On June 2, the California Assembly passed a proposal to amend the state constitution and reduce the California Public Utilities Commission’s (“CPUC”) regulatory authority. Assembly Constitutional Amendment 11 (“ACA”), also referred to as the Public Utility Reform Act of 2016, was passed by the California Assembly by a 61-to-9 vote, and may ultimately be placed on the November 2016 ballot for consideration by California’s voters. If passed, the ACA would restructure the CPUC and reallocate many of the CPUC’s functions to other state agencies, departments, or boards. 

Presently, the California Constitution authorizes the CPUC and gives the agency broad discretion to enact and enforce policies and programs within the CPUC’s jurisdiction. The CPUC’s jurisdiction currently includes regulation of private electric, natural gas, telecommunications, water, railroad, rail transit, and passenger transportation companies. The ACA would amend the California Constitution and authorize the California Legislature to reallocate or reassign a portion of the functions to other state entities. In particular, the ACA directs the Legislature to adopt structures to require greater accountability for CPUC-regulated entities. Additionally, the ACA provides guidance to the CPUC to focus its regulatory efforts on safety, reliability, and rate-setting, as well as implementing statutorily authorized programs for reducing greenhouse gas emissions.

The recitals to the ACA note certain problems with the present structure. In particular, the recitals note recent energy-related events in California that call into question the effectiveness of the current structure, including the San Bruno pipeline explosion, oil trains passing through the Central Valley and Sacramento, the San Onofre and nuclear waste storage concerns in San Diego and Orange County, and a recent gas leak in the Los Angeles County area. Additionally, the recitals note certain ethical lapses, which included the former CPUC president and utility executives engaging in inappropriate ex parte communications and unwarranted intimacy between the CPUC and entities it regulates.

The ACA must go through several additional steps before it becomes law. The ACA now heads to the California Senate for consideration. The Senate must pass the ACA by a two-thirds vote before June 30, 2016 for the ACA to then be placed on the November 2016 ballot. If it reaches the ballot, California voters must approve the ACA by a simple majority. If approved, the ACA will become effective January 1, 2019.

A copy of the Assembly-approved ACA can be found here.