Tuesday, May 3, 2011
Consumer groups say the three new appointments to the California Public Utilities Commission could signal tighter regulation of the energy companies.
Consumer groups have long complained the regulators who oversee California’s power companies have behaved more like lapdogs than watchdogs. The biggest knock against the PUC’s five commissioners is they rubberstamped almost whatever the state’s power companies asked for.
Exhibit A? Solar panels in outer space. Pacific Gas & Electric proposed buying power from a company that wants to beam it from outer space to Earth, more precisely to Fresno. The PUC said sure.
“California certainly has abundant, abundant, abundant solar resources,” said Mindy Spatt with The Utility Reform Network in San Francisco. “PG&E could be looking much closer to home. There was also the issue of potential danger to the project that it would fry Fresno basically.”
The PUC has a $1 billion budget. Commissioners make $128,000 annually. Their job is to regulate energy companies, protect consumers and make sure rates are reasonable. Consumer advocates like Michael Shames of San Diego said the commission has failed.
“It was embarrassingly bad," said Shames, of the Utilities Consumers' Action Network. "In the 25 years I’ve been overseeing utilities and been involved in the regulatory process, the past six years have been by far the worst.”
Consumer advocates say the PUC is too cozy with industry executives - dining privately at swanky restaurants, and doling out bonuses for energy efficiency programs that fell short. And they brushed aside concerns about soaring rates.
One recent San Diego rate hike was for $29 million to offset insurance costs from the 2007 wildfires. The PUC approved the hikes even though state investigators say SDG&E lines ignited three of the fires and the company violated safety rules.
“The last two SDG&E rate case decisions - SDG&E got largely whatever it wanted," Shames said. "We’re talking about hundreds of millions of dollars. We’re not talking about tens of million dollars.”
But Shames says perhaps the worst example of the PUC favoring industry was approval of the Sunrise Powerlink. SDG&E says the $2 billion power line is needed to transmit renewable energy from the desert. The PUC administrative law judge ruled the link was not necessary to transmit renewables and it could harm the environment.
“The administrative law judges who serve at the Public Utilities Commission are a group of very smart people, most of whom have been at the PUC for a very long time….so their opinion actually has a fair amount of weight," Shames said. "These commissioners, some of whom are still there, would literally ignore the wisdom not just of their staff but the judges.”
Michael Peevey, who has been president of the PUC since 2002, disagrees.
“We have administrative law judges," he said. "We also have commissioners. The purpose of the commissioners is to make independent judgments.”
Peevey used to be president of Southern California Edison. He rejected consumer group claims that commissioners have failed to police power companies.
“That’s pure nonsense," Peevey said. "We’ve done a very, very good job. We’ve kept rates below the consumer price index. We’ve moved the state dramatically in such fields as energy efficiency and renewables. As a group, we’ve tried to do a good job in serving the interests of the people of our state.”
The makeup of that group changed this year when Governor Jerry Brown appointed three new commissioners. Consumer groups hope the trio will restore fairness. Commissioner Mark Ferron has a banking background. Catherine Sandoval is a law professor. And Mike Florio was an attorney for the Bay Area consumer group TURN. Florio said there will be a shift in direction at the PUC.
“I do expect a greater focus on consumers and their needs," said Florio. "I think customers want to have confidence that first that the system is safe and as environmentally sustainable as possible and they want to be able to afford their bills.”
Southern California Edison would not talk about the recent appointments. PG&E officials said they look forward to working with the new commissioners. And SDG&E said it would be happy to bring the new commissioners up to speed on the business of energy.