On October 3rd, 2006, the California Public Utilities Commission (CPUC) is conducting its fourth annual hearing on utility company diversity. In previous hearings, the Commission has focused on utility procurement with diverse businesses, diversity in utility employment and governance, and utility customer service to customers who speak languages other than English.
The Commission's diversity hearings have been well attended with representatives from industry, academia, labor, media, the State Legislature, community-based organizations, as well as industry executives. The hearings have provided an opportunity for various business and community leaders to express their concerns and share ideas. From these exchanges, the Commission is able to consider issues that require further staff focus and review.
Several significant accomplishments have been realized since last year's hearing.
- An increase in the overall amount of procurement dollars expended on Women, Minority, and Disabled-Veteran Business Enterprises (WMDVBEs)
- An increase in the overall percentage of procurement dollars expended on WMDVBEs
- Increased focus on traditionally underrepresented procurement categories; specifically legal services and financial services
- Further outreach, evaluation and input provided by the California Utilities Diversity Council (CUDC) in the areas of procurement, corporate governance, philanthropy, and customer service and marketing
In the 2006 hearing, the Commission will return its focus to one of its primary diversity program areas: procurement. It will consider the utilities' expansion of their efforts to reach out to diverse businesses in underrepresented industries, such as financial and legal services.
Continuing Efforts In Diversity
Commission staff continues to encourage utilities to increase procurement levels in traditionally underutilized procurement categories. Due to the Commission's involvement, the utilities have hosted several networking events to increase their outreach to diverse legal and financial services firms. These events have provided diverse firms the opportunity to meet with the utilities' general counsels, chief financial officers, procurement managers, and legal and finance staff to learn more about their operations and to lay the foundation for potential future business opportunities.
The California Utilities Diversity Council is an independent organization that provides information and input to the Commission and utilities regarding the utilities' diversity programs. See www.cudc.biz. The CUDC has made strides in increasing the awareness of utility company employment opportunities for students enrolled in mathematics, science, and engineering programs. It has also laid the foundation for increased availability of bilingual services to utility customers who have limited English proficiency. Members of the Council include recognized leaders from the business community, consumer groups, education, labor organizations, and the utilities.
Update on the Utility Supplier Diversity Program
The CPUC's expansive effort to increase diversity in various utility operations originated from its Utility Supplier Diversity Program, also known as the Women-Owned, Minority-Owned, and Disabled Veteran-Owned Business Enterprise (WMDVBE) program. This program recognizes that diversity benefits utilities, suppliers, ratepayers, California's economy, and society in general. CPUC-regulated natural gas, electric, and telecommunications companies with gross annual revenues exceeding $25 million must submit annual detailed and verifiable plans for increasing women and minority business enterprise procurement. The plans should include short and long term goals and timetables.
General Order (GO) 156 sets forth rules and regulations for utilities' WMBE programs. GO 156 requires participating utilities to inform, recruit, and obtain at least 20% of their products and services from WMBEs. A subsequent CPUC decision, D. 95-12-045, established a 1.5% goal for disabled veteran business enterprises (DVBEs).
The Commission reports annually to the California Legislature on the results of the utilities' procurement diversity programs subject to GO 156. In the report, significant developments are highlighted and relevant trends are analyzed. Results are provided for MBE, WBE, and DVBE procurement, in both large and small utility company categories. The report includes an extensive set of tables providing detailed statistical information for comparison purposes among utilities.
Copies of the report are available at no cost upon request to the Commission.
Results of 2005 Utility Supplier Diversity Procurement
Thirty CPUC-regulated utilities are complying with the program requirements. General Order 156 requires each participating utility to report by March 1 on its WMDVBE program, summarize its purchases for the prior calendar year, and describe its goals and plans for the following year.
The utilities' 2005 procurement results are mixed. The total amount of procurement dollars expended on women-, minority-, and disabled veteran-owned businesses (WMDVBEs) increased over those of 2004. Similarly, the overall percentage of procurement dollars directed toward WMDVBE firms increased over those of 2004. However, the overall averages show the utilities as a whole did not meet the established goals found in General Order 156.
Focus on Underrepresented Procurement Categories
This year's hearing will include a panel dedicated to the utilities' efforts in the area of legal services. In this panel, issues raised in last year's hearing will be expanded upon and actions taken by the utilities in the legal services arena will be highlighted. Due to a new standardized reporting format, the utilities have reported their legal services procurement for 2005 in their annual reports to the Commission. The data indicates there is much room for improvement in this area. At the hearing, the Commission will endeavor to identify key issues and various methods and strategies to improve the utilities' results.
Similarly, a review of utilities' financial services procurement data also indicates further attention is required to meet the program's goals. This years' hearing will include a panel dedicated to financial services. The Chief Financial Officers of California's five largest regulated utilities are scheduled to speak and offer their insights regarding this important and developing area. The Commission intends to continue its on-going efforts in the areas of consulting, architectural, and engineering services next.
The National Association of Regulatory Utility Commissioners (NARUC) has established the Utility Market Access Partnership (UMAP). UMAP is intended to maximize opportunities for WMDVBEs and to serve as a resource to other state commissions and utility companies. CPUC President Peevey is the Vice-Chair of UMAP. In this capacity, he has been able to highlight California's program to Commissioners in other states to serve as a model for initiating their own supplier diversity programs. NARUC held its summer meeting in San Francisco, which include a panel on UMAP. This panel had commissioners from several state commissions as panel members.
The CPUC Supplier Diversity program maintains a page on the CPUC website (www.cpuc.ca.gov) providing contact information for the utilities in the program. This page has general information regarding the program, links to certification requirements, and a link to the Commission's Annual Report to the California legislature. In addition to the CPUC's website, the CUDC has a website, as well as the California Department of General Services, for information on the Disabled Veteran Business Enterprise (DVBE) program.