Bill Text: CA SB1364 | 2011-2012 | Regular Session | Amended

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

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Bill Title: Water corporations.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Passed) 2012-08-29 - Chaptered by Secretary of State. Chapter 224, Statutes of 2012. [SB1364 Detail]

Download: California-2011-SB1364-Amended.html

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BILL NUMBER: SB 1364	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 30, 2012

INTRODUCED BY   Senator Huff

                        FEBRUARY 24, 2012

   An act to amend Sections 314, 454, 587, 797,  798, 1756,
and 1802   and 798  of the Public Utilities Code,
relating to water corporations.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1364, as amended, Huff. Water corporations.
   (1) Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations, gas corporations, telephone corporations, and water
corporations, as defined. The Public Utilities Act authorizes the
PUC, each commissioner, and each officer and person employed by the
PUC at any time to inspect the accounts, books, papers, and documents
of any public utility. This authorization applies to inspections of
the accounts, books, papers, and documents of any business that is a
subsidiary or affiliate of, or a corporation that holds a controlling
interest in, an electrical, gas, or telephone corporation.
   This bill would make the authorization to inspect the accounts,
books, papers, and documents of any business that is a subsidiary or
affiliate of, or a corporation that  hold a  
holds  controlling interest in, a water corporation  that
has 2,000 or more service connections  .
   (2) 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, with certain
exceptions, prohibits a public utility from changing any rate, except
upon a showing before the commission and a finding by the commission
that the new rate is justified. With certain exceptions, whenever
any electrical, gas, heat, telephone, water, or sewer system
corporation files an application to change any rate for the services
or commodities furnished by it, existing law requires that the
corporation furnish its customers notice of its application to the
PUC for approval of the new rate.  This notice requirement
does not apply to any rate change proposed by a corporation pursuant
to an advice letter submitted to the PUC filed pursuant to PUC
established procedures for advice letters. 
   This  bill would make the above-described advice letter
filing exception inapplicable to an advice letter filed by a water
corporation   bill, for a water corporation with more
than 2,000 service connections, would require the notice to include
estimated rate impacts on the various customer classes of the
corporation. The bill would authorize the commission to require the
water corporation to inform customers of the outcome of the general
rate case as prescribed  .
   (3) Existing law requires every electrical, gas, and telephone
corporation to annually prepare and submit to the PUC a report
describing all significant transactions between the corporation and
every subsidiary or affiliate of, or corporation holding a
controlling interest in, the electrical, gas, or telephone
corporation. Existing law requires that the report identify the
nature of the transactions and the terms and conditions applying to
them, including the basis upon which cost allocations and transfer
pricing were established for the transactions. Existing law requires
the PUC to periodically audit all significant transactions between an
electrical, gas, or telephone corporation and every subsidiary or
affiliate of, or corporation holding a controlling interest in, that
electrical, gas, or telephone corporation.
   This bill would make these requirements applicable to water
corporations  with more than 2,000 service connections  .
   (4) If the PUC finds and determines that any electrical, gas, or
telephone corporation has willfully made an imprudent payment to, or
received a less than reasonable payment from, any subsidiary or
affiliate of, or corporation holding a controlling interest in, the
electrical, gas, or telephone corporation in violation of any rule or
order of the PUC, and the corporation has sought to recover the
payment in any proceeding before the PUC, existing law authorizes the
PUC, following a hearing, to levy a penalty against the corporation
not to exceed 3 times the required or prohibited payment if the PUC
finds that the payment was made or received by the corporation for
the purpose of benefiting its subsidiary, affiliate, or holding
corporation.
   This bill would extend this authority to water corporations 
with more than 2,000 service connections  . 
   (5) Existing law authorizes any party to an action or proceeding,
or any stockholder or bondholder or other party pecuniarily
interested in the public utility affected by an order or decision of
the PUC, to apply for a rehearing with respect to any matter
determined in the action or proceeding and specified in the
application for rehearing. Existing law prohibits a cause of action
arising out of any order or decision of the PUC from accruing in a
court to a corporation or person unless the corporation or person has
filed an application to the PUC for a rehearing within a specified
amount of time after the date of issuance of the order or decision.
Existing law generally authorizes an aggrieved party to petition for
a writ of review of an order or decision of the PUC within 30 days
after the commission issues its decision denying an application for a
rehearing, or, if the PUC grants the application, within 30 days
after the PUC issues its decision on rehearing. Under existing law, a
petition for a writ of review may be brought in a court of appeal or
the Supreme Court, except with respect to certain decisions of the
PUC pertaining to a water corporation, which are required to be
brought in the Supreme Court. 
   This bill would eliminate the requirement that certain decisions
of the PUC pertaining to a water corporation be brought in the
Supreme Court.  
   (6) Existing law provides compensation for reasonable advocate's
fees, reasonable expert witness fees, and other reasonable costs to
public utility customers, as defined, for participation or
intervention in any proceeding of the PUC involving the public
utility. The existing definition of a customer, for these purposes,
excludes any state, federal, or local government agency. 

   This bill would include in the definition of a customer, for these
purposes, a local government agency that is a customer of a water
corporation when participating in a proceeding involving the water
corporation.  
   (7) 
    (5)  Under existing law, a violation of the Public
Utilities Act or any order, decision, rule, direction, demand, or
requirement of the commission is a crime.
   Because the provisions of this bill would be a part of the act and
certain provisions of the bill would extend existing requirements to
water corporations, the bill would impose a state-mandated local
program by expanding the application of a crime.
   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 314 of the Public Utilities Code is amended to
read:
   314.  (a) The commission, each commissioner, and each officer and
person employed by the commission may, at any time, inspect the
accounts, books, papers, and documents of any public utility. The
commission, each commissioner, and any officer of the commission or
any employee authorized to administer oaths may examine under oath
any officer, agent, or employee of a public utility in relation to
its business and affairs. Any person, other than a commissioner or an
officer of the commission, demanding to make any inspection shall
produce, under the hand and seal of the commission, authorization to
make the inspection. A written record of the testimony or statement
so given under oath shall be made and filed with the commission.
   (b) Subdivision (a) also applies to inspections of the accounts,
books, papers, and documents of any business that is a subsidiary or
affiliate of, or a corporation that holds a controlling interest in,
 a water,   an  electrical, gas, or
telephone corporation  , or a water corporation that has 2,000 or
more service connections,  with respect to any transaction
between the water, electrical, gas, or telephone corporation and the
subsidiary, affiliate, or holding corporation on any matter that
might adversely affect the interests of the ratepayers of the water,
electrical, gas, or telephone corporation.
  SEC. 2.  Section 454 of the Public Utilities Code is amended to
read:
   454.  (a) Except as provided in Section 455,  no 
 a  public utility shall not  change any rate or
so alter any classification, contract, practice, or rule as to result
in any new rate, except upon a showing before the commission and a
finding by the commission that the new rate is justified. Whenever
any electrical, gas, heat, telephone, water, or sewer system
corporation files an application to change any rate, other than a
change reflecting and passing through to customers only new costs to
the corporation which do not result in changes in revenue allocation,
for the services or commodities furnished by it, the corporation
shall furnish to its customers affected by the proposed rate change
notice of its application to the commission for approval of the new
rate. This notice requirement does not apply to any rate change
proposed by a corporation pursuant to an advice letter submitted to
the commission in accordance with commission procedures for this
means of submission  , but does apply to a rate increase
proposed by a water corporation in an advice letter  . The
procedures for advice letters may include provision for notice to
customers or subscribers on a case-by-case basis, as determined by
the commission. The corporation may include the notice with the
regular bill for charges transmitted to the customers within 45 days
if the corporation operates on a 30-day billing cycle, or within 75
days if the corporation operates on a 60-day billing cycle. If more
than one application to change any rate is filed within a single
billing cycle, the corporation may combine the notices into a single
notice if the applications are separately identified. The notice
shall state the amount of the proposed rate change expressed in both
dollar and percentage terms for the entire rate change as well as for
each customer classification, a brief statement of the reasons the
change is required or sought, and the mailing, and if available, the
email address of the commission to which any customer inquiries may
be directed regarding how to participate in, or receive further
notices regarding the date, time, or place of, any hearing on the
application, and the mailing address of the corporation to which any
customer inquiries relative to the proposed rate change may be
directed. 
   (b) For a water corporation with more than 2,000 service
connections, the notice required in subdivision (a) shall include
estimated rate impacts on the various customer classes of the
corporation. The commission may require the corporation to inform
customers in a separate letter or through a bill insert, at the
corporation's discretion, of the outcome of the general rate case,
within 60 days if the corporation operates on a 30-day billing cycle,
or within 90 days if the corporation operates on a 60-day billing
cycle, of the commission's final decision, including the approved
rates and the approved capital projects that will subsequently be
executed by way of an advice letter.  
   (b) 
    (c)  The commission may adopt rules it considers
reasonable and proper for each class of public utility providing for
the nature of the showing required to be made in support of proposed
rate changes, the form and manner of the presentation of the showing,
with or without a hearing, and the procedure to be followed in the
consideration thereof. Rules applicable to common carriers may
provide for the publication and filing of any proposed rate change
together with a written showing in support thereof, giving notice of
the filing and showing in support thereof to the public, granting an
opportunity for protests thereto, and to the consideration of, and
action on, the showing and any protests filed thereto by the
commission, with or without hearing. However, the proposed rate
change does not become effective until it has been approved by the
commission. 
   (c) 
    (d)  The commission shall permit individual public
utility customers and subscribers affected by a proposed rate change,
and organizations formed to represent their interests, to testify at
any hearing on the proposed rate change, except that the presiding
officer need not allow repetitive or irrelevant testimony and may
conduct the hearing in an efficient manner.
  SEC. 3.  Section 587 of the Public Utilities Code is amended to
read:
   587.  Every water   corporation with more than 2,000
service connections  ,  and every  electrical, gas, and
telephone corporation shall annually prepare and submit to the
commission a report describing all significant transactions, as
specified by the commission, between the corporation and every
subsidiary or affiliate of, or corporation holding a controlling
interest in, the water, electrical, gas, or telephone corporation.
The report shall identify the nature of the transactions and the
terms and conditions applying to them, including, but not limited to,
the basis upon which cost allocations and transfer pricing were
established for the transactions.
  SEC. 4.  Section 797 of the Public Utilities Code is amended to
read:
   797.  The commission shall periodically audit  , or ensure
that an independent audit is conducted for,  all significant
transactions, as specified by the commission, between a 
water,   water corporation with more than 2,000 service
connections, or an  electrical, gas, or telephone corporation
 ,  and every subsidiary or affiliate of, or corporation
holding a controlling interest in, that water, electrical, gas, or
telephone corporation. The commission  may  , in
this connection,  may  utilize the services of an
independent auditor, who shall be selected and supervised by the
commission. Nothing in this section prohibits the commission from
auditing any transaction between a  water,  
water corporation with more than 2,000 service connections, or an
 electrical, gas, or telephone corporation  ,  and any
subsidiary or affiliate of, or corporation holding a controlling
interest in, the water, electrical, gas, or telephone corporation, as
otherwise permitted or required by law.
  SEC. 5.  Section 798 of the Public Utilities Code is amended to
read:
   798.  (a) Whenever the commission finds and determines that any
 water,   water corporation with more than 2,000
service connections, or an  electrical, gas, or telephone
corporation  ,  has willfully made an imprudent payment to,
or received a less than reasonable payment from, any subsidiary or
affiliate of, or corporation holding a controlling interest in, the
water, electrical, gas, or telephone corporation in violation of any
rule or order of the commission, adopted and published by the
commission prior to the transaction but after notice to, and an
opportunity to comment by, the affected corporation, and the
corporation has sought to recover the payment in any proceeding
before the commission, the  commission may ,  
commission,  following a hearing,  may  levy a penalty
against the corporation not to exceed three times the required or
prohibited payment, as the case may be, if the commission finds that
the payment, in whole or part, was made or received by the
corporation for the purpose of benefiting its subsidiary, affiliate,
or holding corporation. This penalty is in addition to any criminal
penalties which may apply.
   (b) In determining whether to impose a civil penalty under this
section, the commission may take into consideration multistate public
utility diversification activities involving cross-subsidization
which are permissible in other states or under federal jurisdiction
although in violation of the commission's rules and orders. 
  SEC. 6.    Section 1756 of the Public Utilities
Code is amended to read:
   1756.  (a) Within 30 days after the commission issues its decision
denying the application for a rehearing, or, if the application was
granted, then within 30 days after the commission issues its decision
on rehearing, or at least 120 days after the application is granted
if no decision on rehearing has been issued, any aggrieved party may
petition for a writ of review in the court of appeal or the Supreme
Court for the purpose of having the lawfulness of the original order
or decision or of the order or decision on rehearing inquired into
and determined. If the writ issues, it shall be made returnable at a
time and place specified by court order and shall direct the
commission to certify its record in the case to the court within the
time specified.
   (b) The petition for review shall be served upon the executive
director and the general counsel of the commission either personally
or by service at the office of the commission.
   (c) For purposes of this section, the issuance of a decision or
the granting of an application shall be construed to have occurred on
the date of issuance, as defined in paragraph (4) of subdivision (b)
of Section 1731.
   (d) The venue of a petition filed in the court of appeal pursuant
to this section shall be in the judicial district in which the
petitioner resides. If the petitioner is a business, venue shall be
in the judicial district in which the petitioner has its principal
place of business in California.
   (e) Any party may seek from the Supreme Court, pursuant to
California Rules of Court, an order transferring related actions to a
single appellate district.
   (f) No order or decision arising out of a commission proceeding
under Section 854 shall be reviewable in the court of appeal pursuant
to subdivision (a) if the application for commission authority to
complete the merger or acquisition was filed on or before December
31, 1998, by two telecommunications-related corporations including at
least one which provides local telecommunications service to over
one million California customers. These orders or decisions shall be
reviewed pursuant to the Public Utilities Code in existence on
December 31, 1998.  
  SEC. 7.    Section 1802 of the Public Utilities
Code is amended to read:
   1802.  As used in this article:
   (a) "Compensation" means payment for all or part, as determined by
the commission, of reasonable advocate's fees, reasonable expert
witness fees, and other reasonable costs of preparation for and
participation in a proceeding, and includes the fees and costs of
obtaining an award under this article and of obtaining judicial
review, if any.
   (b) (1) "Customer" means any of the following:
   (A) A participant representing consumers, customers, or
subscribers of any electrical, gas, telephone, telegraph, or water
corporation that is subject to the jurisdiction of the commission.
   (B) A representative who has been authorized by a customer.
   (C) A representative of a group or organization authorized
pursuant to its articles of incorporation or bylaws to represent the
interests of residential customers, or to represent small commercial
customers who receive bundled electric service from an electrical
corporation.
   (2) "Customer" does not include any state, federal, or local
government agency, any publicly owned public utility, or any entity
that, in the commission's opinion, was established or formed by a
local government entity for the purpose of participating in a
commission proceeding, except that a local government agency that is
a customer of a water corporation may be a customer for purposes of
participating in a proceeding involving the water corporation.
   (c) "Expert witness fees" means recorded or billed costs incurred
by a customer for an expert witness.
   (d) "Other reasonable costs" means reasonable out-of-pocket
expenses directly incurred by a customer that are directly related to
the contentions or recommendations made by the customer that
resulted in a substantial contribution.
   (e) "Party" means any interested party, respondent public utility,
or commission staff in a hearing or proceeding.
   (f) "Proceeding" means an application, complaint, or
investigation, rulemaking, alternative dispute resolution procedures
in lieu of formal proceedings as may be sponsored or endorsed by the
commission, or other formal proceeding before the commission.
   (g) "Significant financial hardship" means either that the
customer cannot afford, without undue hardship, to pay the costs of
effective participation, including advocate's fees, expert witness
fees, and other reasonable costs of participation, or that, in the
case of a group or organization, the economic interest of the
individual members of the group or organization is small in
comparison to the costs of effective participation in the proceeding.

   (h) "Small commercial customer" means any nonresidential customer
with a maximum peak demand of less than 50 kilowatts. The commission
may establish rules to modify or change the definition of "small
commercial customer," including use of criteria other than a peak
demand threshold, if the commission determines that the modification
or change will promote participation in proceedings at the commission
by organizations representing small businesses, without
incorporating large commercial and industrial customers.
   (i) "Substantial contribution" means that, in the judgment of the
commission, the customer's presentation has substantially assisted
the commission in the making of its order or decision because the
order or decision has adopted in whole or in part one or more factual
contentions, legal contentions, or specific policy or procedural
recommendations presented by the customer. Where the customer's
participation has resulted in a substantial contribution, even if the
decision adopts that customer's contention or recommendations only
in part, the commission may award the customer compensation for all
reasonable advocate's fees, reasonable expert fees, and other
reasonable costs incurred by the customer in preparing or presenting
that contention or recommendation. 
   SEC. 8.   SEC. 6.   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.