TURN Says Revolving Door Between Utilities and Regulators Should Be Shut
PG&E is a for-profit company that exists to run a system the public depends on. The California Public Utilities Commission is a state regulator that exists to make sure utilities like PG&E are not pulling any fast ones on the public.
But in the wake of last year’s deadly pipeline blast in San Bruno, which provoked accusations that PG&E failed to protect the public and the CPUC was asleep on the job, consumer advocates and a lawmaker are asking whether industry and regulator are too cozy. Specifically, some suggest that too many energy industry résumés include tenure at the CPUC, and vice versa.
Exhibit A is Michael Peevey, commission president and onetime CEO of SoCal Edison, one of the utilities his agency regulates. But he’s not alone: the agency’s top lawyer, Frank Lindh, worked at PG&E for 16 years, leading Peninsula Assemblyman Jerry Hill to question Lindh’s involvement in investigating the San Bruno blast.
Consumer advocates point to other examples. Delaney Hunter, former CPUC government affairs chief, became an energy lobbyist in 2008. Former Executive Director Steve Larson left the CPUC in 2007 to work at a natural gas company. Ex-Commissioner Jessie J. Knight now leads San Diego Gas & Electric.
Judy Nadler, a government ethicist at Santa Clara University, said there are obvious concerns about such “musical chairs.”
“The perception to the public is that insiders are making all the decisions and they’re all looking out for one another because they’re all interconnected,” she said.
Mindy Spatt of The Utility Reform Network said the revolving door is something”we’ve been concerned about for years.”
But asked whether his agency deserves a “cozy regulator” reputation, CPUC Executive Director Paul Clanon said no.
“Over the last 10 years, we’ve imposed fines of over half a billion on the utilities we regulate. … We’re a long way from being a ‘cozy regulator,'” Clanon said.
Former commissioner Knight said he has not experienced any coziness from the CPUC. “The commission has been seen as a very tough overseer of the company that it regulates,” he said.
Hunter noted that she was a lobbyist both before and after her CPUC stint. In both transitions, she said she carefully followed agency rules. She had to divest from any regulated companies when she took the job, and after leaving had to abide by a one-year “cooling-off period” in which she was not allowed to approach the CPUC on regulatory issues. She said she left the agency primarily to make better money.
“Do I still know a lot of people [at the CPUC]? Yeah,” she said. “Does that afford me something special? No. I think I get the same shake as everybody else does.”
CPUC lawyer under the gun
For 16 years, Frank Lindh was a Pacific Gas & Electric Co. lawyer. Then, in 2008, he became general counsel of its regulator, the California Public Utilities Commission.
In recent months, Assemblyman Jerry Hill has demanded information from the commission about Lindh’s role investigating PG&E, and whether there is a conflict of interest. In May, Hill wrote Commission President Michael Peevey to clarify “what measures the PUC has taken to minimize both Mr. Lindh’s exposure to potential conflicts and the perception of them.”
Five days later, Peevey responded by stating that Lindh took all investments out of PG&E and recused himself from proceedings that he had worked on at PG&E.
Peevey’s confidence in Lindh does not comfort Hill.
“Peevey and the CPUC had the same level of confidence in PG&E before the explosion on Sept. 9, so that dismissive response doesn’t quell my concerns at all, and just raises the level of inquiry,” Hill said.
Lindh said he is familiar with Hill’s questions, and concedes “it’s a legitimate question.” But he said he hasn’t felt that his relationship with his prior client was prohibiting him from doing his current job.
“It just hasn’t happened,” he said. “The kind of information that’s pertinent to the tragedy in San Bruno was not the kind of thing I was involved in over there.”
Consumer advocates and a Peninsula lawmaker have raised questions about whether a revolving door exists between California Public Utilities Commission and the company it is supposed to regulate. Here are a handful of leaders who have leadership positions from both the commission and the industry on their résumés.
Worked as an attorney for Pacific Gas & Electric for 16 years before being chosen as general counsel of the CPUC in 2008.
Has served as president of CPUC since 2002. Earlier in his career, he was president of energy company NewEnergy, Inc., and prior to that led the utility Southern California Edison.
Worked as a legislative aide and energy lobbyist before accepting an appointment by Gov. Arnold Schwarzenegger as CPUC’s director of governmental affairs in 2005. Left commission in 2008 to return to energy lobbying.
Served as CPUC executive director from 2005 to 2007 and was director of its energy division for eight years before that. Left to become executive for a natural gas company. He now consults with energy companies for a public-affairs firm.
JESSIE J. KNIGHT, JR.
Knight was appointed in 1993 to the CPUC, where he served until 1999. He then spent more than seven years leading the San Diego Chamber of Commerce, after which he became the CEO and chairman of utility San Diego Gas & Electric.