SB 959: Water corporation: advice letters.
- Session Year: 2017-2018
- House: Senate
- Latest Version Date: 2018-09-14
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including water corporations, as defined.
This bill would require a water corporation with more than 10,000 service connections to maintain, for a certain period, on its Internet Web site an archive of all advice letters that are pending, approved, or rejected on or after January 1, 2019, in a specified manner.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including water corporations, as defined.
This bill would require a water corporation with more than 10,000 service connections to maintain, for a certain period, on its Internet Web site an archive of all advice letters that are pending, approved, or rejected on or after January 1, 2019, in a specified manner.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including water corporations, as defined.
This bill would require a water corporation with more than 10,000 service connections to maintain, for a certain period, on its Internet Web site an archive of all advice letters that are pending, approved, or rejected on or after January 1, 2019, in a specified manner and with prescribed information. manner.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including water corporations, as defined.
This bill would require a water corporation with more than 10,000 service connections to maintain maintain, for a certain period, on its Internet Web site an archive of all advice letters that are pending, approved, or rejected advice letters. on or after January 1, 2019, in a specified manner and with prescribed information.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including water corporations, as defined.
This bill would require a water corporation with more than 10,000 service connections to maintain on its Internet Web site an archive of all pending, approved, or rejected advice letters.
(a)A water corporation with more than 10,000 service connections shall maintain on its Internet Web site an archive of all pending, approved, or rejected advice letters for a period of two rate case cycles from the date the advice letter is submitted or for six years, whichever is shorter, and shall do all of the following:
(1)Provide a direct link from its Internet Web site to each advice letter, making the information contained there available to the public.
(2)Maintain advice letters in numerical order. The advice letters may be retained as a stand-alone site. The water corporation may combine the list with a list of current advice letters that have been transmitted for filing, or are filed, pending, protested, or otherwise active.
(3)Include a link to the commissions index of advice letters on the water corporations Internet Web site.
(b)For the purposes of this section, advice letter means an advice letter pending, approved, or rejected on or after January 1, 2019, and includes its concurrently submitted cover sheets, attachments, service lists, and exhibits, to the extent they are not identified as confidential.
(a)A water corporation with more than 10,000 service connections shall maintain on its Internet Web site an archive of all pending, approved, or rejected advice letters for a period of two rate case cycles from the date the advice letter is submitted or for six years, whichever is shorter, and shall do all of the following:
(1)Provide a direct link from its Internet Web site to each advice letter, making the information contained there available to the public.
(2)Maintain advice letters in numerical order. The advice letters may be retained as a stand-alone site. The water corporation may combine the list with a list of current advice letters that have been transmitted for filing, or are filed, pending, protested, or otherwise active.
(3)Include a link to the commissions index of advice letters on the water corporations Internet Web site.
(b)For the purposes of this section, advice letter means an advice letter pending, approved, or rejected on or after January 1, 2019, and includes its concurrently submitted cover sheets, attachments, service lists, and exhibits, to the extent they are not identified as confidential.
(a)A water corporation with more than 10,000 service connections shall maintain on its Internet Web site an archive of all pending, approved, or rejected advice letters for a period of two rate case cycles from the date the advice letter is submitted or for six years, whichever is shorter, and shall do all of the following:
(1)Provide a direct link from its Internet Web site to each advice letter, making the information contained there available to the public.
(2)Maintain advice letters in numerical order. The advice letters may be retained as a stand-alone site. The water corporation may combine the list with a list of current advice letters that have been transmitted for filing, or are filed, pending, protested, or otherwise active.
(3)Include on its Internet Web site a description of the types of advice letters and the use of advice letters in the ratemaking and regulatory compliance process.(4)(3)Include a link to the commissions index of advice letters on the water corporations Internet Web site.
(b)For the purposes of this section, advice letter means an advice letter pending, approved, or rejected on or after January 1, 2019, and includes its concurrently submitted cover sheets, attachments, service lists, and exhibits, to the extent they are not identified as confidential.
(a)A water corporation with more than 10,000 service connections shall maintain on its Internet Web site an archive of all pending, approved, or rejected advice letters. letters for a period of two rate case cycles from the date the advice letter is submitted or for six years, whichever is shorter, and shall do all of the following:
(1)Provide a direct link from its Internet Web site to each advice letter, making the information contained there available to the public.
(2)Maintain advice letters in numerical order. The advice letters may be retained as a stand-alone site. The water corporation may combine the list with a list of current advice letters that have been transmitted for filing, or are filed, pending, protested, or otherwise active.
(3)Include on its Internet Web site a description of the types of advice letters and the use of advice letters in the ratemaking and regulatory compliance process.
(4)Include a link to the commissions index of advice letters on the water corporations Internet Web site.
(b)For the purposes of this section, advice letter means an advice letter pending, approved, or rejected on or after January 1, 2019, and includes its concurrently submitted cover sheets, attachments, service lists, and exhibits, to the extent they are not identified as confidential.
A water corporation with more than 10,000 service connections shall maintain on its Internet Web site an archive of all pending, approved, or rejected advice letters.
|
Date
|
Status
|
|---|---|
| Sep 14, 2018 | Chaptered by Secretary of State. Chapter 409, Statutes of 2018. |
| Sep 14, 2018 | Approved by the Governor. |
| Aug 20, 2018 | Enrolled and presented to the Governor at 4 p.m. |
| Aug 13, 2018 | Assembly amendments concurred in. (Ayes 36. Noes 0.) Ordered to engrossing and enrolling. |
| Aug 9, 2018 | In Senate. Concurrence in Assembly amendments pending. |
| Aug 9, 2018 | Read third time. Passed. Ordered to the Senate. |
| Jul 5, 2018 | Read second time. Ordered to consent calendar. |
| Jul 3, 2018 | From committee: Do pass. Ordered to consent calendar. (Ayes 14. Noes 0.) (July 3). |
| Jun 20, 2018 | June 20 hearing postponed by committee. |
| Jun 13, 2018 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on U. & E. |
| Apr 26, 2018 | Referred to Com. on U. & E. |
| Apr 5, 2018 | In Assembly. Read first time. Held at Desk. |
| Apr 5, 2018 | Read third time. Passed. (Ayes 37. Noes 0.) Ordered to the Assembly. |
| Apr 4, 2018 | Read second time. Ordered to third reading. |
| Apr 3, 2018 | From committee: Do pass. (Ayes 11. Noes 0.) (April 3). |
| Mar 22, 2018 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on E., U. & C. |
| Mar 12, 2018 | Set for hearing April 3. |
| Feb 8, 2018 | Referred to Com. on E., U. & C. |
| Feb 1, 2018 | From printer. May be acted upon on or after March 3. |
| Jan 31, 2018 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 13, 2018 | Unfinished Business SB959 Beall Concurrence | Senate Floor |
Passed |
|
| Aug 9, 2018 | SB 959 Beall Consent Calendar Second Day | Assembly Floor |
Passed |
|
| Jul 3, 2018 | Do pass. To Consent Calendar. | Assembly Standing Committee on Utilities and Energy |
Passed |
|
| Apr 5, 2018 | Senate 3rd Reading SB959 Beall | Senate Floor |
Passed |
|
| Apr 3, 2018 | Do pass | Senate Standing Committee on Energy, Utilities and Communications |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| California Water Association | ** Support | Aug 10, 2018 |
| City of San Jose | ** Support | Aug 10, 2018 |
| Office of Ratepayer Advocates | ** Support | Aug 10, 2018 |
| Water Rate Advocates For Transparency, Equity And Sustainability | ** Support | Aug 10, 2018 |
| Water Rate Advocates For Transparency, Equity, And Sustainability | ** Support | Jul 2, 2018 |
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
UNFINISHED BUSINESS
Bill No: SB 959
:
SENATE ENERGY, U. & C. COMMITTEE: 11-0, 4/3/18
AYES: Hueso, Morrell, Bradford, Cannella, Hertzberg, Hill, McGuire, Skinner, Stern, Vidak, Wiener
SENATE FLOOR: 37-0, 4/5/18
AYES: Allen, Anderson, Atkins, Beall, Berryhill, Bradford, Cannella, Dodd, Fuller, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Pan, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk
NO VOTE RECORDED: Bates, De León
ASSEMBLY FLOOR: 71-0, 8/9/18 (Consent) - See last page for vote
DIGEST:
This bill requires each large water corporation to maintain, for a specified period of time, on its Internet Web site an archive of all advice letters filed with the California Public Utilities Commission (CPUC) on or after January 1, 2019.
Assembly Amendments
delete the proposed requirement to include a description of the types of advice letters and their use in the ratemaking process on the water corporation’s Web site.
Existing law:
- Establishes that private corporations and persons that own, operate, control or manage furnishing of water to or for the public are public utilities subject to control by the Legislature. Authorizes the CPUC to fix rates, establish rules, examine records, and establish a uniform system of accounts for all public utilities subject to its jurisdiction. (California Constitution Article XII)
- Establishes “public utility” includes every water corporation and sewer system corporation where the service is performed for, or the commodity delivered to, the public or any portion thereof. (Public Utilities Code §2701)
- Prohibits a public utility from changing any rate or rule as to result in any new rate, except upon a showing before the CPUC and a finding by the CPUC that the new rate is justified. Provides that the procedures for advice letters may include provision for notice to customers or subscribers on a case-by-case basis, as determined by the CPUC. Provides that the CPUC may adopt rules it considers reasonable and proper for each class of public utility providing for the nature of the showing required to be made in support of proposed rate changes. (Public Utilities Code §454)
This bill:
- Requires a large water corporation (with 10,000 service connections or more) to maintain on its Internet Web site an archive of all pending, approved, or rejected advice letters for a period of two rate case cycles from the date the advice letter is submitted or for six years, whichever is shorter.
- Requires the water corporation, in establishing the archive of advice letters, to include: a direct link from its Internet Web site to each advice letter, maintain advice letters in numerical order.
- Defines advice letter for purpose of this bill to mean an advice letter pending, approved, or rejected on or after January 1, 2019, and includes its concurrently submitted cover sheets, attachments, service lists, and exhibits, to the extent they are not identified as confidential.
Background
CPUC-regulated water utilities. The CPUC oversees investor-owned water utilities, ensuring they deliver clean, safe, reliable water to their customers at reasonable rates. The CPUC Water Division regulates over 100 investor-owned water and sewer utilities which provide water service to about 16 percent of California’s residents and which have annual water and wastewater revenues totaling $1.4 billion. Approximately 95 percent of those residents are served by nine large water utilities each serving more than 10,000 connections.
Advice letters. An advice letter is a document prepared by a utility to request action by the CPUC, including: approval, authorization, or other relief. Most commonly, advice letters are requests for a tariff change, such as an informal request for approval to furnish service under rates, charges, terms or conditions other than those contained in the utility's approved rates and terms and conditions. Statute has largely deferred to the CPUC to adopt rules and procedures for addressing advice letters. Advice letters are procedurally less formal than other proceedings at the CPUC that require more judicial-type elements of an evidentiary hearing. Advice letters are classified into three tiers, ranging from Tier 1 to Tier 3. Tier 1 advice letters generally become effective upon filing of the letter. However, Tier 3 advice letters require commissioners to hear the item and take a vote at a publicly noticed meeting.
CPUC rules. Advice letter filings are governed largely under CPUC General Order 96-B. The rules include provisions related to classification of the advice letters, public notice requirements, and specified requirements by industry (such as water, energy, or telecommunications). CPUC general rule 8.1.2 requires utilities with gross intrastate revenues of $10 million or more to maintain all tariffs and proposed tariff changes, including submitted advice letters, on their respective utility Web site. Additionally, CPUC Water Industry Rule 3.1 requires all Class A water utilities (those with 10,000 service connections or more) to provide a link to pending advice letters on the utility’s Internet Web site. However, the rule does not require any further requirements once the advice letters have been approved or rejected.
Is a bill needed? The author states this bill will provide a very simple and low-cost improvement to the transparency of the advice letter process for Class A water investor-owned utilities. Some parties have raised concerns, which have been echoed by CPUC commissioners, regarding an increasing reliance by utilities on the use of advice letters to address rate increases, particularly among the Class A water utilities. As noted above, the CPUC reviews each request to ensure it is reasonable, in light of the circumstances. While the use of advice letters are necessary in many instances, as a general principle, it may be preferable to address a utility’s rate changes in a general rate case proceeding where the utility’s anticipated costs are addressed. However, some rate changes may need to be addressed between general rates cases. This bill appropriately acknowledges the need for the advice letter process but increases the transparency regarding its use. As such, customers can visit their utility’s Internet Web site to access the information regarding pending, approved, or rejected advice letters. This bill requires the utility to maintain an archive of any advice letters for a period of two rate case cycles from the date the advice letter is submitted or for six years, whichever is shorter. This time frame seems adequate for the purposes of providing transparency while not confusing customers with information that may be too outdated.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
California Water Association
City of San Jose
Office of Ratepayer Advocates
Water Rate Advocates for Transparency, Equity and Sustainability
None received
ARGUMENTS IN SUPPORT: According to the author, SB 959 provides more transparency to water customers by requiring that large water companies keep an archive of all pending, approved, and rejected advice letters.
ASSEMBLY FLOOR: 71-0, 8/9/18
AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bonta, Burke, Calderon, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mayes, McCarty, Medina, Melendez, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rivas, Rodriguez, Rubio, Salas, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood
NO VOTE RECORDED: Bloom, Brough, Caballero, Carrillo, Cristina Garcia, Mathis, Mullin, Santiago, Rendon
8/10/18 13:56:04
Date of Hearing: July 3, 2018
ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY
Chris Holden, Chair
SBPCA Bill Id:SB 959
Author:(Beall) – As Amended Ver:March 22, 2018
SENATE VOTE: 37-0
SUBJECT: Water corporation: advice letters
SUMMARY: Would require a water corporation with more than 10,000 service connections to maintain on its website an archive of all advice letters submitted to the California Public Utilities Commission (CPUC) beginning on January 1, 2019 for no more than six years. Specifically, this bill:
- Requires a water corporation with more than 10,000 service connections to maintain on its website all pending, approved and rejected advice letters for two rate case cycles or for six years, whichever is shorter.
- Requires the water corporation website posting to contain a direct link to each advice letter.
- Defines advice letter, for purposes of this bill, to mean an advice letter pending, approved or rejected on or after January 1, 2019 and includes submitted cover sheets, attachments, service lists and exhibits as long as they are not confidential.
EXISTING LAW:
1) Defines every water corporation and sewer system corporation where the service is performed for, or the commodity delivered to, the public or any portion thereof as a public utility. (Public Utilities Code § 2701)
2) Prohibits a public utility from changing any rate or rule as to result in any new rate, except upon a showing before the CPUC and a finding by the CPUC that the new rate is justified. Provides that the procedures for advice letters may include provision for notice to customers or subscribers on a case-by-case basis, as determined by the CPUC. Provides that the CPUC may adopt rules it considers reasonable and proper for each class of public utility providing for the nature of the showing required to be made in support of proposed rate changes. (Public Utilities Code § 454)
FISCAL EFFECT: None. This bill is not keyed fiscal.
BACKGROUND:
CPUC Regulated Water Corporations – The CPUC is responsible for ensuring that California’s water corporations deliver clean, safe, and reliable water to their customers at reasonable rates. The CPUC regulates over 100 water corporations and sewer utilities under the CPUC’s jurisdiction providing water service to about 16 percent of California’s residents. Approximately 95 percent of that total is served by nine large water corporations each serving more than 10,000 connections.
General Rate Cases – All large water corporations regulated by the CPUC are required to file a general rate case (GRC) every three years to ensure that rates accurately reflect the cost of providing service. In the GRC process, the CPUC sets rates to cover the costs of providing water and allow the utility to earn a reasonable return on its investment. Major costs to operate a water system include purchased electric power, purchased water, treatment costs, groundwater pumping fees, labor, and chemicals.
Advice Letters – Electric, gas, water and telecommunications utilities whose rates are set by the CPUC can submit advice letters to the CPUC. Advice letter filings are governed largely under CPUC General Order 96-B. The advice letter process provides a quick and simplified review of the types of utility requests that are expected neither to be controversial nor to raise important policy questions. The primary use of the advice letter process is to review a utility's request to change its tariffs in a manner previously authorized by statute or Commission order, to conform the tariffs to the requirements of a statute or Commission order, or to get Commission authorization to deviate from its tariffs. Advice letters can also be used after a CPUC decision, for instance, to get the CPUC approval on program implementation or program changes.
COMMENTS:
- Author’s Statement. According to the author, “SB 959 provides more transparency to water customers by requiring that large water companies keep an archive of all pending, approved, and rejected advice letters.”
- Transparency. CPUC General Rule 8.1.2 requires utilities with gross intrastate revenues of $10 million or more to maintain all tariffs and proposed tariff changes, including submitted advice letters, on their respective utility websites. Additionally, CPUC Water Industry Rule 3.1 requires all Class A water utilities (those with 10,000 service connections or more) to provide a link to pending advice letters on the utility’s Internet web site. However, the rule does not have any further requirements once the advice letters have been approved or rejected. This bill would require the water corporations to maintain an archive of all advice letters for two rate case cycles or for six years whichever is shorter.
- Standardization with Energy Utilities. In addition to General Rule 8.1.2, the energy utilities have Energy Industry Rule 6.1 which requires a utility to publish its tariffs on the Internet. The utility must publish all of its tariff sheets in effect or pending review and disposition. Additionally, the utility also must keep up-to-date the status of the tariff sheet (i.e., in effect; pending review and disposition, withdrawn, rejected; or no longer in effect). All tariff sheets published at the utility's internet site shall remain accessible at the site unless and until the Commission authorizes an alternative electronic means of publishing and enabling public access to the utility's tariffs. This bill aims to increase transparency in rates with water corporations by requiring more information to be publically available which electric utilities are already required to do.
- Cost of Compliance. It is important to note to the extent such costs are not already included in rates, the cost of this policy may be recovered through the GRC process.
REGISTERED SUPPORT / OPPOSITION:
Support
California Water Association
City of San Jose
Office of Ratepayer Advocates
Water Rate Advocates for Transparency, Equity, and Sustainability (WRATES)
Opposition
None on file.
Analysis Prepared by: Elle Hoxworth / U. & E. /
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
THIRD READING
Bill No: SB 959
:
SENATE ENERGY, U. & C. COMMITTEE: 11-0, 4/3/18
AYES: Hueso, Morrell, Bradford, Cannella, Hertzberg, Hill, McGuire, Skinner, Stern, Vidak, Wiener
DIGEST:
This bill requires each large water corporation to maintain, for a specified period of time, on its Internet Web site an archive of all advice letters filed with the California Public Utilities Commission (CPUC) in a specified manner with prescribed information.
Existing law:
- Establishes that private corporations and persons that own, operate, control or manage furnishing of water to or for the public are public utilities subject to control by the Legislature. Authorizes the CPUC to fix rates, establish rules, examine records, and establish a uniform system of accounts for all public utilities subject to its jurisdiction. (California Constitution Article XII)
- Establishes “public utility” includes every water corporation and sewer system corporation where the service is performed for, or the commodity delivered to, the public or any portion thereof. (Public Utilities Code §2701)
- Prohibits a public utility from changing any rate or rule as to result in any new rate, except upon a showing before the CPUC and a finding by the CPUC that the new rate is justified. Provides that the procedures for advice letters may include provision for notice to customers or subscribers on a case-by-case basis, as determined by the CPUC. Provides that the CPUC may adopt rules it considers reasonable and proper for each class of public utility providing for the nature of the showing required to be made in support of proposed rate changes. (Public Utilities Code §454)
This bill:
- Requires a large water corporation (with 10,000 service connections or more) to maintain on its Internet Web site an archive of all pending, approved, or rejected advice letters for a period of two rate case cycles from the date the advice letter is submitted or for six years, whichever is shorter.
- Requires the water corporation, in establishing the archive of advice letters, to include: a direct link from its Internet Web site to each advice letter, maintain advice letters in numerical order, provide a description of the types of advice letters and the use of advice letters in the ratemaking and regulatory compliance process.
- Defines advice letter for purpose of this bill to mean an advice letter pending, approved, or rejected on or after January 1, 2019, and includes its concurrently submitted cover sheets, attachments, service lists, and exhibits, to the extent they are not identified as confidential.
Background
CPUC-regulated water utilities. The CPUC oversees investor-owned water utilities, ensuring they deliver clean, safe, reliable water to their customers at reasonable rates. The CPUC Water Division regulates over 100 investor-owned water and sewer utilities which provide water service to about 16 percent of California’s residents and which have annual water and wastewater revenues totaling $1.4 billion. Approximately 95 percent of those residents are served by nine large water utilities each serving more than 10,000 connections.
Advice letters. An advice letter is a document prepared by a utility to request action by the CPUC, including: approval, authorization, or other relief. Most commonly, advice letters are requests for a tariff change, such as an informal request for approval to furnish service under rates, charges, terms or conditions other than those contained in the utility's approved rates and terms and conditions. Statute has largely deferred to the CPUC to adopt rules and procedures for addressing advice letters. Advice letters are procedurally less formal than other proceedings at the CPUC that require more judicial-type elements of an evidentiary hearing. Advice letters are classified into three tiers, ranging from Tier 1 to Tier 3. Tier 1 advice letters generally become effective upon filing of the letter. However, Tier 3 advice letters require commissioners to hear the item and take a vote at a publicly noticed meeting.
CPUC rules. Advice letter filings are governed largely under CPUC General Order 96-B. The rules include provisions related to classification of the advice letters, public notice requirements, and specified requirements by industry (such as water, energy, or telecommunications). CPUC general rule 8.1.2 requires utilities with gross intrastate revenues of $10 million or more to maintain all tariffs and proposed tariff changes, including submitted advice letters, on their respective utility Web site. Additionally, CPUC Water Industry Rule 3.1 requires all Class A water utilities (those with 10,000 service connections or more) to provide a link to pending advice letters on the utility’s Internet Web site. However, the rule does not require any further requirements once the advice letters have been approved or rejected.
Is a bill needed? The author states this bill will provide a very simple and low-cost improvement to the transparency of the advice letter process for Class A water investor-owned utilities. Some parties have raised concerns, which have been echoed by CPUC commissioners, regarding an increasing reliance by utilities on the use of advice letters to address rate increases, particularly among the Class A water utilities. As noted above, the CPUC reviews each request to ensure it is reasonable, in light of the circumstances. While the use of advice letters are necessary in many instances, as a general principle, it may be preferable to address a utility’s rate changes in a general rate case proceeding where the utility’s anticipated costs are addressed. However, some rate changes may need to be addressed between general rates cases. This bill appropriately acknowledges the need for the advice letter process but increases the transparency regarding its use. As such, customers can visit their utility’s Internet Web site to access the information regarding pending, approved, or rejected advice letters. This bill requires the utility to maintain an archive of any advice letters for a period of two rate case cycles from the date the advice letter is submitted or for six years, whichever is shorter. This time frame seems adequate for the purposes of providing transparency while not confusing customers with information that may be too outdated.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
California Water Association
City of San Jose
Office of Ratepayer Advocates
None received
ARGUMENTS IN SUPPORT: According to the author, SB 959 provides more transparency to water customers by requiring that large water companies keep an archive of all pending, approved, and rejected advice letters.
4/4/18 14:21:57
**** END ****
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2017 - 2018 Regular
Bill No: SB 959 Hearing Date: 4/3/2018
Author: | Beall | ||
Version: | 3/22/2018 As Amended | ||
Urgency: | No | Fiscal: | No |
Consultant: | Nidia Bautista | ||
SUBJECT: Water corporation: advice letters
DIGEST: This bill would require each large water corporation to maintain, for a specified period of time, on its Internet web site an archive of all advice letters filed with the California Public Utilities Commission (CPUC) in a specified manner with prescribed information.
ANALYSIS:
Existing law:
- Establishes that private corporations and persons that own, operate, control or manage furnishing of water to or for the public are public utilities subject to control by the Legislature. Authorizes the CPUC to fix rates, establish rules, examine records, and establish a uniform system of accounts for all public utilities subject to its jurisdiction. (California Constitution Article XII)
- Establishes “public utility” includes every water corporation and sewer system corporation where the service is performed for, or the commodity delivered to, the public or any portion thereof. (Public Utilities Code §2701)
- Prohibits a public utility from changing any rate or rule as to result in any new rate, except upon a showing before the CPUC and a finding by the CPUC that the new rate is justified. Provides that the procedures for advice letters may include provision for notice to customers or subscribers on a case-by-case basis, as determined by the CPUC. Provides that the CPUC may adopt rules it considers reasonable and proper for each class of public utility providing for the nature of the showing required to be made in support of proposed rate changes. (Public Utilities Code §454)
This bill:
- Requires a large water corporation (with 10,000 service connections or more) to maintain on its Internet web site an archive of all pending, approved, or rejected advice letters for a period of two rate case cycles from the date the advice letter is submitted or for six years, whichever is shorter.
- Requires the water corporation, in establishing the archive of advice letters, to include: a direct link from its Internet web site to each advice letter, maintain advice letters in numerical order, provide a description of the types of advice letters and the use of advice letters in the ratemaking and regulatory compliance process.
- Defines advice letter for purpose of this bill to mean an advice letter pending, approved, or rejected on or after January 1, 2019, and includes its concurrently submitted cover sheets, attachments, service lists, and exhibits, to the extent they are not identified as confidential.
Background
CPUC-regulated water utilities. The CPUC oversees investor-owned water utilities, ensuring they deliver clean, safe, reliable water to their customers at reasonable rates. The CPUC Water Division regulates over 100 investor-owned water and sewer utilities which provide water service to about 16 percent of California’s residents and which have annual water and wastewater revenues totaling $1.4 billion. Approximately 95 percent of those residents are served by nine large water utilities each serving more than 10,000 connections, detailed in the table below:
DETAILED SERVICE CONNECTION DATA –CLASS A WATER UTILITIES | |
Utility | Service Connections |
California Water Service Company | 519, 002 |
Golden State Water Company | 261,244 |
San Jose Water Company | 187,577 |
San Gabriel Valley Water Company | 104,235 |
Suburban Water Systems | 76,152 |
Great Oaks Water Company | 31,454 |
Liberty Utilities (Park Water) Corp. | 29,119 |
Liberty Utilities (Apple Valley Ranchos) Corp. | 23,136 |
Total Class A | 1,456,567 |
Source: CPUC Website: http://www.cpuc.ca.gov/water/ | |
Advice letters. An advice letter is a document prepared by a utility to request action by the CPUC, including: approval, authorization, or other relief. Most commonly, advice letters are requests for a tariff change, such as an informal request for approval to furnish service under rates, charges, terms or conditions other than those contained in the utility's approved rates and terms and conditions. Statute has largely deferred to the CPUC to adopt rules and procedures for addressing advice letters. Advice letters are procedurally less formal than other proceedings at the CPUC that require more judicial-type elements of an evidentiary hearing. Advice letters are classified into three tiers, ranging from Tier 1 to Tier 3. Tier 1 advice letters generally become effective upon filing of the letter. However, Tier 3 advice letters require commissioners to hear the item and take a vote at a publicly noticed meeting.
Per the CPUC’s website:
“The lifecycle of an Advice Letter (AL) varies. At the time of their initial filing, all ALs require a 20-day public comment/protest period. During this time, no action can be taken to close/dispose of the AL. If no protests are received, an AL may be considered a Tier 1 or Tier 2 AL and it may be closed within an additional 10-20-day period. For those ALs that are complex or that receive protests or comments, a Resolution may be required for disposition. ALs that require a Resolution are considered Tier 3 ALs, and take more time and resources to process. Resolutions are placed on a CPUC Agenda and must be reviewed and approved by the CPUC Commissioners. Resolutions require between 21 and 30 days for drafting, management review, and approval. Once approved, most draft Resolutions require a 20-day public review and comment period. All comments are due to the CPUC at least 10 days prior to the date of the CPUC Meeting at which the resolution will be considered. It is under this sort of scenario that an AL may stay open for 90 days or more before it has reached a final disposition.”
CPUC Rules. Advice letter filings are governed largely under CPUC General Order 96-B. The rules include provisions related to classification of the advice letters, public notice requirements, and specified requirements by industry (such as water, energy, or telecommunications). CPUC general rule 8.1.2 requires utilities with gross intrastate revenues of $10 million or more to maintain all tariffs and proposed tariff changes, including submitted advice letters, on their respective utility website. Additionally, CPUC Water Industry Rule 3.1 requires all Class A water utilities (those with 10,000 service connections or more) to provide a link to pending advice letters on the utility’s Internet web site. However, the rule does not require any further requirements once the advice letters have been approved or rejected.
Is a bill needed? The author states this bill will provide a very simple and low-cost improvement to the transparency of the advice letter process for Class A water investor-owned utilities. Some parties have raised concerns, which have been echoed by CPUC commissioners, regarding an increasing reliance by utilities on the use of advice letters to address rate increases, particularly among the Class A water utilities. As an example, in the past five years, the San Jose Water Company has filed a total of 67 advice letters, with 22 of the filings involving either rate increases or additional surcharges on customer bills. As noted above, the CPUC reviews each request to ensure it is reasonable, in light of the circumstances. While the use of advice letters are necessary in many instances, as a general principle, it may be preferable to address a utility’s rate changes in a general rate case proceeding where the utility’s anticipated costs are addressed. However, some rate changes may need to be addressed between general rates cases, this bill appropriately acknowledges the need for the advice letter process but increases the transparency regarding its use. As such, customers can visit their utility’s Internet web site to access the information regarding pending, approved, or rejected advice letters. This bill would require the utility to maintain an archive of any advice letters for a period of two rate case cycles from the date the advice letter is submitted or for six years, whichever is shorter. This time frame seems adequate for the purposes of providing transparency while not confusing customers with information that may be too outdated.
Suggested Author Amendments. The author may consider amending the bill with minor technical amendments to clarify what is meant by “the types of advice letters and the use of advice letters in the ratemaking and regulatory compliance process,” as well as other minor amendments.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT:
California Water Association
City of San Jose
Office of Ratepayer Advocates
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: According to the author, SB 959 provides more transparency to water customers by requiring that large water companies keep an archive of all pending, approved, and rejected advice letters.
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