LEGISLATIVE SUBCOMMITTEE RECOMMENDATION: SUPPORT

SUMMARY OF BILL:

This bill would extend the minority-, women-, and disabled veteran-owned business enterprises procurement to water corporations with gross annual revenues of more than $25,000,000 and would encourage each electrical, gas, water, and telephone corporations that is not required to submit a plan to voluntarily adopt a plan for increasing women, minority, and disabled veteran business enterprise procurement in all categories.

SUMMARY OF SUPPORTING ARGUMENTS FOR RECOMMENDATION:

This bill will simply codify steps already voluntarily taken by the six largest California Class-A water utilities, which in 2004 entered into a memorandum of intent (MOI) with the CPUC to voluntarily implement a Utility Supplier Diversity Program (USDP) within the water industry.

SUMMARY OF SUGGESTED AMENDMENTS:

None.

DIVISION ANALYSIS (CSID):

· If the bill were enacted, it would incorporate by reference the water companies and remove any ambiguities of the MOI entered into by the water companies in
April 2004.

· By incorporating the water companies, the bill would provide parity treatment of electrical, gas, and telephone corporations that are under the supervision of the Commission.

· According to DRA, cost-of-service regulated corporations, including water utilities and investor-owned gas and electric utilities, recover through rates the expenses associated with utility supplier diversity programs in compliance with General
Order 156.

· Pursuant to Public Utilities Code § 8283 (d), water companies with gross annual revenues exceeding $25,000,000 would have to furnish an annual report to the commission regarding the implementation of their utility supplier diversity programs.

· Pursuant to Public Utilities Code § 8283 (e), the CPUC would be required to report on the progress of activities under-taken by the water companies in its annual report to the Legislature on September 1 of each year.

PROGRAM BACKGROUND:

The six California Class-A water utilities - California American Water Company; California Water Service Company; San Gabriel Valley Water Company; San Jose Water Company; Southern California Water Company and Suburban Water Company (collectively referred to as the "Water Utilities") entered into a memorandum of intent (MOI) dated April 23, 2004, whereby they agreed to voluntarily implement a Utility Supplier Diversity Program (USDP) within the water industry. This, in effect, required the water utilities to comply with G.O. 156.

LEGISLATIVE HISTORY:

· Since its inception in 1986, Article 5 of the Public Utilities Code § 8281 through 8286 - Women and Minority Business Enterprises - was amended in 1990, to include disabled veteran business enterprises (DVBE).

· Thereafter, the Commission opened R.91-02-011, which resulted in Decision 93-06-041, dated June 3, 1993, amending General Order 156 to incorporate the terms of a settlement agreement requiring utilities to have an annual goal of increasing procurement of goods and services from certified DVBE. However, the portion of the program relating to DVBE was approved without specific numeric goals, but instead with an overall goal of simply increasing procurement from DVBE on an annual basis.

FISCAL IMPACT:

Minor and absorbable, since the CPUC already receives similar plans pursuant to the Memorandum of Intent with the six affected water companies.

STATUS:

AB 873 passed the Assembly 47-27. It is now awaiting hearing in the Senate Committee on Energy, Utilities and Communications.

SUPPORT/OPPOSITION:

None on file.

STAFF CONTACTS:

Pamela Loomis pcl@cpuc.ca.gov

Office of Governmental Affairs (916) 327-8441

Phil Enis, Program Manager pje@cpuc.ca.gov

Consumer Services & Information Division (415) 703-4112

Date: March 6, 2008

BILL LANGUAGE:

BILL NUMBER: AB 873 AMENDED

BILL TEXT

AMENDED IN ASSEMBLY JANUARY 18, 2008

AMENDED IN ASSEMBLY JANUARY 7, 2008

INTRODUCED BY Assembly Member Davis

FEBRUARY 22, 2007

An act to amend Sections 8281, 8283, 8284, and 8285 of the Public

Utilities Code, relating to public utilities.

LEGISLATIVE COUNSEL'S DIGEST

AB 873, as amended, Davis. Public utilities: procurement.

Under existing law, the Public Utilities Commission has regulatory

authority over public utilities, including electrical, gas, water,

and telephone corporations. Existing law authorizes the commission to

establish rules for all public utilities, subject to control by the

Legislature. Existing law directs the commission to require every

electrical, gas, and telephone corporation with annual gross revenues

exceeding $25,000,000, and their regulated subsidiaries and

affiliates, to implement a program developed by the commission to

encourage, recruit, and utilize minority-, women-, and disabled

veteran-owned business enterprises, as defined, in the procurement of

contracts from those corporations or from their regulated

subsidiaries and affiliates, and to require the reporting of certain

information. The commission has, by rulemaking, adopted General Order

156, applicable to certain electrical, gas, and telephone

corporations, to effectuate these requirements.

This bill would extend the minority-, women-, and disabled

veteran-owned business enterprises procurement requirements to water

corporations with 10,000 or more service connections

with gross annual revenues of more than $25,000,000

and would encourage each electrical, gas, water, and telephone

corporation that is not required to submit a plan to voluntarily

adopt a plan for increasing women, minority, and disabled veteran

business enterprise procurement in all categories. Because a

violation of certain of the requirements by an electrical, gas, or

telephone corporation is a crime, this bill would impose a

state-mandated local program by expanding the definition of a crime

to include violations by a water corporation with 10,000 or

more service connections with gross annual

revenues of more than $25,000,000 .

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: yes.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. 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

competition. Only through full and free 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 assured. The preservation and expansion of

that competition is 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, and disabled veteran business

enterprises is encouraged and developed. Therefore, it is the

declared policy of the state to aid the interests of women, minority,

and disabled veteran 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 are awarded to women,

minority, and disabled veteran business enterprises, and to maintain

and strengthen the overall economy of the state.

(b) (1) The Legislature finds all of the following:

(A) The opportunity for full participation in our free enterprise

system by women, minority, and disabled veteran 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 which have established short- and long-range

women, minority, and disabled veteran business enterprise goals are

awarding 30 percent or more of their contracts to these business

enterprises.

(C) Women, minority, and disabled veteran business enterprises

have traditionally received less than a proportionate share of

regulated public utility procurement contracts.

(D) It is in the state's interest to expeditiously improve the

economically disadvantaged position of women, minority, and disabled

veteran business enterprises.

(E) The position of these businesses can be improved by providing

long-range substantial goals for procurement by regulated public

utilities of technology, equipment, supplies, services, materials,

and construction work from women, minority, and disabled veteran

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.

(2) It is the purpose of this article to do all of the following:

(A) Encourage greater economic opportunity for women, minority,

and disabled veteran business enterprises.

(B) Promote competition among regulated public utility suppliers

in order to enhance economic efficiency in the procurement of

electrical, gas, water, 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, and

disabled veteran business enterprises.

SEC. 2. Section 8283 of the Public Utilities

Code is amended to read:

8283. (a) The commission shall require each electrical, gas, and

telephone corporation with gross annual revenues exceeding

twenty-five million dollars ($25,000,000), each water corporation

with 10,000 or more service connections, and their

commission-regulated subsidiaries and affiliates, to submit annually,

a detailed and verifiable plan for increasing women, minority, and

disabled veteran business enterprise procurement in all categories.

(b) These annual plans shall include short- and long-term goals

and timetables, but not quotas, and shall include methods for

encouraging both prime contractors and grantees to engage women,

minority, and disabled veteran business enterprises in subcontracts

in all categories which provide subcontracting opportunities.

(c) The commission shall establish guidelines for all electrical,

gas, and telephone corporations with gross annual revenues exceeding

twenty-five million dollars ($25,000,000), all water corporations

with 10,000 or more service connections, and their

commission-regulated subsidiaries and affiliates, to be utilized in

establishing programs pursuant to this article.

(d) Each electrical, gas, and telephone corporation with gross

annual revenues exceeding twenty-five million dollars ($25,000,000)

and each water corporation with 10,000 or more service connections

shall furnish an annual report to the commission regarding the

implementation of programs established pursuant to this article in a

form that the commission shall require, and at the time that the

commission shall annually designate.

(e) The commission shall provide a report to the Legislature on

September 1 of each year, on the progress of activities undertaken by

each electrical, gas, and telephone corporation with gross annual

revenues exceeding twenty-five million dollars ($25,000,000), and all

water corporations with 10,000 or more service connections, pursuant

to this article in the implementation of women, minority, and

disabled veterans business enterprise development programs. The

commission shall recommend a program for carrying out the policy

declared in this article, together with recommendations for

legislation that it deems necessary or desirable to further that

policy.

(f) The Legislature declares that each electrical, gas, water, and

telephone corporation that is not required to submit a plan pursuant

to subdivision (a) is encouraged to voluntarily adopt a plan for

increasing women, minority, and disabled veteran business enterprise

procurement in all categories.

SEC. 3. Section 8284 of the Public Utilities

Code is amended to read:

8284. (a) The commission shall, by rule or order, adopt criteria

for verifying and determining the eligibility of women, minority, and

disabled veteran business enterprises for procurement contracts.

(b) The commission shall develop, and require each electrical,

gas, and telephone corporation with gross annual revenues exceeding

twenty-five million dollars ($25,000,000), each water corporations

with 10,000 or more service connections, and their

commission-regulated subsidiaries and affiliates to implement, an

outreach program to inform and recruit women, minority, and disabled

veteran business enterprises to apply for procurement contracts under

this article.

SEC. 4. Section 8285 of the Public Utilities

Code is amended to read:

8285. Any person or corporation, through its directors, officers,

or agents, which falsely represents a business as a women, minority,

or disabled veteran business enterprise in the procurement of, or

attempt to procure, contracts from an electrical, gas, or telephone

corporation with gross annual revenues exceeding twenty-five million

dollars ($25,000,000), a water corporation with 10,000 or more

service connections, or a commission-regulated subsidiary or

affiliate subject to this article, shall be punished by a fine of not

more than five thousand dollars ($5,000), by imprisonment in a

county jail for not more than one year or in the state prison, or by

both that fine and imprisonment. In the case of a corporation, the

fine or imprisonment, or both, shall be imposed on each director,

officer, or agent responsible for the false statements.

SEC. 2. Section 8283 of the Public

Utilities Code is amended to read:

8283. (a) The commission shall require each electrical, gas,

water, and telephone corporation with gross annual revenues

exceeding twenty-five million dollars ($25,000,000) and their

commission-regulated subsidiaries and affiliates, to submit annually,

a detailed and verifiable plan for increasing women, minority, and

disabled veteran business enterprise procurement in all categories.

(b) These annual plans shall include short- and long-term goals

and timetables, but not quotas, and shall include methods for

encouraging both prime contractors and grantees to engage women,

minority, and disabled veteran business enterprises in subcontracts

in all categories which provide subcontracting opportunities.

(c) The commission shall establish guidelines for all electrical,

gas, water, and telephone corporations with gross annual

revenues exceeding twenty-five million dollars ($25,000,000) and

their commission-regulated subsidiaries and affiliates, to be

utilized in establishing programs pursuant to this article.

(d) Every electrical, gas, water, and telephone

corporation with gross annual revenues exceeding twenty-five million

dollars ($25,000,000) shall furnish an annual report to the

commission regarding the implementation of programs established

pursuant to this article in a form that the commission shall require,

and at the time that the commission shall annually designate.

(e) The commission shall provide a report to the Legislature on

September 1 of each year, on the progress of activities undertaken by

each electrical, gas, water, and telephone corporation

with gross annual revenues exceeding twenty-five million dollars

($25,000,000) pursuant to this article in the implementation of

women, minority, and disabled veterans business enterprise

development programs. The commission shall recommend a program for

carrying out the policy declared in this article, together with

recommendations for legislation that it deems necessary or desirable

to further that policy.

(f) The Legislature declares that each electrical, gas, water, and

telephone corporation that is not required to submit a plan pursuant

to subdivision (a) is encouraged to voluntarily adopt a plan for

increasing women, minority, and disabled veteran business enterprise

procurement in all categories.

SEC. 3. Section 8284 of the Public

Utilities Code is amended to read:

8284. (a) The commission shall, by rule or order, adopt criteria

for verifying and determining the eligibility of women, minority, and

disabled veteran business enterprises for procurement contracts.

(b) The commission shall develop, and require every electrical,

gas, water, and telephone corporation with gross annual

revenues exceeding twenty-five million dollars ($25,000,000) and

their commission-regulated subsidiaries and affiliates to implement,

an outreach program to inform and recruit women, minority, and

disabled veteran business enterprises to apply for procurement

contracts under this article.

SEC. 4. Section 8285 of the Public

Utilities Code is amended to read:

8285. Any person or corporation, through its directors, officers,

or agents, which falsely represents a business as a women, minority,

or disabled veteran business enterprise in the procurement of, or

attempt to procure, contracts from an electrical, gas, water,

or telephone corporation with gross annual revenues exceeding

twenty-five million dollars ($25,000,000), or a commission-regulated

subsidiary or affiliate subject to this article, shall be punished by

a fine of not more than five thousand dollars ($5,000), by

imprisonment in a county jail for not more than one year or in the

state prison, or by both that fine and imprisonment. In the case of a

corporation, the fine or imprisonment, or both, shall be imposed on

every director, officer, or agent responsible for the false

statements.

SEC. 5. 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.