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AB-1552 Women, minority, disabled veteran, and LGBT business enterprise procurement: late payment penalties.(2017-2018)

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Date Published: 09/12/2017 09:00 PM
AB1552:v98#DOCUMENT

Amended  IN  Assembly  September 12, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1552


Introduced by Assembly Member Quirk-Silva

February 17, 2017


An act to amend Section 8281 of, and to add Section 354 to 8287 to, the Public Utilities Code, relating to energy. public utilities.


LEGISLATIVE COUNSEL'S DIGEST


AB 1552, as amended, Quirk-Silva. Electricity: distributed generation. Women, minority, disabled veteran, and LGBT business enterprise procurement: late payment penalties.
Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical electrical, gas, water, and telephone corporations. 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 requires the PUC to require each electrical corporation under the operational control of the Independent System Operator as of January 1, 2001, to modify tariffs so that all customers that install new distributed energy resources, as defined, in accordance with specified criteria are served under rates, rules, and requirements identical to those of a customer within the same rate schedule that does not use distributed energy resources and to withdraw any provisions in otherwise applicable tariffs that activate other tariffs, rates, or rules if a customer uses distributed energy resources. Existing law provides, notwithstanding these requirements, that a customer that installs new distributed energy resources not be exempted from (1) reasonable interconnection charges, (2) charges imposed pursuant to the Reliable Electric Service Investment Act, and (3) charges imposed to repay the Department of Water Resources for electricity procurement expenses incurred in response to the electricity crisis of 2000–01. Existing law requires the PUC, in establishing the rates applicable to customers that install new distributed energy resources, to create a firewall that segregates distribution cost recovery so that any net costs, taking into account the actual costs and benefits of distributed energy resources, proportional to each customer class, as determined by the PUC, resulting from the tariff modifications granted to members of each customer class may be recovered only from that class. requires each electrical, gas, water, wireless telecommunications service provider, or telephone corporation with gross annual revenues exceeding $25,000,000, and its commission-regulated subsidiaries and affiliates, to annually submit a detailed and verifiable plan for increasing procurement from women, minority, disabled veteran, and LGBT business enterprises, as defined, and to implement an outreach program to inform and recruit those business enterprises to apply for procurement contracts, as specified. Existing law includes a declaration by the Legislature that each electrical, gas, water, mobile telephony service provider, and telephone corporation that is not required to submit a plan, and each cable television corporation and direct broadcast satellite provider, is encouraged to voluntarily adopt a plan for increasing procurement from those business enterprises. Existing law requires the commission, by rule or order, to adopt criteria for verifying and determining eligibility of women, minority, and LGBT business enterprises for procurement contracts.
This bill would, by July 1, 2018, to the extent authorized by federal law, require the state’s 3 largest electrical corporations to stop assessing utility-imposed nonbypassable charges against customers using clean distributed generation resources, as defined, for electricity generated and consumed on-site and instead require those customers to pay all applicable fees based only on electricity purchased from the electrical corporation that is delivered over the electrical grid. would require each electrical, gas, water, mobile telephony service provider, or telephone corporation, with gross annual revenues exceeding $25,000,000, and its commission-regulated subsidiaries and affiliates, to pay an undisputed invoice by its required payment approval date, as defined. If the payment is not made by that date, the bill would require the utility to pay a late payment penalty to a disabled veteran, minority, women, or LGBT business enterprise claimant a penalty at a rate of 10% above the United States Prime Rate, and to all other claimants a penalty at a rate of 1% above the Pooled Money Investment Account daily rate, of the amount of the late undisputed invoice, as specified. The bill would provide that a late payment penalty that accrues as a result of a utility’s failure to make a timely payment is not recoverable from its ratepayers. The bill would require each utility to annually provide the commission with a report of its late payment penalties. The bill would authorize the commission to open a proceeding to offer further guidance to assist in the implementation of these provisions, and would require the commission to encourage all public utilities to adopt policies and practices that encourage claimants to promptly pay their contractors and suppliers, especially those that are small businesses.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC commission is a crime.
Because the provisions of this bill would be a part of the act and because a violation of an order or decision of the PUC commission implementing its requirements the requirements of the bill would be a crime, the bill would impose a state-mandated local program by creating a new 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   Local Program: YES  

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


SECTION 1.

 (a) The Legislature finds and declares that the most vulnerable businesses, including women, minority, disabled veteran, and LGBT business enterprises, are often treated differently by the entities with whom they contract, and that those businesses often disproportionately suffer when they do not receive the payments owed to them on time.
(b) It is the intent of the Legislature to do both of the following:
(1) To ensure that those businesses receive their payments on time, and that, when those payments are received late, those businesses are adequately compensated for the harm that they suffer.
(2) To enable those businesses to participate equally in their pursuits of the American Dream.

SEC. 2.

 Section 8281 of the Public Utilities Code is amended to read:

8281.
 (a) The Legislature hereby finds and declares that the essence of the American economic system of private enterprise is free, open, and transparent competition. Only through free, open, and transparent competition can free markets, reasonable and just prices, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment be ensured. The preservation and expansion of that competition are basic to the economic well-being of this state and that well-being cannot be realized unless the actual and potential capacity of women, minority, disabled veteran, and LGBT business enterprises is encouraged and developed. Therefore, it is the declared policy of the state to aid the interests of women, minority, disabled veteran, and LGBT business enterprises in order to preserve reasonable and just prices and a free competitive enterprise, to ensure that a fair proportion of the total purchases and contracts or subcontracts for commodities, supplies, technology, property, and services for regulated public utilities, including, but not limited to, renewable energy, wireless energy resources, mobile telecommunications, broadband, smart grid, and rail projects, are awarded to women, minority, disabled veteran, and LGBT business enterprises, and to maintain and strengthen the overall economy of the state.
(b) (1) The Legislature finds and declares all of the following:
(A) The opportunity for full participation in our free enterprise system by women, minority, disabled veteran, and LGBT business enterprises is essential if this state is to attain social and economic equality for those businesses and improve the functioning of the state economy.
(B) Public agencies and some regulated public utilities that have established short- and long-range women, minority, disabled veteran, and LGBT business enterprise goals are awarding 30 percent or more of their contracts to these business enterprises.
(C) Women, minority, disabled veteran, and LGBT business enterprises have traditionally received less than a proportionate share of regulated public utility procurement contracts, especially in renewable energy, wireless energy resources, mobile telecommunications, broadband, smart grid, and rail projects.
(D) It is in the state’s interest to expeditiously improve the economically disadvantaged position of women, minority, disabled veteran, and LGBT business enterprises.
(E) The position of these businesses can be substantially improved by providing long-range substantial goals for procurement by regulated public utilities of technology, equipment, supplies, services, materials, and construction work, especially in renewable energy, wireless energy resources, mobile telecommunications, broadband, smart grid, and rail projects, from women, minority, disabled veteran, and LGBT businesses.
(F) That procurement also benefits the regulated public utilities and consumers of the state by encouraging the expansion of the number of suppliers for procurements, thereby encouraging competition among the suppliers and promoting economic efficiency in the process.
(G) That the long-term economic viability of this state depends substantially upon the ability of renewable energy, wireless energy resources, mobile telecommunications, broadband, smart grid, and rail projects to incorporate women, minority, disabled veteran, and LGBT businesses into those projects.
(2) It is the purpose of this article to do all of the following:
(A) Encourage greater economic opportunity for women, minority, disabled veteran, and LGBT business enterprises.
(B) Promote competition among regulated public utility suppliers in order to enhance economic efficiency in the procurement of electrical, gas, water, wireless telecommunications mobile telephony service provider, and telephone corporation contracts and contracts of their commission-regulated subsidiaries and affiliates.
(C) Clarify and expand the program for the procurement by regulated public utilities of technology, equipment, supplies, services, materials, and construction work from women, minority, disabled veteran, and LGBT business enterprises.
(D) Ensure that regulated public utilities treat women, minority, disabled veteran, and LGBT businesses respectfully, including by providing for the prompt payment of valid invoices.

SEC. 3.

 Section 8287 is added to the Public Utilities Code, to read:

8287.
 (a) The following definitions apply to this section:
(1) “Invoice” means a bill or claim that requests payment on a contract under which a public utility acquires a good or service.
(2) “Reasonable cause” means a determination by a public utility that any of the following conditions is present:
(A) There is a discrepancy between the invoice or claimed amount and the provisions of the contract for the goods or services.
(B) There is a discrepancy between the invoice or claimed amount and either the goods or services delivered by the claimant to the public utility or the goods or services accepted by the public utility.
(C) The public utility requires the claimant to provide additional evidence supporting the validity of the invoice or claimed amount.
(D) The claimant has improperly executed or needs to correct the invoice.
(E) There is a discrepancy between the refund or other payment due as calculated by the party to whom the money is owed and by the public utility.
(3) The date an invoice is “received by the public utility” means the date an invoice is delivered to the public utility or party specified in the contract.
(4) “Required payment approval date” means the date on which payment is due as specified in a contract. If a date is not specified in the contract, the required payment approval date is 30 calendar days following the date upon which an undisputed invoice is received by the public utility.
(b) (1) The late payment penalty requirements in this section shall apply only to an electrical, gas, water, mobile telephony service provider, or telephone corporation, with gross annual revenues exceeding twenty-five million dollars ($25,000,000), and its commission-regulated subsidiaries and affiliates.
(2) Other public utilities are encouraged to implement policies that support the prompt payment of contractors.
(c) (1) A utility described in paragraph (1) of subdivision (b) shall pay an undisputed invoice by the required payment approval date.
(2) A utility described in paragraph (1) of subdivision (b) may dispute an invoice submitted by a claimant for reasonable cause if the utility notifies the claimant within 15 working days from receipt of the invoice, or delivery of property or services, whichever is later. No employee of the utility shall dispute an invoice on the basis of minor or technical defects to circumvent or avoid the general intent, or any of the specific provisions, of this section.
(d) If a utility described in paragraph (1) of subdivision (b) fails to comply with the requirement of paragraph (1) of subdivision (c), it shall pay a late payment penalty, as described in this subdivision, without requiring the claimant to submit an additional invoice for that amount. The penalty shall cease to accrue on the date the utility issues the payment.
(1) If the claimant is a disabled veteran, minority, women, or LGBT business enterprise, as defined in this article, the utility shall pay to the claimant a late payment penalty at a rate of 10 percent above the United States Prime Rate on June 30 of the prior fiscal year of the amount of the late undisputed invoice. If the amount of the late payment penalty is ten dollars ($10) or less, it shall be waived and not paid by the utility.
(2) To all other businesses, the utility shall pay a late payment penalty at a rate of 1 percent above the Pooled Money Investment Account daily rate on June 30 of the prior fiscal year, not to exceed a rate of 15 percent, of the amount of the late undisputed invoice. If the amount of the penalty is twenty-five dollars ($25) or less, the penalty shall be waived and not paid by the utility.
(e) Any late payment penalty that accrues as a result of a failure of a utility described in paragraph (1) of subdivision (b) to make a timely payment, as required by this section, shall not be recoverable from the utility’s ratepayers.
(f) (1) On an annual basis, within 90 calendar days following the end of each fiscal year, a utility described in paragraph (1) of subdivision (b) shall provide the commission with a report of late payment penalties that it paid in accordance with this section during the preceding fiscal year.
(2) The report shall include the total dollar amount of contracts paid during the fiscal year and separately identify the total number, and dollar amount, of late payment penalties paid pursuant to paragraphs (1) and (2) of subdivision (d), disaggregated, at a minimum, by the ownership categories of business enterprises specified in paragraph (1) of subdivision (d) for which each late payment penalty was made. This information shall be included in the annual plan required by Section 8283.
(g) The commission may open a proceeding to offer further guidance to assist in the implementation of this section.
(h) The commission shall encourage all public utilities to adopt policies and practices that encourage claimants to promptly pay their contractors and suppliers, especially those claimants that are small businesses. The policies and practices may include, but are not limited to, expedited payment processes and transparent payment practices that allow a contractor to track when the claimant has been paid by a public utility.

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.
SECTION 1.Section 354 is added to the Public Utilities Code, to read:
354.

(a)As used in this section, “clean distributed generation resource” means a facility that is located on the customer’s premises and generates electricity, or electricity and useful heat, where the electricity generated is used for a purpose described in paragraph (1) or (2) of subdivision (b) of Section 218, and that meets, as determined for each year of eligibility based on the then current criteria, either of the following requirements:

(1)It meets all of the following criteria:

(A)Complies with the emissions standards adopted by the State Air Resources Board pursuant to the distributed generation certification program requirements (Section 94203 of Title 17 of the California Code of Regulations).

(B)Has a nameplate rated generation capacity of 10 megawatts or less.

(C) Is sized to meet the electrical demand of, or use the available waste heat of, the customer that will be served by the facility.

(2)It meets all of the following criteria:

(A)Is an eligible renewable energy resource, pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)).

(B)Has a nameplate rated generation capacity of 15 megawatts or less.

(C)Is sized to meet the electrical demand of the customer that will be served by the facility.

(D)Will not otherwise be addressed in the commission’s implementation of Section 769 or 2827.1.

(b)To the extent authorized by federal law, by July 1, 2018, the commission shall require the state’s three largest electrical corporations to stop assessing utility-imposed nonbypassable charges against customers using clean distributed generation resources for electricity generated and consumed on-site and instead require those customers to pay all applicable fees based only on electricity purchased from the electrical corporation that is delivered over the electrical grid.

SEC. 2.

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.