BILL NUMBER: SB 48 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 8, 2013
AMENDED IN SENATE APRIL 8, 2013
INTRODUCED BY Senator Hill
DECEMBER 19, 2012
An act to add Section 740.5 to the Public Utilities Code, relating
to public utilities.
LEGISLATIVE COUNSEL'S DIGEST
SB 48, as amended, Hill. Public utilities: research and
development projects.
Under existing law, the Public Utilities Commission has regulatory
authority over public utilities, including electrical corporations,
gas corporations, heat corporations, and telephone corporations, as
defined. 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 authorizes electrical
corporations, gas corporations, heat corporations, and telephone
corporations to voluntarily adopt certain research and development
programs and authorizes the commission to allow inclusion of expenses
for research and development in rates. Existing law requires the
commission to consider specified guidelines in evaluating the
research, development, and demonstration programs proposed by
electrical corporations and gas corporations.
The bill would require the commission, by no later than January 1,
2016, to consolidate all review and approval of research and
development projects into a single research investment planning
proceeding that would be required to recur no more frequently than
every 2 years. The bill would prohibit the commission from allowing
cost recovery of expenses for funding any research and development
project outside the consolidated proceeding, except for the excluded
projects and programs, as defined, for which a public utility applied
for research and development funding prior to January 1, 2013. The
bill would require the commission, when reviewing any request for
authorization of expenses for research and development projects where
the expenses are to be recovered from ratepayers, to place a
preference on projects if the application was solicited in a manner
that provides for the maximum amount of competition, unless limited
and unique circumstances exist where it is not possible or desirable
to maximize competition, and the proposed project encourages the use
and leveraging of matching funds where possible. The bill would
require that certain research and development projects first undergo
peer review, as defined, that considers specified matter. The bill
would require the commission, before initiating a consolidated
research planning proceeding, to prepare and submit a report to the
relevant policy and fiscal committees of the Legislature listing all
research and development projects where the expenses of the project
were or are recovered from ratepayers during the previous 5 years.
This bill would require that when the commission reviews a request
from a public utility for authorization to incur expenses for a
research and development project, as defined, where the project
expenses are to be recovered from ratepayers and are in excess of
$1,500,000 per year, the commission is to administer a peer review,
as defined, with certain exceptions. The bill would require that the
peer review consider specified matters. The bill would require the
commission, by December 31, 2014, and by December 31 of each 3rd year
thereafter, to prepare and submit a report to the relevant policy
and fiscal committees of the Legislature listing all research and
development projects where the expenses of the project were or are
recovered from ratepayers during the previous 3 years, including for
each project the citations of all published papers, all oral and
poster presentations given at public meetings, and all patents
awarded for the funded research.
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) "Excluded projects and programs" means research and
development or research, development, and demonstration projects and
programs that are the subject of Application 12-11-009, Application
11-03-001, Application 11-03-002, Application 11-03-003, Application
12-07-001, Application 12-07-002, Application 12-07-003, Application
12-07-004, Application 11-06-006, Application 11-06-029, and
Application 11-07-001.
(2)
(1) "Peer 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. Peer reviewers shall be free of any financial or other
interest which could significantly impair the individual's
objectivity or create and unfair competitive advantage for any person
or organization.
(3)
(2) "Research and development project" includes a
research, development, and demonstration project or program.
(b) No later than January 1, 2016, the commission shall
consolidate all review and approval of research and development
projects into a single research investment planning proceeding that
shall recur no more frequently than every two years. Commencing
January 1, 2014, the commission shall not allow cost recovery of
expenses for funding any research and development project outside the
consolidated proceeding, except for the excluded projects and
programs for which a public utility applied for research and
development funding prior to January 1, 2013.
(c) When reviewing any request for authorization of expenses for
research and development projects where the expenses are to be
recovered from ratepayers, the commission shall place a preference on
projects where both of the following are true:
(1) The application was solicited in a manner that provides for
the maximum amount of competition, unless limited and unique
circumstances exist where it is not possible or desirable to maximize
competition.
(2) The proposed project encourages the use and leveraging of
matching funds where possible.
(d) Unless the proposed research and development project has been
selected by the public utility through an open solicitation of
proposals, the commission shall not authorize expenses for a project
that will be recovered from ratepayers in an amount in excess of one
million five hundred thousand dollars ($1,500,000) without the
project first undergoing peer review. The peer review shall consider
all of the following:
(b) When reviewing any request from a public utility for
authorization to incur expenses for a research and development
project where the project expenses are to be recovered from
ratepayers and are in excess of one million five hundred thousand
dollars ($1,500,000) per year, the commission shall administer a peer
review of the proposed project before authorizing recovery of the
project's expenses from ratepayers. The peer review shall consider
all of the following:
(1) The overall scientific or technical merits of the proposed
research and development project.
(1)
(2) The extent to which the same or similar research,
development, and demonstration work could be performed by entities
that the public utility does not select.
(2)
(3) The appropriateness of the level of requested
funding in camparison to other projects by similarly experience
individuals using similar facilities performing in similar timeframes
and circumstances.
(3)
(4) The likelihood that the proposed work can be
accomplished within the proposed time and budget by the investigators
or the technical staff, given their experience and expertise and
available resources.
(c) The commission may waive the peer review requirements in
subdivision (b) for a research and development project that was
selected through an open solicitation of proposals or if the project
is contingent upon a peer review by a public state or federal entity.
(e)
(d) (1) Notwithstanding Section 10231.5 of the
Government Code, before initiating a consolidated research planning
proceeding, the The commission shall prepare and
submit a report to the relevant policy and fiscal committees of the
Legislature listing all research and development projects where the
expenses of the project were or are recovered from ratepayers during
the previous five three years,
including for each project the citations of all published papers, all
oral and poster presentations given at public meetings, and all
patents awarded for the funded research. For an electrical
corporation, the report may be included in the report made to the
Legislature pursuant to Section 910. The first report
shall be submitted by December 31, 2014, and subsequent reports shall
be submitted by December 31 of every third year thereafter,
notwithstanding Section 10231.5 of the Government Code.
(2) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
(f) The requirements of this section do not apply to research and
development projects or programs managed by an independent contractor
pursuant to subdivision (b) of Section 2851, or to those managed by
the Energy Commission.
(g) Except for those research and development projects exempt
pursuant to subdivision (f), any research and development project for
which recovery of expenses is requested pursuant to Section 740,
that furthers the goals of Section 740.1, or that advances the public
interest consistent with subdivision (c) of Section 399, is subject
to the requirements of subdivisions (b), (c), (d), and (e).
(h) Nothing in this section authorizes funding of research and
development projects through the rates of a gas corporation that is
not in compliance with subdivision (a) of Section 890.