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Legislative Weekly
November 8, 2002
CMTA Election Wrapup
Direct Access Exit Fee Effective January 1
On Thursday, November 7, the other shoe dropped.
The California Public Utilities Commission (CPUC), by a 3-2 vote, issued a ruling requiring direct access customers to pay an exit fee to cover their share of Department of Water Resources (DWR) and investor-owned utility (IOUs) power costs. The decision establishes an interim direct access (DA) “cost responsibility surcharge” to cover past DWR and utility undercollections and future DWR costs, with an overall cap of 2.7 cents per kWh.
The surcharge will take effect January 1, 2003, and will include four components:
- DWR bond charge, covering historic purchases from January 17, 2001 to September 20, 2001;
- DWR historic power charge, covering DA customers’ share of procurement costs between September 21, 2001 and December 31, 2002;
- DWR going forward power charge, covering DA customers’ share of prospective DWR costs for the calendar year 2003; and
- A charge to cover the ongoing above-market utility-retained generation costs.
The decision, which determines how to calculate the cost allocation to ensure indifference and no cost-shifting to bundled customers, will impose costs on DA customers which go beyond achieving “ratepayer indifference” for bundled customers. Particularly troubling is a new provision, added at the last moment, which requires all DA customers that took DA bundled service from the IOUs on or after February 1, 2001, to pay the exit fee, a significant change from the July 1, 2001 cut-off date in the earlier proposed decisions. The small number of customers continuously on DA since January 17, 2001 are exempt. The long anticipated vote by commissioners is the culmination of months of filings, reply comments, and evidentiary hearings at the CPUC in San Francisco. In this proceeding, CMTA argued for an overall cap of 2.0 cents per kWh to preserve the viability of direct access. The sensitivity to energy prices is what forced many businesses to enter into direct access contracts, and even 2.0 additional cents per kWh could make electricity prices too high for some industrial customers.
The “interim” surcharge will be revisited by the CPUC next July, when the Commission will consider whether the undercollections can be recovered over a reasonable time period, or whether the cap should be adjusted upward or downward to ensure that over the long term bundled customers remain “indifferent.”
State Water Board Workshops Draft General Industrial Stormwater Permit
This week the State Water Resources Control Board (State Board) presented draft changes to the General Industrial Stormwater Permit to a standing room only crowd of permittees and environmentalists. The existing permit, last revised in 1997, covers thousands of industrial facilities around the state and has been the subject of considerable controversy, coming under fire from activist groups both at the regional board level in the form of more stringent facility-specific permits and in the Legislature in measures such as Senator Kuehl’s (D-Santa Monica) SB 72 (2001).
The revised draft permit incorporates a number of additional inspection and monitoring requirements, but preserves the State Board’s pollution prevention approach to stormwater management. The permit requires the discharger to develop a Stormwater Pollution Prevention plan, implement best management practices (BMPs) to minimize exposure of chemicals and process equipment to stormwater, and monitor/evaluate stormwater quality and BMP performance.
CMTA joined other industrial discharger interests in support of the draft permit noting that stormwater, by virtue of its inherent unpredictability (volumes and chemical concentrations may change radically from one event to the next), cannot be controlled in the same fashion as a discrete end-of-pipe discharge. CMTA also commented that the General Permit policy should be implemented in a more consistent fashion at the regional board level, where environmental groups have had some success advancing direct discharge permitting policies for stormwater. Specifically, CMTA requested that the State Board issue guidance to help the regional boards determine whether more stringent facility-specific stormwater permits should be used in lieu of the General Permit. CMTA also requested that the guidance clearly articulate the State Board’s preference for the pollution prevention approach over the use of numeric discharge limits.
Tuesday's workshop marks the beginning of what may be a lengthy public review process on the revised draft permit. Several environmental organizations, including Natural Resources Defense Council, Santa Monica Baykeeper and Heal the Bay are lobbying the State Board to abandon the General Permit in favor of a command and control stormwater program that requires dischargers to meet arbitrary stormwater quality limits. Under their approach, costs for industrial permittees could reach into the billions of dollars with minimal or no water quality improvements. CMTA urges the State Board to stay the course.
Restrictions Eased on Employment Investigative Reports
 Wright |
AB 655 was overly restrictive and had some unintended consequences on employers. The bill included a "licensed attorney" in the definition of an “investigative consumer reporting agency.” This interferes with an employer's ability to use attorneys to conduct in-house investigations under the attorney/client privilege without notifying the person being investigated. Current law also prohibits an investigative consumer-reporting agency from furnishing certain information necessary to conduct employment background investigations. In addition, the bill limited the length of time a background investigation could cover, possibly forcing employers to violate the terms of their contract with the federal government or face a huge fine.
Under AB 655, if an employer prepared an investigative consumer report for employment purposes other than for suspicion of "wrongdoing", the employer would have to give the subject advance written notice that the report was being prepared. AB 1068 expands this to include suspicion of "misconduct" as a justification to not give the employee advance notice.
AB 1068 also clarifies that if an employer collects or receives consumer information for employment purposes that constitute matters of public record, the information has to be provided to the consumer on only one occasion. Employers would also have to provide information on the job application form to permit a consumer to waive his or her right to receive that information.
Existing law makes privileged (protected from the threat of civil action) communications regarding job performance and qualifications. AB 2868 specifies that the privilege applies to communications regarding applicants for employment, thus authorizing a current or former employer to answer with privilege whether or not the employer would rehire a current or former employee.
AB 2868 also makes an exception for employers to the length-of-time provision where an employer is required by an agency to check for records that investigative consumer reports may contain, when the employer is reviewing a consumers' qualifications for employment.
Both AB 1068 and 2868 were urgency bills signed by the governor on September 28, 2002. They went into effect immediately.
Hot Legislative Topics for 2003-04
Energy
Energy crisis fatigue is likely to continue in the 2003-04 session with a modest number of bills introduced. But the impact of 2003-04 legislation could be far-reaching, covering such topics as: direct access (perhaps only for renewable power), utility obligation to serve, agency reorganization, and reform of the California Public Utilities Commission. Alleged market abuses by wholesale generators could spawn legislation that will raise the important threshold issue of whether California will have a robust energy marketplace or a return to CPUC regulation.
Environment
This year's successful defeat of many bad environmental bills may see their revival next year, with action likely on electronic products recycling, Native American sacred sites protection, and chemical security. Other issues such as stormwater runoff permits and diesel generator operating rules will be considered by state agencies. An executive order issued by Governor Davis imposed a two year moratorium on disposal of low level waste in municipal landfills pending a new state standard for site cleanup and closure, but legislation could arise in this area.
Tax
The next legislative session will be overshadowed by big deficits between state revenues and state spending. The Assembly Revenue & Taxation Committee asked the Legislative Analyst's Office to do a report on the MIC and will hold hearings on the issue in early 2003. CMTA will oppose any reduction, suspension, or elimination of the MIC and fend off other attempts to unfairly target business with increases of the personal income tax, sales tax, or property tax.
Corporate Counsel
Trial attorneys will continue their assault on arbitration, and CMTA expects another attempt next year to amend the issuance of protective orders. A priority of the trial bar for many years, it was most recently embodied in AB 36 (Steinberg D-Sacramento) and SB 11 (Escutia D-Whittier). The proposals would have expanded plaintiff attorneys' ability to discover the research, business plans, and trade secrets of California companies, simply by filing a lawsuit. Existing California law on protective orders is balanced and fair.
Employment and Labor
Organized labor will continue to press safety and health issues, starting with more stringent ergonomic rules, new criminal and civil penalties and higher fines for safety violations. CMTA expects retaliation violations under the Labor Code to be expanded to cover almost any subsequent employer sanction following an employee's complaint to the labor commissioner. A single payer state-run healthcare program is rumored to be on the legislative agenda for next session mandating employer contributions.
Manufacturing Fact
Workers' compensation injury claims in California's private sector have dropped by more than 50% over the last decade and the State has one of the lowest claims-to-workers ratio in the country -- 1.8 claims per 100 workers. By the end of next year, the cost of the worker's compensation system will have increased by more than 150% since 1990.
Talking Point
This year it is imperative that reforms be embraced to reduce the unjustified high costs of workers' compensation insurance. California employers - the people who write the checks - should be invited to the debate, not excluded as they were last year.
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