Bill Text: CA AB861 | 2011-2012 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Public Utilities Act: remedies for violation: gas and

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2012-09-23 - Chaptered by Secretary of State - Chapter 464, Statutes of 2012. [AB861 Detail]

Download: California-2011-AB861-Amended.html

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BILL NUMBER: AB 861	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 19, 2012
	AMENDED IN SENATE  JUNE 7, 2012
	AMENDED IN SENATE  MAY 14, 2012
	AMENDED IN ASSEMBLY  MAY 27, 2011

INTRODUCED BY   Assembly Member Hill

                        FEBRUARY 17, 2011

   An act to amend Sections 2110 and 2111 of, and to add 
Sections   Section 451.6  and 451.7
 to, the Public Utilities Code, relating to public
utilities.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 861, as amended, Hill. Public Utilities Act: remedies for
violation: gas and electrical corporation executive officer
compensation incentives.
   (1) The California Constitution establishes the Public Utilities
Commission, with regulatory jurisdiction over all public utilities,
as defined. The Public Utilities Act provides that every public
utility and every officer, agent, or employee of a public utility,
who violates or fails to comply with, or who procures, aids, or abets
any violation by any public utility of any provision of the
California Constitution or of the act, or who fails to comply with
any part of any order, decision, rule, direction, demand, or
requirement of the commission, or who procures, aids, or abets any
public utility in a violation or noncompliance, in a case in which a
penalty has not otherwise been provided, is guilty of a misdemeanor
and is punishable by a fine not exceeding $1,000, or by imprisonment
in a county jail not exceeding one year, or by both fine and
imprisonment.
   This bill would provide that the fine may not exceed $5,000.
   (2) The act additionally provides that every corporation or
person, other than a public utility and its officers, agents, or
employees, knowingly violating or failing to comply with, or
procuring, aiding, or abetting any violation of the California
Constitution relating to public utilities or of the act, or that
fails to comply with any part of any order, decision, rule,
direction, demand, or requirement of the commission, or procuring,
aiding, or abetting any public utility in a violation or
noncompliance, in a case in which a penalty has not otherwise been
provided, is subject to a penalty of not less than $500, or more than
$20,000, for each offense.
   This bill would increase the maximum penalty to not more than
$50,000 for each offense.
   (3) Existing law authorizes the commission to fix the rates and
charges for every public utility, and requires that those rates and
charges be just and reasonable. Existing law requires that any
expense resulting from a bonus paid to an executive officer, as
defined, of a public utility that has ceased to pay its debts in the
ordinary course of business, be borne by the shareholders of the
public utility and prohibits any expense from being recovered in
rates.
   This bill would require that any expense resulting from an
earnings- or stock price-based incentive program paid to an employee
or director of an electrical or gas corporation be borne by the
shareholders of the utility and would prohibit any expense from being
recovered in rates. Because this provision of the bill would be a
part of the act and because a violation of an order or decision of
the commission implementing this requirements would be a crime, the
bill would impose a state-mandated local program by creating a new
crime. 
   (4) This bill would prospectively require, if monetary sanctions
are imposed by the commission on an energy public utility, as
defined, for a violation, as defined, that the energy public utility
recover any excess compensation, as defined, received by any current
or former officer or director, as defined, of the energy public
utility during the 5-year period preceding the date on which the
monetary sanctions are imposed. If monetary sanctions are imposed by
the commission on an energy public utility for a violation, and the
energy public utility is owned 80% or more by a holding company, as
defined, the bill would prospectively require that the holding
company recover any excess compensation received by any current or
former officer or director of the holding company during the 5-year
period preceding the date on which the monetary sanctions were
imposed.  
   (5) 
    (4)  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.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 451.6 is added to the Public Utilities Code, to
read:
   451.6.  Any expense resulting from an earnings- or stock
price-based incentive program paid to an employee or director of an
electrical corporation or a gas corporation shall not be recoverable
either directly or indirectly in rates and shall be borne exclusively
by the shareholders of the public utility. 
  SEC. 2.    Section 451.7 is added to the Public
Utilities Code, to read:
   451.7.  (a) For purposes of this section, the following terms have
the following meanings:
   (1) "Energy public utility" means a gas corporation, an electrical
corporation, or a public utility that is both a gas corporation and
an electrical corporation.
   (2) "Excess compensation" means the difference between what an
officer or director received in incentive-based compensation during
the period in which a violation occurred and what that officer or
director would have received had a monetary sanction been imposed
concurrent with the violation.
   (3) "Holding company" means an entity with ownership of 80 percent
or more of an energy public utility.
   (4) "Incentive-based compensation" means, but is not limited to,
short-term incentives, long-term incentives, stock options awarded as
compensation, and special recognition awards.
   (5) "Monetary sanction" means a commission imposed requirement
that an energy public utility pay money as a result of a violation
that relates to public safety, including any fine, penalty, or
requirement to pay restitution.
   (6) "Officer" and "director," with respect to an energy public
utility or holding company, have the same meaning as defined in
Section 16 of the federal Securities Exchange Act of 1934 (15 U.S.C.
Sec. 78a et seq.).
   (7) "Violation" means the failure by an energy public utility to
comply with any provision of the California Constitution, of this
part, or of any order, decision, decree, rule, direction, demand, or
requirement of the commission that relates to public safety, results
in a monetary sanction being imposed on the energy public utility by
the commission.
   (b)  If a monetary sanction is imposed by the commission on an
energy public utility for a violation, the energy public utility
shall recover excess compensation received by any current or former
officer or director of the energy public utility during the five-year
period preceding the date on which the monetary sanction was
imposed.
   (c) If a monetary sanction is imposed by the commission on an
energy public utility for a violation, and the energy public utility
is owned 80 percent or more by a holding company, the holding company
shall recover any excess compensation received by any current or
former officer or director of the holding company during the
five-year period preceding the date on which the monetary sanction
was imposed.
   (d) In any order or decision of the commission that imposes a
monetary sanction on an energy public utility, the commission shall
make findings whether the monetary sanction is being made as a result
of a violation relating to safety. If monetary sanctions are being
imposed, in part, as a result of a violation relating to safety, the
commission shall specify what monetary sanctions are being imposed
because of a violation relating to safety.
   (e) The requirements of this section are applicable to any
contract between an energy public utility and a director or officer
of that energy public utility, and to any contract between a holding
company and a director or officer of that holding company, that is
executed, modified, or extended beginning January 1, 2013. 
   SEC. 3.   SEC. 2.   Section 2110 of the
Public Utilities Code is amended to read:
   2110.  Every public utility and every officer, agent, or employee
of any public utility, who violates or fails to comply with, or who
procures, aids, or abets any violation by any public utility of any
provision of the California Constitution or of this part, or who
fails to comply with any part of any order, decision, rule,
direction, demand, or requirement of the commission, or who procures,
aids, or abets any public utility in the violation or noncompliance
in a case in which a penalty has not otherwise been provided, is
guilty of a misdemeanor and is punishable by a fine not exceeding
five thousand dollars ($5,000), or by imprisonment in a county jail
not exceeding one year, or by both fine and imprisonment.
   SEC. 4.   SEC. 3.   Section 2111 of the
Public Utilities Code is amended to read:
   2111.  Every corporation or person, other than a public utility
and its officers, agents, or employees, which or who knowingly
violates or fails to comply with, or procures, aids or abets any
violation of any provision of the California Constitution relating to
public utilities or of this part, or fails to comply with any part
of any order, decision, rule, direction, demand, or requirement of
the commission, or who procures, aids, or abets any public utility in
the violation or noncompliance, in a case in which a penalty has not
otherwise been provided for the corporation or person, is subject to
a penalty of not less than five hundred dollars ($500), nor more
than fifty thousand dollars ($50,000) for each offense.
   SEC. 5.   SEC. 4.   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.