Lead­ers pro­pose over­haul of PUC

Com­pro­mise by Brown, state leg­is­la­tors looks to tighten fo­cus, ethics rules

San Francisco Chronicle - - FRONT PAGE - By David R. Baker

In a bid to end back-room deals be­tween util­ity companies and their state reg­u­la­tors, Gov. Jerry Brown and leg­isla­tive lead­ers pro­posed a sweep­ing over­haul of the Cal­i­for­nia Pub­lic Util­i­ties Com­mis­sion on Mon­day, tight­en­ing ethics rules and hand­ing some of its pow­ers to other agen­cies.

The com­mis­sion’s lead­ers would need to re­port in pub­lic any con­ver­sa­tions with util­ity ex­ec­u­tives over set­ting util­ity rates. Should they fail to do so, the state’s at­tor­ney gen­eral could drag them into Su­pe­rior Court and fine them.

The com­mis­sion would also es­tab­lish an ethics om­buds­man to field ethics ques­tions and com­plaints from com­mis­sion em­ploy­ees and the pub­lic alike.

The pro­posed changes mark the lat­est ef­fort to re­form the pow­er­ful com­mis­sion in the wake of the fa­tal 2010 ex­plo­sion of a Pa­cific Gas and Elec­tric Co. pipeline be­neath San Bruno. In­ves­ti­ga­tions into the blast, which killed eight peo­ple, re­vealed a pat­tern of back-chan­nel com­mu­ni­ca­tions be­tween the com­mis­sion and the companies it reg­u­lates.

“The util­i­ties were con­trol­ling the com­mis­sion — it be­came very clear that this was the prob­lem,” said Cal­i­for­nia Sen. Jerry Hill, a Demo­crat who rep­re­sents San Bruno. “This is a tremen­dous step, and it moves us closer to putting the ‘pub­lic’ back in the Pub­lic Util­i­ties Com­mis­sion.”

The pro­pos­als also rep­re­sent a com­pro­mise

be­tween the gover­nor and leg­is­la­tors — Hill in­cluded — who wanted even tougher re­forms. Brown last year ve­toed a bill that would have banned pri­vate com­mu­ni­ca­tions be­tween com­mis­sion­ers and util­ity ex­ec­u­tives about set­ting rates.

More changes pos­si­ble

Sev­eral leg­is­la­tors in­volved in the fight said Mon­day that they may push for fur­ther changes in the fu­ture.

“We’ve tight­ened things to the de­gree we could, and that in it­self should com­mu­ni­cate to all in­volved that we mean busi­ness, that what has tran­spired can­not con­tinue,” said state Sen. Mark Leno, D-San Fran­cisco. “Will there be a loop­hole? I hope not. But if there’s more funny busi­ness, we’ll come back.”

While many of the pro­pos­als con­cern the com­mis­sion’s day-to-day pro­ce­dures, some go deeper. For ex­am­ple, the changes would re­move the com­mis­sion’s au­thor­ity to en­force reg­u­la­tions on buses, lim­ou­sines and ride ser­vices such as Uber and Lyft, hand­ing that power to the Cal­i­for­nia State Trans­porta­tion Agency in­stead.

Sim­i­larly, the pack­age raises the pos­si­bil­ity of re­mov­ing some or all of the com­mis­sion’s au­thor­ity over telecom­mu­ni­ca­tions companies. The pack­age calls for mak­ing an assess­ment of the com­mis­sion’s telecom­mu­ni­ca­tions gov­er­nance by Jan­uary 2018.

Seek­ing a tighter fo­cus

Both of those changes would cre­ate a com­mis­sion more tightly fo­cused on reg­u­lat­ing elec­tric and nat­u­ral gas util­i­ties, al­ready the agency’s pri­mary fo­cus.

“The re­form ini­tia­tives war­rant our sup­port, and we re­main com­mit­ted to an out­come that will pro­vide en­hanced ac­count­abil­ity and trans­parency, and al­low us to con­cen­trate on core reg­u­la­tory func­tions that pro­tect Cal­i­for­ni­ans,” the com­mis­sion re­ported Mon­day in a news re­lease.

Many of the changes pro­posed are con­tained within sep­a­rate bills now wind­ing their way through the Leg­is­la­ture. Oth­ers may re­quire fur­ther leg­is­la­tion, while some steps — such as en­cour­ag­ing the com­mis­sion to hold more meet­ings out­side of its San Fran­cisco home base — can be han­dled as ad­min­is­tra­tive mat­ters within the agency.

The changes would re­quire any­one lob­by­ing the com­mis­sion to reg­is­ter in pub­lic. The re­form pack­age also calls for de­vel­op­ing an “e-com­ment” sys­tem that would let mem­bers of the pub­lic file com­ments in the of­fi­cial record of com­mis­sion pro­ceed­ings.

Many of the changes fo­cus on end­ing — or at least tightly reg­u­lat­ing — a cul­ture of backchan­nel deal­ing among the agency’s five vot­ing com­mis­sion­ers, its top staff and util­ity ex­ec­u­tives.

Cur­rent rules bar such “ex parte” com­mu­ni­ca­tions in ad­ju­di­ca­tory pro­ceed­ings — such as in­ves­ti­ga­tions of po­ten­tial wrong­do­ing by a util­ity — but al­low them in rate­set­ting pro­ceed­ings. Util­ity ex­ec­u­tives are re­quired to re­port such meet­ings, but com­mis­sion­ers aren’t. The pro­posal un­veiled Mon­day would force com­mis­sion­ers and com­mis­sion staff to post a no­tice and de­scrip­tion of any such meet­ing on the com­mis­sion’s web­site.

Rev­e­la­tions of in­ap­pro­pri­ate com­mu­ni­ca­tions in the wake of the San Bruno blast forced two top PG&E ex­ec­u­tives to re­sign and helped pres­sure the com­mis­sion’s for­mer pres­i­dent, Michael Peevey, to step down in late 2014.

Mark Toney, direc­tor of The Util­ity Re­form Net­work (TURN), said the pack­age would “limit the op­por­tu­ni­ties for pri­vate in­ter­ests to seek spe­cial fa­vors be­hind closed doors.”

Merely a ‘face-lift’?

But not all con­sumer ad­vo­cates were im­pressed. Jamie Court, pres­i­dent of Con­sumer Watch­dog, said the pro­posed changes would help but also rep­re­sented a missed op­por­tu­nity. “It’s more of a face-lift than the kind of heart trans­plant we think the com­mis­sion needs,” Court said. “These are not changes that are go­ing to help ratepay­ers avoid the ripoffs they faced un­der Peevey.”

A PG&E spokesman said the util­ity, Cal­i­for­nia’s largest, was still re­view­ing all of the pro­posed changes.

“PG&E is com­mit­ted to in­ter­act­ing with all of our reg­u­la­tors, in­clud­ing the CPUC, in a trans­par­ent and eth­i­cal man­ner,” spokesman Don­ald Cut­ler said.

Lacy Atkins / The Chron­i­cle 2011

San Bruno Mayor Jim Ruane (left) and As­sem­bly­man Jerry Hill talk at a cer­e­mony for res­i­dents of the neigh­bor­hood that was hit by a pipeline ex­plo­sion the pre­vi­ous year. Hill, now a state sen­a­tor, was in­volved in craft­ing the new leg­isla­tive pack­age.

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