, subject to confirmation by the Senate.
(2) The director shall annually appear before the appropriate policy committees of the Assembly and the Senate to report on the activities of the office.
(3) The director shall not accept a gift, as defined in Section 82028 of the Government Code, from an entity subject to regulation by the commission.
(4) The director, for a period of three years one year after the end of the director’s term of office, shall not be employed by an entity subject to regulation by the commission.
(c) The director shall develop a budget for the office that shall be subject to final approval of the Department of Finance. As authorized in the approved budget, the office shall employ personnel and resources, including attorneys and other legal support staff, at a level sufficient to ensure that customer and subscriber interests are effectively represented in all significant proceedings. The office may employ experts necessary to carry out its functions. The director may appoint a lead attorney who shall represent the office, and shall report to and serve at the pleasure of the director. The lead attorney for the office shall obtain adequate legal personnel for the work to be conducted by the office from the commission’s attorney appointed pursuant to Section 307. The commission’s attorney shall timely and appropriately fulfill all requests for legal personnel made by the lead attorney for the office, if the office has sufficient moneys and positions in its budget for the services requested.
(d) The commission shall develop appropriate procedures to ensure that the existence of the office does not create a conflict of roles for any employee. The procedures shall include, but shall not be limited to, the development of a code of conduct and procedures for ensuring that advocates and their representatives on a particular case or proceeding are not advising decisionmakers on the same case or proceeding.
(e) The office may compel the production or disclosure of any information it deems necessary to perform its duties from any entity regulated by the commission, provided that any objections to any request for information shall be decided in writing by the assigned commissioner or by the president of the commission, if there is no assigned commissioner.
(f) There is hereby created the Public Utilities Commission Public Advocate’s Office Account in the General Fund. Moneys from the Public Utilities Commission Utilities Reimbursement Account in the General Fund shall be transferred in the annual Budget Act to the Public Utilities Commission Public Advocate’s Office Account. The funds in the Public Utilities Commission Public Advocate’s Office Account shall be a budgetary program fund administered and used exclusively by the office in the performance of its duties as determined by the director. The director shall annually submit a staffing report containing a comparison of the staffing levels for each five-year period.
(g) On or before January 10 of each year, the office shall provide to the chairperson of the fiscal committee of each house of the Legislature and to the Joint Legislative Budget Committee all of the following information:
(1) The number of personnel years used during the prior year by the office.
(2) The total dollars expended by the office in the prior year, the estimated total dollars expended in the current year, and the total dollars proposed for appropriation in the following budget year.
(3) Workload standards and measures for the office.
(h) The office shall meet and confer in an informal setting with a regulated entity before issuing a report or pleading to the commission regarding alleged misconduct, or a violation of a law or a commission rule or order, raised by the office in a complaint. The meet and confer process shall be used in good faith to reach agreement on issues raised by the office regarding any regulated entity in the complaint proceeding.

SEC. 4.

 Section 454.15 is added to the Public Utilities Code, immediately following Section 454.1, to read:
454.15.

(a)In any instance where the commission authorizes a forecast for a category of costs in a ratesetting proceeding and authorizes the recording of costs in an existing or new balancing account for potential rate recovery above the authorized forecast, the public utility shall submit an application for rate recovery and the commission shall, in a ratesetting proceeding, determine if the recovery of costs above the authorized forecast is just and reasonable before the public utility may recover any costs above the authorized forecast.

(b)

454.15.
 (a) (1) In any instance where the commission authorizes a forecast for a category of costs in a ratesetting proceeding and authorizes the recording of costs in an existing or new balancing account for potential rate recovery above the authorized forecast, any costs above the authorized forecast may be allocated between ratepayers and shareholders.
(2) Any costs determined by the commission to not be just and reasonable, and costs allocated to shareholders pursuant to paragraph (1), shall be denied rate recovery.

(c)

(b) All proposed electrical corporation spending for wildfire expenses that is eligible for rate recovery shall include a cost-benefit analysis of the proposed expense and at least one credible alternative.

SEC. 5.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.