2. Statutory Background
Beginning in 1986, the California Legislature enacted a series of statutes to encourage a fair proportion of total utility contracts and subcontracts for products and services be awarded to women, minority, and disabled veteran business enterprises (WMDVBE).1 (Pub. Util. Code §§ 8281-8286.)2 The purposes of these statutes are to (a) encourage greater economic opportunity for women, minority, and disabled veteran business enterprises; (b) promote competition among regulated public utility suppliers to enhance economic efficiency in the procurement of electrical, gas, and telephone corporations' (and their affiliates') contracts; and (c) clarify and expand the program for the utilities' procurement of products and services from WMDVBE enterprises. (§ 8281(b)(2).)
Commission-regulated electrical, gas, and telephone corporations with gross annual revenues exceeding $25,000,000 and their Commission-regulated subsidiaries and affiliates are directly covered by these laws. (§§ 8283-8285.)
Commission-regulated water utilities, that are privately owned and operated, were not originally required to participate in the program; however, the largest water companies in the State have been voluntarily complying. The Legislature added water companies with gross annual revenues exceeding $25,000,000 beginning in 2009.3 Other smaller utilities have chosen to similarly expand their procurement programs to achieve the statutory purposes.
GO 156, first adopted in 1988, sets forth Commission guidelines for the utilities to follow in meeting the statutory goals set forth in §§ 8281-8286. GO 156 has been amended numerous times over the years, most recently by Decision (D.) 06-08-031. Nothing in GO 156 authorizes or permits a utility to use set-asides, preferences, or quotas in administration of its WMDVBE program and utilities retain the authority to use legitimate business judgment to select a supplier for a particular contract.4 An updated version of GO 156, reflecting all amendments through the issuance of D.06-08-031, is set forth as Attachment A.
In GO 156, the Commission established voluntary procurement goals for each covered utility of 5% for woman-owned, 15% for minority-owned, and 1.5% for disabled veteran-owned business enterprises.5 The utilities report annually on their procurement purchases from WMDVBEs, and their progress in meeting the procurement goals. GO 156 also authorized participating utilities to establish a joint clearinghouse to certify women-owned (WBE) and minority-owned (MBE) suppliers.6 Disabled veteran-owned business enterprises (DVBE) are certified by the California State Department of General Services, Office of Small and Minority Business. A utility that contracts with a supplier who is not certified may not count those expenditures toward their annual goal nor can the contract be included in the WMDVBE expenditures listed in the utilities' annual reports to the Commission. However, there is no penalty for failure of any utility to meet or exceed their annual goals.
On September 1st of each year, the Commission is required to file an annual report with the Legislature detailing the progress by each utility towards implementing the legislative policies. The report also contains information about successful programs and recommendations for improvement.
1 The Legislature passed Assembly Bill 3678 (Stats. 1986, ch.1259), which requires California regulated utilities with $25 million in annual revenues to establish a program to procure goods and services from woman- and minority-owned business enterprises. In response to Assembly Bill 3678, the Commission issued GO 156, which established guidelines for the utilities to follow in meeting these requirements.
2 Unless otherwise indicated, all future statutory references to "section" mean to the Public Utilities Code.
3 Water companies were added by Stats. 2008, ch. 316.
4 GO 156 at § 6.
5 GO 156 at § 8.2.
6 GO 156 at 3.1.
