3. Issues before the Commission Today

The issue before the Commission today is whether to proceed with creation of the SBAC given the practical and legal factors that have come to light.

3.1. Positions of Parties

CSBRT/CSBA "strongly believe that there is a need for a Small Business Advisory Council to expand and enhance the flow of communications between the small business community, Commissioners, Commission Staff and regulated utilities."² CSBRT/CSBA note the "limitations of formal proceedings" and "the time, cost, number and complexity" of Commission proceedings that produce "obstacles to meaningful participation."³ SB-Cal filed comments expressing support for the SBAC and asking for inclusion on the SBAC panel.⁴

AT&T and Verizon (filing jointly) comment briefly, stressing that the value and accomplishments of the SBAC are "uncertain at this time."⁵ In Reply Comments, they note that currently "small businesses and their associations participate in formal proceedings, and small businesses are robustly represented by other organizations such as TURN, DRA, and Greenlining."⁶

PG&E asks that the Commission model the SBAC on the Low Income Oversight Board.⁷ PG&E also stresses the need for "meaningful review of the Small Business Advisory Council."⁸ PG&E notes that even if the SBAC exists, "it will not replace the divergent views of the small business community" and therefore cannot be "a substitute for individual party participation in the regulatory process."⁹

SDG&E and SoCalGas (filing jointly) express support for the Commission's goal of assisting small business customers.¹⁰ SCE expresses similar support for the Commission's efforts to support small businesses, but "requests clarification on whether the roles and responsibilities of the BCOG [Business & Community Outreach Group] will be different following the creation of the SBAC and, if so, how."¹¹

DRA also argues that "while an increased dialogue between small business and the Commission can be facilitated by the Council, the Council's advisory functions should not become a substitute for issues being raised in formal proceedings where due process is accorded to all parties and proposals are voted on by the Commission based on the evidentiary record."¹²

TURN argues that the Commission should "immediately reject any notion that that the input of the SBAC might substitute for the formal participation in Commission proceedings by small businesses and their representatives."¹³ TURN concludes that "[w]hile the SBAC will offer the Commission valuable information regarding small business customers, this information cannot serve as a proxy for small business interests in the Commission's formal decision-making process."¹⁴

Greenlining also expresses support for small businesses and the Commission's efforts "to increase the participation of small business owners in Commission proceedings."¹⁵ Greenlining states that it expects that the SBAC "will prove to be of great value to the Commission as it embarks upon sweeping modernization in both the energy and telecommunications sectors."¹⁶ On the other hand, Greenlining observes that "[i]t is unrealistic to think that any nine members can represent all of the diverse interests of California's small business community."¹⁷

Finally, we note that at the March 7, 2011, workshop conducted at the Commission, participants engaged in a constructive discussion. Multiple parties stressed that it is important that the Commission involve the small business community in the Commission's work, but that this involvement take place in an effective way that enables constructive participation at low cost.

3.2. Discussion

Based on the comments of parties to the proceeding and the statements of participants in the Commission workshop, Commission staff concludes that cost-effective participation by the small business community is key to the success of an SBAC. With this in mind, Commission legal and professional staff conducted a more extensive analysis of the structures of existing boards and the implications for the SBAC. This analysis leads the Commission to conclude that modest modifications to the agenda of the small business expositions held twice a year by the Commission offer a more constructive way to proceed. In addition, if necessary, the Commission can also modify the topics discussed at the annual small business roundtable to provide additional avenues for small business input to the Commission.

Our examination of the existing Commission boards shows a major statutory difference with this proposed board. All existing boards are required by statutes, which set their structure, goals and key operations. The Low Income Oversight Board, on which the Commission proposed to model the SBAC, was established in Section 382.1 of the Public Utilities Code. Similarly, the advisory boards created in conjunction with the telecommunications programs are supported by Sections 270-285 of the Public Utilities Code. There is, however, no statute requiring the Commission to create the SBAC.

Currently there are no advisory boards that are not required by statute. If the Commission created an SBAC by decision, it would, like the other boards, become subject to a variety of rules that apply to governmental bodies. These rules aim to ensure that boards function in a formal and transparent way. If the Commission created an SBAC that consisted of three or more people, it would be a "state body," as defined in Government Code Section 11121(c), and would therefore be subject to the Bagley-Keene Open Meeting Act (Government Codes Section 11120, et seq.).

The Commission's experience with advisory boards is that they involve substantial investments of Commission staff time and energy, and ratepayer dollars. The Bagley-Keene Open Meeting Act, in particular, includes a number of procedural and substantive requirements that must be adhered to. Educating members of advisory boards about these aspects of the law takes staff time and energy away from their normal day-to-day responsibilities. The requirements are not simple to explain and monitoring compliance can place the Commission staff in an adversarial relationship with the board.

There are still other legal complexities. As an advisory board, the SBAC would not automatically have party status in Commission proceedings. Without party status, the advisory board would only be able to convey its thoughts and ideas through its comments to the assigned Commissioner.

Since an advisory board commonly provides only "advice" to the Commission, it is frequently difficult to identify tangible results associated with the advisory board. In particular, since Commission decisions must be based on the record before the Commission in a particular proceeding, reliance on advice and information outside the record of the proceeding risks legal error.

An advisory board, in addition to staff resources and time, may require substantial direct funding to support travel expenses and per diem for attending meetings. In some cases, the Commission has also authorized contracts with technical advisors, adding still more costs.

Alternatively, we note that the Commission currently has in place a strong business and community outreach program. Last year the Commission's small business team participated in over 55 business events and outreach to thousands of small business owners. The Commission's team educated small business owners about regulatory policies impacting their businesses and helped connect them to procurement opportunities with utilities and state agencies.

Currently, the Commission sponsors two small business expositions every year - one in Northern California and one in Southern California. Over 300 small business owners attend each exposition. Currently, these expositions include information exhibits, workshops, and sessions in which a small business can meet with the procurement representatives from government agencies and utilities. A modification of the agenda of the workshops would enable the Commissioner who attends these meetings to learn of the needs of the small business community vis-à-vis the Commission and its regulatory program. Since this program currently operates successfully, it provides a cost-effective alternative to establishing and managing an advisory board. We therefore order such a modification of the workshop agenda.

If needed, the Commission staff could also modify the agenda of the small business roundtables that have been held to address issues affecting this community. In 2011, the Commission Business and Community Outreach staff coordinated a series of roundtable discussions for Commissioners and leaders of the small business community to facilitate an exchange of information, thoughts and concerns. This roundtable offers an information format that could readily provide the liaison Commissioner and Commission staff with insights into utility issues affecting small business interests. The roundtables, if needed, could also be very helpful in facilitating an informal two-way communication.