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AB-1156 Electrical corporations: safety certification: executive incentive compensation structures.(2021-2022)

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Date Published: 03/11/2021 09:00 PM
AB1156:v98#DOCUMENT

Amended  IN  Assembly  March 11, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 1156


Introduced by Assembly Member Holden

February 18, 2021


An act to amend Section 398.4 8389 of the Public Utilities Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


AB 1156, as amended, Holden. Disclosure of sources of electrical generation. Electrical corporations: safety certification: executive incentive compensation structures.
Under existing law, the Public Utilities Commission has regulatory authority over electrical corporations. Existing law requires the executive director of the commission to issue a safety certification to an electrical corporation if the electrical corporation provides documentation that it has an approved wildfire mitigation plan, is in good standing, has established a safety committee of its board of directors, has established board-of-director-level reporting to the commission on safety issues, has established a compensation structure for any new or amended contracts for executive officers, and has established an executive incentive compensation structure approved by the commission’s Wildfire Safety Division, as specified. Existing law requires the division to approve an electrical corporation’s executive incentive compensation structure if the division determines the structure meets specified principles.
Existing law requires the commission to award reasonable advocate’s fees, reasonable expert witness fees, and other reasonable costs of preparation for, and participation in, a hearing or proceeding, as defined, to any customer who complies with specified procedural requirements, makes a substantial contribution to the adoption of the commission’s order or decision, and would otherwise experience a significant financial hardship as a result of that participation or intervention.
This bill would require the commission, rather than the division, to approve an electrical corporation’s executive incentive compensation structure if the commission determines the structure meets those principles, and would expressly authorize the commission to reject or modify the structure if it determines those principles are not met. The bill would expressly authorize a public utility customer to be compensated for the costs of participating or intervening in the commission’s review of the structure, as specified.

Existing law requires that a retail supplier that makes an offering to sell electricity that is consumed in California disclose its electricity sources and the associated greenhouse gases emissions intensity for the previous calendar year. Existing law requires that these disclosures be made to potential end-use consumers in all product-specific written promotional materials that are distributed to consumers by either printed or electronic means, including the retail supplier’s internet website, if one exists, but excludes advertisements and notices in general circulation media from this requirement.

This bill would make a nonsubstantive revision to the requirement that these disclosures be made to potential end-use consumers in all product-specific written promotional materials that are distributed to consumers by either printed or electronic means, including the retail supplier’s internet website, if one exists.

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

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


SECTION 1.

 Section 8389 of the Public Utilities Code is amended to read:

8389.
 (a) For purposes of this section, the following definitions apply:
(1) “Board” means the California Wildfire Safety Advisory Board established pursuant to Section 326.1.
(2) “Division” means the Wildfire Safety Division established pursuant to Section 326.
(3) “Proceeding” has the same meaning as defined in Section 1802.
(b) By June 30, 2020, and annually thereafter, the board shall make recommendations to the division on all of the following:
(1) Appropriate performance metrics and processes for determining an electrical corporation’s compliance with its approved wildfire mitigation plan.
(2) Appropriate requirements in addition to the requirements set forth in Section 8386 for the wildfire mitigation plan.
(3) The appropriate scope and process for assessing the safety culture of an electrical corporation.
(c) By October 31, 2020, and annually thereafter, the division shall issue an analysis and recommendation to the commission on the recommendations provided by the board pursuant to subdivision (b).
(d) By December 1, 2020, and annually thereafter, the commission, after consultation with the division, shall adopt and approve all of the following:
(1) Performance metrics for electrical corporations.
(2) Additional requirements for wildfire mitigation plans.
(3) A wildfire mitigation plan compliance process.
(4) A process for the division to conduct annual safety culture assessments for each electrical corporation.
(e) The executive director of the commission shall issue a safety certification to an electrical corporation if the electrical corporation provides documentation of all of the following:
(1) The electrical corporation has an approved wildfire mitigation plan.
(2) The electrical corporation is in good standing, which can be satisfied by the electrical corporation having agreed to implement the findings of its most recent safety culture assessment, if applicable.
(3) The electrical corporation has established a safety committee of its board of directors composed of members with relevant safety experience.
(4) The electrical corporation has established an executive incentive compensation structure approved by the division commission pursuant to subparagraph (B) of paragraph (6) and structured to promote safety as a priority and to ensure public safety and utility financial stability with performance metrics, including incentive compensation based on meeting performance metrics that are measurable and enforceable, for all executive officers, as defined in Section 451.5. This may include tying 100 percent of incentive compensation to safety performance and denying all incentive compensation in the event the electrical corporation causes a catastrophic wildfire that results in one or more fatalities.
(5) The electrical corporation has established board-of-director-level reporting to the commission on safety issues.
(6) (A) The electrical corporation has established a compensation structure for any new or amended contracts for executive officers, as defined in Section 451.5, that is based on the following principles:
(i) (I) Strict limits on guaranteed cash compensation, with the primary portion of the executive officers’ compensation based on achievement of objective performance metrics.
(II) No guaranteed monetary incentives in the compensation structure.
(ii) It satisfies the compensation principles identified in paragraph (4).
(iii) A long-term structure that provides a significant portion of compensation, which may take the form of grants of the electrical corporation’s stock, based on the electrical corporation’s long-term performance and value. This compensation shall be held or deferred for a period of at least three years.
(iv) Minimization or elimination of indirect or ancillary compensation that is not aligned with shareholder and taxpayer interest in the electrical corporation.
(B) The division commission, as part of a proceeding, shall approve the compensation structure of an electrical corporation if it determines the compensation structure meets the principles set forth in subparagraph (A) and paragraph (4). If the commission determines the compensation structure of an electrical corporation fails to meet the principles set forth in subparagraph (A) and paragraph (4), the commission may reject or modify the compensation structure. Costs to public utility customers of participation or intervention in the proceeding shall be eligible for compensation pursuant to Article 5 (commencing with Section 1801) of Chapter 9 of Part 1 of Division 1.
(C) It is the intent of the Legislature, in enacting this paragraph and paragraph (4), that any approved bankruptcy reorganization plan of an electrical corporation should, in regards to compensation for executive officers of the electrical corporation, comply with the requirements of those paragraphs.
(7) The electrical corporation is implementing its approved wildfire mitigation plan. The electrical corporation shall file a tier 1 advice letter on a quarterly basis that details the implementation of both its approved wildfire mitigation plan and recommendations of the most recent safety culture assessment, and a statement of the recommendations of the board of directors safety committee meetings that occurred during the quarter. The advice letter shall also summarize the implementation of the safety committee recommendations from the electrical corporation’s previous advice letter filing. If the division has reason to doubt the veracity of the statements contained in the advice letter filing, it shall perform an audit of the issue of concern.
(f) (1) The executive director shall issue an initial safety certification within 30 days of receipt of a request for that certification by an electrical corporation if the electrical corporation provides documentation that it is meeting the requirements set forth in paragraphs (1), (2), (3), and (5) of subdivision (e). A safety certification shall be valid for the 12 consecutive months following the issuance of the certification.
(2) Before the expiration of a certification, an electrical corporation shall submit to the division a request for certification for the following 12 months. The division shall issue a safety certification within 90 days of a request if the electrical corporation has provided documentation that it has satisfied the requirements in subdivision (e).
(3) All documents submitted pursuant to this section shall be publicly available on the commission’s internet website.
(4) Notwithstanding paragraph (1), a safety certification shall remain valid until the division acts on the electrical corporation’s pending request for safety certification.
(g) If the division determines an electrical corporation is not in compliance with its approved wildfire mitigation plan, it may recommend that the commission pursue an enforcement action against the electrical corporation for noncompliance with its approved plan.

SECTION 1.Section 398.4 of the Public Utilities Code is amended to read:
398.4.

(a)Every retail supplier that makes an offering to sell electricity that is consumed in California shall disclose its electricity sources and the associated greenhouse gases emissions intensity for the previous calendar year.

(b)The disclosures required by this section shall be made to potential end-use consumers in all product-specific written promotional materials that are distributed to consumers by either printed or electronic means, including the retail supplier’s internet website, if one exists, except that advertisements and notices in general circulation media shall not be subject to this requirement.

(c)The disclosures required by this section shall be made annually to end-use consumers of the offered electricity. The annual disclosure shall be made by the end of the first complete billing cycle for the third quarter of the year, and shall be consistent with information provided to the Energy Commission pursuant to Section 398.5. A retail supplier may distribute the disclosures required by this section via email to any end-use consumer that has consented to receive email in lieu of printed materials.

(d)The disclosures required by this section shall be made separately for each portfolio offering made by the retail supplier.

(e)On or before January 1, 1998, the Energy Commission shall specify guidelines for the format and means for disclosure required by Section 398.3 and this section, based on the requirements of this article and subject to public hearing.

(f)The costs of making the disclosures required by this section shall be considered to be generation related.

(g)The disclosures required by this section shall comply with the following:

(1)A retail supplier’s disclosure of its electricity sources shall be expressed as a percentage of annual sales derived from each of the following categories:

(A)Electricity from unspecified sources.

(B)Purchases of electricity from specified sources.

(2)A retail supplier’s disclosure of its electricity sources shall also separately identify total California system electricity, which is the sum of all in-state generation and net electricity imports by fuel type.

(h)Each of the categories specified in subdivision (g) shall be additionally identified as a percentage of annual sales that is derived from the following fuels, sources of energy, or electricity products:

(1)Coal.

(2)Large hydroelectric (greater than 30 megawatts).

(3)Natural gas.

(4)Nuclear.

(5)Eligible renewable energy resources pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)), including any of the following:

(A)Biomass and biowaste.

(B)Geothermal.

(C)Eligible hydroelectric.

(D)Solar.

(E)Wind.

(6)Other categories as determined by the Energy Commission.

(7)The portion of annual sales derived from unbundled renewable energy credits shall be included in the disclosures in a format determined by the Energy Commission. A retail supplier may include additional information related to the sources of the unbundled renewable energy credits.

(i)All electricity sources disclosed as purchases of electricity from specified sources shall meet the requirements of subdivision (d) of Section 398.2.

(j)Purchases of electricity from specified sources identified pursuant to this section shall be from sources connected to the Western Electricity Coordinating Council interconnected grid.

(k)(1)Each retail supplier shall disclose both the greenhouse gas emissions intensity of any electricity portfolio offered to its retail customers and the Energy Commission’s calculation of greenhouse gas emissions intensity associated with all statewide retail electricity sales, consistent with the requirements of this subdivision.

(2)The Energy Commission shall do all of the following:

(A)Adopt a methodology, in consultation with the State Air Resources Board, for the calculation of greenhouse gas emissions intensity for each purchase of electricity by a retail supplier to serve its retail customers.

(B)Calculate the greenhouse gas emissions intensity associated with statewide retail electricity sales based on the greenhouse gas emissions for total California system electricity.

(C)Rely on the most recent verified greenhouse gas emissions data while ensuring that greenhouse gas emissions intensity factors for electricity from specified and unspecified sources are available to retail suppliers with sufficient advance notice to permit timely reporting.

(D)Establish guidelines for adjustments to a greenhouse gas emissions intensity factor for a reporting year for any local publicly owned electric utility demonstrating generation of quantities of electricity in previous years in excess of its total retail sales and wholesale sales from specified sources that do not emit any greenhouse gases. Adjustments authorized by the guidelines established by the Energy Commission shall not permit excess generation procured in a single year to be counted more than once or to be resold to another retail supplier as a specified source.

(E)Ensure that there is no double-counting of the greenhouse gas emissions or emissions attributes associated with any unit of electricity production reported by a retail supplier for any specific generating facility or unspecified source located within the Western Electricity Coordinating Council when calculating greenhouse gas emissions intensity.

(F)(i)On or before January 1, 2018, adopt guidelines, through an open process, subject to public comment, and adopted by a vote of the Energy Commission, for the reporting and disclosure of greenhouse gas emissions intensity associated with retail sales based on the requirements of this subdivision. Beginning June 1, 2020, retail suppliers shall be required to report data on greenhouse gas emissions intensity associated with retail sales occurring after December 31, 2018.

(ii)Any new community choice aggregator formed after January 1, 2016, shall not be required to report data on greenhouse gas emissions intensity associated with retail sales until at least 24 months, but shall be required to report that data no later than 36 months, after serving its first retail customer.

(3)Any marketing or retail product claims relating to the greenhouse gas emissions intensity of the electric supply portfolio of a retail supplier shall be consistent with the methodology adopted by the Energy Commission pursuant to this section. Retail suppliers may provide additional information to customers describing other actions relating to greenhouse gases that are unrelated to the electric supply portfolio.

(l)The provisions of this section shall not apply to generators providing electric service onsite, under an over-the-fence transaction as described in Section 218, or to an affiliate or affiliates, as defined in subdivision (a) of Section 372.