CPUC Reform Bill Passes Key Assembly Vote

Senator Leno’s CPUC Reform Bill Passes Key Assembly Committee

July 13, 2015

SB 660 Limits the Powers of the CPUC President, Restricts Ex-Parte Communications and Sets Standards to Curb Bias

SACRAMENTO – Legislation that would significantly reform the California Public Utilities Commission (CPUC) passed the Assembly Utilities Committee today with a 15-0 bipartisan vote. Senate Bill 660, authored by Senator Mark Leno, aims to rebuild public trust in the agency following ongoing revelations of unethical back-channel communications between the CPUC and the utilities it regulates. The bill is jointly authored by Senator Ben Hueso, D-San Diego.

“Unfortunately, the CPUC has demonstrated in recent years that is has cozy relationships with the utilities it regulates,” said Senator Leno, D-San Francisco. “On top of that, recent media reports have revealed unethical abuses of power, biased decisions and secret communications that threaten public safety and the interests of California ratepayers. It’s time to clean up shop.”

SB 660 addresses what critics have called a “governance problem” within the CPUC. The bill limits the power of the CPUC president to directly manage staff and delegates oversight functions to committees of two or more commissioners. It also creates stronger standards for determining when a commissioner should be disqualified from a case due to bias and sets new rules to curb improper communications between the Commission and the companies it regulates. The legislation is sponsored by TURN, The Utility Reform Network.

The bill implements many of the recommendations contained in a recently-released report from the Strumwasser & Woocher law firm. That report, commissioned by the CPUC, concluded that ex-parte communications within the agency unfairly bias key decisions and should be banned. SB 660 not only sets new rules to limit secret communications, but also for the first time requires decision makers, including CPUC commissioners and senior staff, to disclose all such meetings, eliminating conversations during which only one commissioner talks in order to avoid public disclosure.

“Critical decisions that impact ratepayers, consumer rights and public safety should never be made in secret,” said Mark Toney, Executive Director of TURN. “These back door deals have corrupted the Commission’s process, allowing utility demands to rule the day.  SB 660 strengthens the lax rules that have allowed corruption to flourish and establishes strong penalties for those who dare betray the public trust.”

A lawsuit resulting from the 2010 gas pipeline explosion in San Bruno that killed eight people and destroyed an entire neighborhood forced the CPUC to release about 65,000 communications, some of which appear to show private conversations and decisions between the agency and Pacific Gas & Electric (PG&E). The private communications indicate the Commission advised the utility on handling controversies, discussed selecting a judge for a rate-setting hearing and suggested campaign contributions. In light of these communications and other developments, both the California Attorney General’s Office and the U.S. Department of Justice are looking into the agency’s relationship with utilities.

Established in 1911, the CPUC regulates privately owned electric, natural gas, telecommunications, water, railroad, rail transit and passenger transportation companies. The Commission is governed by five commissioners, including a Commission president, who are appointed by the Governor to serve six-year terms.

SB 660 will be heard next in the Assembly Appropriations Committee.