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SB-637 Public Utilities Commission: gas corporations: electrical corporations: safety.(2017-2018)

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Date Published: 03/27/2017 03:41 PM
SB637:v98#DOCUMENT

Amended  IN  Senate  March 27, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 637


Introduced by Senator Hill

February 17, 2017


An act to amend Section 451 of the Public Utilities Code, relating to public utilities. An act to amend Section 1701.4 of, to amend and renumber Section 309.8 of, to add Sections 309.2, 315.2, 315.6, and 315.8 to, and to add and repeal Section 315.4 of, the Public Utilities Code, relating to utility service.


LEGISLATIVE COUNSEL'S DIGEST


SB 637, as amended, Hill. Public utilities: rates. Public Utilities Commission: gas corporations: electrical corporations: safety.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations. The Public Utilities Act requires the commission to investigate the cause of all accidents occurring upon the property of any public utility or directly or indirectly arising from or connected with its maintenance or operation, resulting in loss of life or injury to person or property and requiring, in the judgment of the commission, investigation by it, and authorizes the commission to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. The California Constitution authorizes the commission to establish rules for all public utilities, subject to control by the Legislature.
This bill would require the commission to adopt a commissionwide gas corporation and electrical corporation safety program that includes specified elements and would authorize the commission to adopt an organizationwide safety program for other public utilities and specified nonutilities that are also subject to the commission’s regulatory jurisdiction. The bill would require gas corporations and electrical corporations to have effective programs to continually identify safety hazards and to analyze, assess, and mitigate or eliminate safety risks. The bill would specify the safety-related responsibilities with respect to gas corporations and electrical corporations of various entities within the commission. The bill would require the commission to perform a detailed safety management assessment for each gas corporation and electrical corporation not less often than every 5 years and would require the commission to take official notice of the safety management assessment in relevant proceedings, including general rate cases. The bill would require the commission, by March 1, 2018, to contract with one or more consultants to determine the effectiveness of its internal safety communications and decisionmaking processes and the incentives for staff in primarily safety-related roles compared to the incentives and opportunities for attorneys, administrative law judges, and staff in primarily nonsafety, energy-policy-related roles.
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 placing additional safety duties upon gas corporations and electrical corporations would be a part of the act, the bill would impose a state-mandated local program by creating a new crime.
Existing law requires the commission to appoint an executive director who is responsible for the commission’s executive and administrative duties and to organize, coordinate, supervise, and direct the operations and affairs of the commission and expedite all matters within the commission’s jurisdiction. Existing law authorizes the executive director to employ those officers, administrative law judges, experts, engineers, statisticians, accountants, inspectors, clerks, and employees as the executive director deems necessary to carry out the provisions of the Public Utilities Act or to perform the duties and exercise the powers conferred upon the commission by law.
This bill would require the executive director to provide an engineer to each commissioner to advise him or her on the technical aspects of safety and the technical aspects of other topics within the jurisdiction of the commission.
The California Constitution authorizes the commission to establish its own procedures, subject to statutory limitations or directions and constitutional requirements of due process. The Public Utilities Act requires the commission to determine whether a proceeding requires a hearing and, if so, to determine whether the matter requires a quasi-legislative, an adjudication, or a ratesetting hearing. For these purposes, quasi-legislative cases are cases that establish policy rulemakings and investigations which may establish rules affecting an entire industry. Existing law generally permits ex parte communications in quasi-legislative cases.
The bill would require that any excess of formality in commission policy or administrative practice not be used to prevent commission staff from submitting findings and evidence relevant to safety into the quasi-legislative proceeding record or from presenting arguments to improve safety in quasi-legislative cases.
Pursuant to its existing authority, the commission has issued an interim decision adopting a multiattribute approach and directing certain public utilities to take steps toward a more uniform risk management framework.
This bill would void a specified order in that interim decision and direct the Safety and Enforcement Division and executive director of the commission to not implement that order.
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.

Existing law authorizes the Public Utilities 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 a public utility to furnish and maintain adequate, efficient, just, and reasonable service, instrumentalities, equipment, and facilities as are necessary to promote the safety, health, comfort, and convenience of its patrons, employees, and the public.

This bill would make nonsubstantive changes in these provisions.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NOYES  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Because there are no restrictions on ex parte communications in quasi-legislative proceedings before the Public Utilities Commission, an advisory role for safety staff of the commission confers no benefits in those proceedings, while preventing safety staff from contributing to the proceeding’s record.
(b) In his June 22, 2015, “Report on Key Findings from CPUC Modernization and Reform Project,” Edward O’Neill, the Governor’s senior adviser on modernization and reform of the Public Utilities Commission, stated that “[i]nformation flow is constrained by a combination of organizational, physical, cultural and legal constraints, which tend to impair rather than promote individual initiative and creativity, as well as collaboration and collective problem solving, and organizational innovation.”
(c) In their February 17, 2016, report to Public Utility Commission’s Committee on Finance and Administration titled “Report on the Safety Management System Implementation at the California Public Utilities Commission,” Professors Paul Schulman and Karlene Roberts noted that “it is not clear to us that at present either Commission managers or staff see major institutional incentives attached to roles closely connected with safety,” and that “there does not seem to be a plausible career track for safety specialists in the Commission.”
(d) Professors Schulman and Roberts also note, in the same report, that the Public Utilities Commission does not have clear roles for safety staff and the commission has adopted overly restrictive constraints on the safety advocacy of safety staff, writing that “[o]ne of the striking things we discovered in our interviews and discussions within the CPUC was the confusion in understanding the roles of advisor, advocate and enforcer among a surprising number of people,” and that “[i]t seems to us from our interviews that the confusion leads to an overly protective and overly-rigid functional separation in order to avoid any legal violations.”

SEC. 2.

 Paragraph 12 of the Public Utilities Commission Decision 16-08-018 (August 18, 2016), Interim Decision Adopting the Multi-Attribute Approach (or Utility Equivalent Features) and Directing Utilities to Take Steps Toward a More Uniform Risk Management Framework, is void and the Safety and Enforcement Division and executive director shall not implement that paragraph.

SEC. 3.

 Section 309.2 is added to the Public Utilities Code, to read:

309.2.
 The executive director shall provide an engineer to each commissioner to advise him or her on the technical aspects of safety and the technical aspects of other topics within the jurisdiction of the commission.

SEC. 4.

 Section 309.8 of the Public Utilities Code is amended and renumbered to read:

309.8. 315.1.
 (a) There is hereby established within the commission the Office of the Safety Advocate to advocate for the continuous, cost-effective improvement of the safety management and safety performance of public utilities.
(b) The office shall promote public utility safety by doing all of the following:
(1) Advocating, as a party to commission proceedings and on behalf of the interests of public utility customers, for effective public utility safety management and infrastructure improvements and for the transparency of safety information, including, but not limited to, information relating to past performance.
(2) Recommending improvements to the commission’s safety management policy and procedures and its safety culture.
(3) Informing the official record on safety-related risks in applicable commission proceedings and assisting the commission in its efforts to hold public utilities accountable for their safe operation.
(c) On or before January 10 of each year, the office shall provide to the chairpersons of the appropriate fiscal and policy committees of each house of the Legislature all of the following information:
(1) The actions taken by the office to recommend improvements to the commission’s safety management policy and procedures and its safety culture related to the oversight of utilities.
(2) The actions taken by the office to recommend improvements to public utility safety management policy and procedures and safety culture.
(3) The proceedings in which the office participated and a brief description of the testimony it filed.
(d) This section shall remain in effect only until January 1, 2020, and as of that date is repealed, unless a later enacted statute, statute that is enacted before January 1, 2020, deletes or extends that date.

SEC. 5.

 Section 315.2 is added to the Public Utilities Code, to read:

315.2.
 (a) The commission shall adopt a commissionwide gas corporation and electrical corporation safety program that includes all of the following:
(1) Adopting safety policies and objectives, including by determining the responsibilities and accountabilities throughout the commission.
(2) Continually identifying safety hazards and analyzing, assessing, and mitigating or eliminating safety risks and requiring gas corporations and electrical corporations to have effective programs to do the same.
(3) Ensuring safety, including through monitoring, data tracking and analysis, accident investigations, and audits of gas corporation and electrical corporation safety programs.
(4) Promoting safety, including through the establishment of both internal and external processes to provide or facilitate safety training, communication, and dissemination of safety information.
(b) The commission may adopt a commissionwide safety program for other public utilities and those nonutilities that are subject to regulation by the commission pursuant to Division 2 (commencing with Section 3901).

SEC. 6.

 Section 315.4 is added to the Public Utilities Code, to read:

315.4.
 (a) The following persons and entities within the commission have the following safety responsibilities with respect to electrical and gas corporations:
(1) The director of the division responsible for gas and electrical corporation safety assurance shall be responsible for the following:
(A) Determining an annual safety assurance plan consistent with hazards and risks, and the uncertainty of those risks, identified by the division and by other sources, and with commission orders.
(B) In consultation with the legal division, proposing investigations to the commission.
(2) The gas safety and reliability branch and the electrical safety and reliability branch shall assume a safety assurance role and be responsible for the following:
(A) Identifying and documenting safety violations.
(B) Monitoring and documenting the effectiveness of identified risk controls.
(C) Identifying safety hazards that pose risks that are not sufficiently controlled through existing gas corporation and electrical corporation practices or commission rules and orders.
(3) The risk assessment section shall be responsible for the following:
(A) In consultation with the gas safety and reliability branch and the electrical safety and reliability branch, analyzing gas corporation and electrical corporation and industry safety trends.
(B) In consultation with the gas safety and reliability branch and the electrical safety and reliability branch, analyzing gas corporation and electrical corporation hazard identification processes.
(4) (A) The Office of the Safety Advocate, consistent with Section 315.1, shall be responsible for the following:
(i) Annually proposing to the commission a safety action plan.
(ii) In consultation with the risk assessment section, the gas safety and reliability branch, and the electrical safety and reliability branch, identifying risk management needs and proposed safety assurance activities to be performed by gas corporations, electrical corporations, and any other public utilities subject to a safety program pursuant to subdivision (b) of Section 315.2.
(iii) In consultation with the risk assessment section, the gas safety and reliability branch, the electrical safety and reliability branch, and the director of the division responsible for gas corporation and electrical corporation safety assurance, developing petitions for rulemakings, petitions for modification, and other procedural means to improve safety at gas corporations, electrical corporations, and any other public utilities subject to a safety program pursuant to subdivision (b) of Section 315.2.
(iv) In advocacy in commission proceedings, conferring with the director of the division responsible for gas corporation and electrical corporation safety assurance to determine staff roles within the office and the division responsible for gas corporation and electrical corporation safety assurance.
(v) Proposing safety promotion activities and initiatives to the commission.
(B) If the Office of the Safety Advocate cease operation pursuant to subdivision (d) of Section 315.1, the responsibilities specified in subparagraph (A) shall be transferred to the director of the division responsible for gas corporation and electrical corporation safety assurance.
(5) The news and outreach office shall be responsible for publicizing significant safety-related findings made by the commission and commission staff, including the list of the most hazardous grade crossings in the state and other safety hazards identified by commission staff.
(b) This section shall remain in effect only until January 1, 2023, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2023, deletes or extends that date.

SEC. 7.

 Section 315.6 is added to the Public Utilities Code, to read:

315.6.
 The commission shall perform a detailed safety management assessment for each gas corporation and electrical corporation not less often than once every five years. The safety management assessment shall consider the results of safety assurance activities undertaken by the commission, by third parties, and by the gas corporations and electrical corporations, and shall not solely consider physical elements, but shall also include human and organizational factors that can contribute to or mitigate risk. The commission shall take official notice of safety management assessments in relevant proceedings, including, but not limited to, general rate cases.

SEC. 8.

 Section 315.8 is added to the Public Utilities Code, to read:

315.8.
 By March 1, 2018, the commission shall contract with one or more consultants to determine both of the following:
(a) The effectiveness of its internal safety communications and decisionmaking processes.
(b) The incentives at the commission for staff in primarily safety-related roles, including career advancement opportunities both within the commission and to outside organizations, when compared with incentives and opportunities for attorneys, administrative law judges, and staff in primarily nonsafety, energy-policy-related roles.

SEC. 9.

 Section 1701.4 of the Public Utilities Code is amended to read:

1701.4.
 (a) This section shall apply only to quasi-legislative cases, except, if the commission pursuant to Section 1701.1 has determined that a quasi-legislative case does not require a hearing, the procedures prescribed by subdivisions (b), (d), and (e) shall not apply.
(b) The assigned administrative law judge and any assigned technical advisory staff shall act as an assistant to the assigned commissioner in quasi-legislative cases. The assigned commissioner shall prepare the proposed rule or order with the assistance of the administrative law judge and any assigned technical advisory staff. The assigned commissioner shall present the proposed rule or order to the full commission in a public meeting. The report shall include the number of days of hearing and the number of days that the commissioner was present.
(c) Ex parte communications in quasi-legislative proceedings are permitted and not subject to the disclosure requirements of this article, except when the commission, by order or ruling, determines either of the following:
(1) That ex parte communications are subject to the disclosure requirements of this article.
(2) That ex parte communications are prohibited and subject to the disclosure requirements of this article.
(d) Any party has the right to present a final oral argument of its case before the commission. Those requests shall be scheduled in a timely manner. A quorum of the commission shall be present for the final oral arguments.
(e) The commission may, in issuing its rule or order, adopt, modify, or set aside the proposed decision or any part of the rule or order. The final rule or order of the commission shall be issued not later than 60 days after the issuance of the proposed rule or order. Under extraordinary circumstances the commission may extend this date for a reasonable period. The 60-day period shall be extended for 30 days if any alternate rule or order is proposed pursuant to Section 311.
(f) No informality in the manner of taking testimony or evidence shall invalidate any order, decision, or rule made, approved, or confirmed by the commission in quasi-legislative cases.
(g) Excess of formality in commission policy or administrative practice shall not be used to prevent commission staff from submitting findings and evidence relevant to safety into the proceeding record or from presenting arguments to improve safety.

SEC. 10.

 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.
SECTION 1.Section 451 of the Public Utilities Code is amended to read:
451.

(a)All charges demanded or received by any public utility, or by any two or more public utilities, for any product or commodity furnished or to be furnished or any service rendered or to be rendered shall be just and reasonable. Every unjust or unreasonable charge demanded or received for such a product or commodity or service is unlawful.

(b)Every public utility shall furnish and maintain such adequate, efficient, just, and reasonable service, instrumentalities, equipment, and facilities, including telephone facilities, as defined in Section 54.1 of the Civil Code, as are necessary to promote the safety, health, comfort, and convenience of its patrons, employees, and the public.

(c)All rules made by a public utility affecting or pertaining to its charges or service to the public shall be just and reasonable.