CPUC Could Get Pro-Consumer Majority

The CPUC has been overly friendly to the state’s three big electric utilities in recent years, Gov. Jerry Brown could have a big impact on business and residential energy bills and the California economy by making as many as three appointments.

Reporting from Sacramento—Gov. Jerry Brown could have a big impact on business and residential energy bills and the California economy by making as many as three appointments this month to the state’s top regulatory body, the Public Utilities Commission.

At least two appointments to fill current vacancies in the five-member panel could come as early as Friday and could start to give the PUC its most pro-consumer majority since the days of the energy crisis a decade ago.

A third member, Nancy Ryan, must step down Jan. 20 if her appointment last year by then-Gov. Arnold Schwarzenegger to a regular six-year term is not confirmed by the state Senate by then.

The PUC is a constitutionally independent commission that oversees companies supplying electricity, natural gas, telephone and cable service to millions of homes and businesses.

The agency also regulates drinking water providers, household moving companies, limousine operators and light-rail and intrastate railroad safety.

“This is a most powerful agency that is supposed to be regulating utilities that every Californian uses,” said Kathay Feng, executive director of California Common Cause. “Its reach expands much further than what folks usually think of as public utilities.”

All of the half-dozen candidates known to be interested in joining the commission have strong pro-consumer credentials. One, consumer lawyer Michael Florio, has spent the last 32 years representing utility ratepayers at meetings at the PUC’s San Francisco headquarters.

Critics contend that the Schwarzenegger appointees, who dominated the panel in recent years, have been overly friendly to the state’s three big electric utilities—Southern California Edison Co., Pacific Gas & Electric Co. and San Diego Gas & Electric Co.—and opened the door to higher rates.

At the same time, Schwarzenegger’s commissioners largely deregulated the telephone business.

“We really think that the PUC has lost its way,” said Mark Toney, executive director of the Utility Reform Network, a San Francisco ratepayer advocacy group. “The PUC in the last six years has a pattern of giving away the store to utilities. That’s the first thing we want to see stopped.”

Regulated companies such as Edison and major business trade groups such as the California Manufacturers & Technology Assn. declined to comment on possible Brown nominees and their influence on PUC policies.

But one Democrat in the state Senate didn’t see a bias against consumers.

“I don’t think the commission has been anti-consumer,” said Sen. Alex Padilla (D- Pacoima), chairman of the Senate Energy, Utilities and Communications Committee. “The various commissioners each bring life experiences and sets of expertise to the commission. As a whole, they are relatively balanced.”

Critics, though, point to a number of decisions by the PUC under President Michael Peevey that they say overly favored the big corporations at the expense of ratepayers.

Last month, the PUC helped utilities financially by reversing three proposed decisions by its own administrative law judges.

A 3-2 majority approved millions of dollars in energy efficiency bonuses for four utilities; another 3-2 vote allowed San Diego Gas & Electric to recoup wildfire insurance costs from ratepayers; and a 4-1 vote approved procurement orders for electricity from a new power plant that the PUC’s independent Division of Ratepayer Advocates said wasn’t needed.

Those decisions and others spurred an avalanche of spending that utilities can recoup—along with substantial markups—from consumers, said Cheryl Cox, the Division of Ratepayer Advocates’ chief policy advisor.

“On the energy side, where so much money is being spent, we definitely want to see a more balanced ratepayer perspective from the commission,” Cox said.

Critics also charge that the PUC has been complacent in overseeing regulated companies. An investigation of the fatal explosion of a PG&E natural gas pipeline in San Bruno in September showed that some PUC staff members did not do their jobs.

According to PUC work papers, the utility sought $5 million in its 2009 rates to cover the cost of repairs to the San Bruno pipeline section that eventually failed.

“I think the gas pipeline aftermath has revealed some significant breakdowns in the safety division,” said V. John White, executive director of the Center for Energy Efficiency and Renewable Technology in Sacramento.

Peevey, a former Southern California Edison president, declined to respond to the criticism or to speculate on who might be appointed to the commission. Peevey was appointed by former Gov. Gray Davis in March 2002 and named as president 10 months later. Schwarzenegger reappointed him to a second six-year term in 2008.

Brown can replace Peevey as president but can’t remove him from the agency. Capital insiders suggest that the governor might replace him as president with John Geesman, a former member of the California Energy Commission.

Last fall, Geesman was a leader in a successful campaign to defeat a PG&E-sponsored ballot measure that would have made it more difficult for ratepayers to create public power authorities.

He previously served as president of the Utility Reform Network’s board of directors. Geesman declined to talk about his application for a PUC appointment.

Another candidate, Florio, also has a strong connection to The Utility Reform Network. He has served as a staff attorney since 1978, appearing hundreds of times in PUC legal proceedings.

Other PUC candidates include former state Sen. Dean Florez; Catherine Sandoval, a Santa Clara University law professor and telecommunications expert; Jack McNally, a retired business official for the International Brotherhood of Electrical Workers; and Julia Levin, a former state energy commissioner and environmental attorney at the California attorney general’s office.

Additionally, Brown could reappoint Ryan, an energy economist and former top Peevey assistant, to a new six-year term.

All of the candidates, except Florez, declined to be interviewed or could not be reached for comment. The governor’s office also declined to comment.

Florez, the son of farmworkers who represented the southern San Joaquin Valley until last month, tangled repeatedly with PG&E, the PUC and Peevey over the installation of so-called electricity smart meters on residences.

The meters, his constituents complained, drove up energy bills. Florez cast the only negative vote to confirm Peevey’s reappointment in 2008.

“My vote was really about the direction the PUC is going, not necessarily about Mike Peevey,” Florez said. “The ratepayers are always the last persons to get served.”