Bill Text: CA SB48 | 2013-2014 | Regular Session | Introduced

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

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Bill Title: Public utilities: research and development projects.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2014-06-23 - Set, final hearing. Failed passage in committee. [SB48 Detail]

Download: California-2013-SB48-Introduced.html

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BILL NUMBER: SB 48	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Hill

                        DECEMBER 19, 2012

   An act to amend Section 854 of, and to add Sections 740.5 and
854.5 to, the Public Utilities Code, relating to energy.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 48, as introduced, Hill. Energy-related research: mergers:
entities formed to receive benefits on behalf of ratepayers.
   Under existing law, the Public Utilities Commission (PUC) has
regulatory authority over public utilities, including electrical
corporations and gas corporations, as defined. 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. Existing law authorizes certain public utilities,
including electrical corporations and gas corporations, to
voluntarily adopt certain research and development programs and
authorizes the PUC to allow inclusion of expenses for research and
development in rates. Existing law requires the PUC to consider
specified guidelines in evaluating the research, development, and
demonstration programs proposed by electrical corporations and gas
corporations.
   This bill would require that any research and development or
research, development, and demonstration project that is performed by
a 3rd party, as defined, and is funded in whole or in part by the
ratepayers of an electrical or gas corporation be subject to a merit
review, as defined. The bill would require the State Energy Resources
Conservation and Development Commission to select the persons to
perform the merit review. The bill would require the PUC to prepare
and submit to the policy and fiscal committees of the Legislature, by
February 1 of each year, a written report listing all research and
development, or research, development, and demonstration projects,
including specified information, that were funded in whole or in part
by the ratepayers of an electrical or gas corporation during the
previous 5 years.
   The Public Utilities Act, prohibits any person or corporation from
acquiring or controlling, directly or indirectly, any public utility
organized and doing business in this state, without first securing
authorization to do so from the PUC. The act requires the PUC, before
authorizing the merger, acquisition, or change in control of an
electric, gas, or telephone utility having revenues in excess of a
specified amount, to consider, among other things, that the proposal
provides short-term and long-term economic benefits to ratepayers,
and equitably allocates the short-term and long-term forecasted
economic benefits of the proposed merger, acquisition, or control, as
determined by the PUC, between shareholders and ratepayers, where
the PUC has ratemaking authority. Existing law requires that the
ratepayers receive not less than 50% of the benefits.
   This bill would prohibit the PUC, when authorizing a merger,
acquisition, or change in control, from establishing an entity to
receive benefits on behalf of ratepayers without first obtaining
statutory authorization from the Legislature. The bill would prohibit
a commissioner of the PUC from being an officer or director of an
entity formed to receive benefits of behalf of ratepayers resulting
from approval of a merger, acquisition, or change in control of an
electrical, gas, or telephone corporation.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  Section 740.5 is added to the Public Utilities Code, to
read:
   740.5.  (a) For purposes of this section, the following terms have
the following meanings:
   (1) "Merit review" means a thorough, consistent, and objective
examination based on preestablished criteria by persons who are
independent of persons submitting an application, or conducting the
research and development, and who are knowledgeable in the field of
endeavor to which the application or research and development
pertains.
   (2) "State agency" includes every state office, officer,
department, division, bureau, board, and commission. "State agency"
does not include the University of California or California State
University.
   (3) "Third party" means a person, corporation, or other entity
that is not a state agency or an electrical corporation or gas
corporation regulated by the commission.
   (b) Any research and development or research, development, and
demonstration project that is performed by a third party and is
funded in whole or in part by the ratepayers of an electrical or gas
corporation shall be subject to a merit review. The Energy Commission
shall select the persons to perform the merit review. The Energy
Commission shall use the most recent Merit Review Guide for Financial
Assistance, or successor guide, issued by the federal Department of
Energy pursuant to Section 600.13 of Subpart A of Part 600 of Chapter
II of Title 10 of the Code of Federal Regulations (10 CFR 600.13) as
a guide for conducting merit reviews.
   (c) (1) Notwithstanding Section 10231.5 of the Government Code, by
February 1 of each year, the commission shall prepare and submit to
the policy and fiscal committees of the Legislature a written report
listing all research and development, or research, development, and
demonstration projects that were funded in whole or in part by the
ratepayers of an electrical or gas corporation during the previous
five years, including for each project the citations of all published
papers and all oral and poster presentations given at public
meetings. For an electrical corporation, the report may be included
in the report made to the Legislature pursuant to Section 910.
   (2) A report to be submitted pursuant paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
  SEC. 2.  Section 854 of the Public Utilities Code is amended to
read:
   854.  (a) No person or corporation, whether or not organized under
the laws of this state, shall merge, acquire, or  obtain 
control  ,  either directly or indirectly  , of 
any public utility organized and doing business in this state without
first securing authorization to do so from the commission. The
commission may establish by order or rule the definitions of what
constitute merger, acquisition, or control activities which are
subject to this section. Any merger, acquisition, or  change in
 control without that prior authorization shall be void and of
no effect. No public utility organized and doing business under the
laws of this state, and no subsidiary or affiliate of, or corporation
holding a controlling interest in a public utility, shall aid or
abet any violation of this section.
   (b) Before authorizing the merger, acquisition, or  a change
in  control of any  electric   electrical
 , gas, or telephone utility   corporation
 organized and doing business in this state, where any of the
utilities that are parties to the proposed transaction has gross
annual California revenues exceeding five hundred million dollars
($500,000,000), the commission shall find that the proposal does all
of the following:
   (1) Provides short-term and long-term economic benefits to
ratepayers.
   (2) Equitably allocates, where the commission has ratemaking
authority, the total short-term and long-term forecasted economic
benefits, as determined by the commission, of the proposed merger,
acquisition, or control, between shareholders and ratepayers.
Ratepayers shall receive not less than 50 percent of those benefits.
   (3) Not adversely affect competition. In making this finding, the
commission shall request an advisory opinion from the Attorney
General regarding whether competition will be adversely affected and
what mitigation measures could be adopted to avoid this result.
   (c) Before authorizing the merger, acquisition, or  a change
in  control of any  electric   electrical
 , gas, or telephone  utility   corporation
 organized and doing business in this state, where any of the
entities that are parties to the proposed transaction has gross
annual California revenues exceeding five hundred million dollars
($500,000,000), the commission shall consider each of the criteria
listed in paragraphs (1) to (8), inclusive, and find, on balance,
that the merger, acquisition, or control proposal is in the public
interest.
   (1) Maintain or improve the financial condition of the resulting
public utility doing business in the state.
   (2) Maintain or improve the quality of service to public utility
ratepayers in the state.
   (3) Maintain or improve the quality of management of the resulting
public utility doing business in the state.
   (4) Be fair and reasonable to affected public utility employees,
including both union and nonunion employees.
   (5) Be fair and reasonable to the majority of all affected public
utility shareholders.
   (6) Be beneficial on an overall basis to state and local
economies, and to the communities in the area served by the resulting
public utility.
   (7) Preserve the jurisdiction of the commission and the capacity
of the commission to effectively regulate and audit public utility
operations in the state.
   (8) Provide mitigation measures to prevent significant adverse
consequences which may result.
   (d) When reviewing a merger, acquisition, or  change in 
control proposal, the commission shall consider reasonable options to
the proposal recommended by other parties, including no new merger,
acquisition, or control, to determine whether comparable short-term
and long-term economic savings can be achieved through other means
while avoiding the possible adverse consequences of the proposal.
   (e) The person or corporation seeking acquisition or control of a
public utility organized and doing business in this state shall have,
before the commission, the burden of proving by a preponderance of
the evidence that the requirements of subdivisions (b) and (c) are
met.
   (f) In determining whether an acquiring utility has gross annual
revenues exceeding the amount specified in subdivisions (b) and (c),
the revenues of that utility's affiliates shall not be considered
unless the affiliate was utilized for the purpose of effecting the
merger, acquisition, or control.
   (g) Paragraphs (1) and (2) of subdivision (b) shall not apply to
the formation of a holding company.
   (h) For purposes of paragraphs (1) and (2) of subdivision (b), the
legislature does not intend to include acquisitions or changes in
control that are mandated by either the commission or the Legislature
as a result of, or in response to any electric industry
restructuring. However, the value of an acquisition or change in
control may be used by the commission in determining the costs or
benefits attributable to any  electric  
electrical  industry restructuring and for allocating those
costs or benefits for collection in rates.
  SEC. 3.  Section 854.5 is added to the Public Utilities Code, to
read:
   854.5.  (a) When authorizing a merger, acquisition, or change in
control pursuant to this chapter, the commission shall not establish
an entity to receive benefits on behalf of ratepayers without first
obtaining statutory authorization from the Legislature.
   (b) No commissioner shall be a director or officer of an entity
formed to receive benefits on behalf of ratepayers. The holding of
simultaneous positions as a commissioner and as a director or officer
of an entity formed to receive benefits of behalf of ratepayers
resulting from approval of a merger, acquisition, or change in
control pursuant to this chapter is the holding of public offices
that are incompatible pursuant to Section 1099 of the Government
Code.