California Senate Bill SB48 Amended / Bill

 BILL NUMBER: SB 48AMENDED BILL TEXT AMENDED IN ASSEMBLY MARCH 18, 2014 AMENDED IN ASSEMBLY JUNE 19, 2013 AMENDED IN SENATE MAY 8, 2013 AMENDED IN SENATE APRIL 8, 2013 INTRODUCED BY Senator Hill DECEMBER 19, 2012 An act  to amend Section 740.   1 of, and  to add  Section 740.5 to  Sections 740.12 and 740.13 to,  the Public Utilities Code, relating to public utilities. LEGISLATIVE COUNSEL'S DIGEST SB 48, as amended, Hill. Public utilities: research and development projects. Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations, gas corporations, heat corporations, and telephone corporations, as defined. Existing law authorizes the commission to fix the rates and charges for every public utility, and requires that those rates and charges be just and reasonable. Existing law authorizes electrical corporations, gas corporations, heat corporations, and telephone corporations to voluntarily adopt certain research and development programs and authorizes the commission to allow inclusion of expenses for research and development in rates. Existing law requires the commission to consider specified guidelines in evaluating the research, development, and demonstration programs proposed by electrical corporations and gas corporations.  Existing law establishes the Energy Resources Programs Account and requires a specified surcharge on electricity usage to be transferred to the Energy Resources Programs Account.  This bill would  authorize the commission to establish an advisory committee consisting of persons meeting specified requirements to evaluate whether proposed research and development projects meet the guidelines. The bill would, by July 1, 2016, require an electrical corporation with more than 100,000 customer accounts to cre   ate a peer review committee to evaluate whether projects meet the guidelines and to evaluate specific technical aspects of the proposed project. The bill would prohibit, except under specified conditions, the commission from approving the inclusion of expenses incurred by a project in electricity rates if the proposed project is not supplemented by a  written evaluation from the peer review committee. The bill would require the commission, upon appropriation by the Legislature, to reimburse the electrical corporation for costs incurred in creating and operating the peer review committee from the Energy Resources Programs Account. The bill would  require the commission, by  July 1,   December 31,  2015, and  by December 31 of  every 3 years thereafter, to  require electrical corporations with more than 100,000 customer accounts, to file a 3-year research plan, which includes, among other things, proposals for specific research and development projects and the estimated costs of the projects to the ratepayers. The bill would require the Legislative Analyst's Office to select members of a peer review to evaluate the 3-year research plan of each electrical corporation and would require that the peer review consider specified matters. The bill would require the commission, by December 31, 2014, and by December 31 of each 3rd year thereafter, to prepare and  submit a report to the relevant policy and fiscal committees of the Legislature listing all research and development projects where the expenses of the project were or are recovered from ratepayers during the previous 3 years, including for each project the citations of all published papers, all oral and poster presentations given at public meetings, and all patents awarded for the funded research.  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 some electrical corporations would be required to create a peer review committee, a violation of which would be a crime, this bill would impose a state-mandated local program.   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. State-mandated local program:  no   yes  . THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   Section 740.1 of the   Public Utilities Code   is amended to read:  740.1.  (a)    The commission shall consider the following guidelines in evaluating the research, development, and demonstration programs proposed by electrical and gas corporations:  (a)   (1)  Projects should offer a reasonable probability of providing benefits to ratepayers.  (b)   (2)  Expenditures on projects  which   that  have a low probability for success should be minimized.  (c)   (3)  Projects should be consistent with the corporation' s resource plan.  (d)   (4)  Projects should not unnecessarily duplicate research currently, previously, or imminently undertaken by other electrical or gas corporations or research organizations.  (e)   (5)  Each project should also support one or more of the following objectives:  (1)   (A)  Environmental improvement.  (2)   (B)  Public and employee safety.  (3)   (C)  Conservation by efficient resource use or by reducing or shifting system load.  (4)   (D)  Development of new resources and processes, particularly renewable resources and processes  which   that  further supply technologies.  (5)   (E)  Improve operating efficiency and reliability or otherwise reduce operating costs.  (b) The commission may establish an advisory committee to evaluate whether a research and development project meets the guidelines described in subdivision (a). The advisory committee, if established, shall be composed of persons who meet all of the following requirements:   (1) Be independent of the person proposing the project.   (2) Be independent of the persons conducting the proposed project, if different from those persons proposing the project.   (3) Be knowledgeable in the field of endeavor to which the proposed project pertains.   (4) Be free of any financial or other interest that could significantly impair the ability of the person serving on the committee to be objective or that could create an unfair competitive advantage of a person or organization.   (c) The establishment of an advisory committee is not an unlawful delegation of the commission's authority.   SEC. 2.  Section 740.12 is added to the   Public Utilities Code   , to read:  740.12. (a) On or before July 1, 2016, an electrical corporation with more than 100,000 customer accounts shall, in consultation with the National Research Council, create a peer review committee to evaluate whether a research and development project proposed in an application for the inclusion of expenses for research and development in rates pursuant to Section 740 meets the guidelines in Section 740.1 and to evaluate all of the following technical aspects: (1) The overall scientific or technical merits of the proposed project. (2) The extent to which the same or similar project could be performed by entities that the electrical corporation does not select. (3) The appropriateness of the level of requested funding in comparison to other projects by similarly experienced individuals using similar facilities performing in similar timeframes and circumstances. (4) The likelihood that the proposed project can be accomplished within the proposed time and budget by the investigators or the technical staff, given their experience and expertise and available resources. (b) The peer review committee shall have a membership of no more than nine persons. (c) The composition and policies of the peer review committee described in subdivision (a) shall ensure that the evaluation of an application shall be performed by persons who meet all of the following requirements: (1) Be independent of persons submitting the proposed project that is included in the application. (2) Be independent of persons conducting the project, if different from those persons proposing the project. (3) Be knowledgeable in the field of endeavor to which the proposed project pertains. (4) Be free of any financial or other interest that could significantly impair the ability of the person serving on the committee to be objective or that could create an unfair competitive advantage for a person or organization. (d) The commission shall, upon appropriation by the Legislature, reimburse the electrical corporation for costs incurred by the electrical corporation in consulting with the National Research Council and in creating and operating the peer review committee from the Energy Resources Programs Account. (e) The commission shall not approve the inclusion of expenses incurred by a research and development project in electricity rates pursuant to Section 740 for a proposed project that is not supplemented by a written evaluation from the peer review committee. In a decision to approve the inclusion of expenses incurred by research and development projects in electricity rates pursuant to Section 740, the commission shall make findings on how the written evaluation by the peer review committee informed the decision, including aspects of the proposed projects in which the opinion of the commission differs from the opinion of the peer review committee. (f) The requirement for a written evaluation pursuant to subdivision (e) may be waived by the commission for a proposed project listed in an application submitted to the commission if both of the following conditions are satisfied: (1) Substantial funding for the project is contingent upon approval by a state or federal agency. (2) Funding for the project may be awarded by the state or federal agency only after a review by persons who meet the criteria in subdivision (c).   SEC. 3.   Section 740.13 is added to the   Public Utilities Code   , to read:   740.13. (a) On or before December 31, 2015, and, notwithstanding Section 10231.5 of the Government Code, on or before December 31 of every three years thereafter or more frequently as determined by the commission, the commission shall submit to the fiscal and relevant policy committees of the Legislature a report listing all research and development projects for which the costs of the projects were or are recovered from ratepayers during the previous three years, including, for each project the citations of all published papers, all oral and poster presentations given at public meetings, and all patents awarded for the funded projects. (b) The report submitted pursuant to subdivision (a) shall be submitted in compliance with Section 9795 of the Government Code.   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 740.5 is added to the Public Utilities Code, to read: 740.5. (a) For purposes of this section, the following terms have the following meanings: (1) "Peer review" means a thorough, consistent, and objective examination based on preestablished criteria by persons who are independent of persons submitting an application, or conducting the research and development, and who are knowledgeable in the field of endeavor to which the application or research and development pertains. Peer reviewers shall be free of any financial or other interest which could significantly impair the individual's objectivity or create an unfair competitive advantage for any person or organization. (2) "Research and development project" includes a research, development, and demonstration project or program. (b) The commission shall, no later than July 1, 2015, and triennially thereafter, require electrical corporations with more than 100,000 customer accounts to file a three-year research plan. The plan shall include: (1) The research areas in which the utilities intend to engage. (2) Proposals for specific research and development projects, and the estimated costs of the projects to the ratepayers. (3) A proposed amount allocated for unspecified research. (c) The Legislative Analyst's Office shall select members of a peer review to evaluate the three-year research plan of each electrical corporation. The peer review shall consider the electrical corporation's research and development activities from the preceding three years in evaluating the electrical corporation's proposed research and development projects and in providing guidance to the electrical corporation for improving the projects. Members of the peer review may add supplemental reviewers on an ad hoc basis to ensure the reviewers have sufficient technical expertise to evaluate the projects. In their evaluation, the peer review shall consider the technical aspects of the electrical corporation's project including, but not limited to: (1) The overall scientific or technical merits of the proposed research and development project. (2) The extent to which the same or similar research, development, and demonstration work could be performed by entities that the public utility does not select. (3) The appropriateness of the level of requested funding in comparison to other projects by similarly experienced individuals using similar facilities performing in similar timeframes and circumstances. (4) The likelihood that the proposed work can be accomplished within the proposed time and budget by the investigators or the technical staff, given their experience and expertise and available resources. (d) The commission may waive the peer review requirements in subdivision (c) for a research and development project that was selected through an open solicitation of proposals or if the project is contingent upon a peer review by a public state or federal entity. (e) (1) The commission shall prepare and submit a report to the relevant policy and fiscal committees of the Legislature listing all research and development projects where the expenses of the project were or are recovered from ratepayers during the previous three years, including for each project the citations of all published papers, all oral and poster presentations given at public meetings, and all patents awarded for the funded research. The first report shall be submitted by December 31, 2014, and subsequent reports shall be submitted by December 31 of every third year thereafter, notwithstanding Section 10231.5 of the Government Code. (2) A report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.