Capitol Alert

Sweeping Public Utilities Commission changes announced

California Public Utilities Commission needs reform, lawmaker says

On Monday, June 27, 2016, the day Gov. Jerry Brown and lawmakers announced a deal to overhaul the troubled California Public Utilities Commission, then-Assemblyman Mike Gatto, D-Los Angeles, explained why things need to change.
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On Monday, June 27, 2016, the day Gov. Jerry Brown and lawmakers announced a deal to overhaul the troubled California Public Utilities Commission, then-Assemblyman Mike Gatto, D-Los Angeles, explained why things need to change.

A deal between Gov. Jerry Brown and lawmakers announced Monday will bring major changes to the oft-criticized California Public Utilities Commission, including removing the regulator’s enforcement authority over ride-hailing services such as Uber and Lyft.

“These reforms will change how this commission does business,” Brown said in a statement.

As a series of crises have beset the commission, from its response to a massive Southern California gas leak to the ouster of its former leader after revelations of back-channel dealings related to a deadly San Bruno pipeline explosion, legislators have agitated for changes. Assembly Speaker Anthony Rendon, D-Paramount, called the regulator “a mess” in advocating reforms.

Calling the regulator overburdened and ineffective, Assemblyman Mike Gatto, D-Los Angeles, has advanced a constitutional amendment to dissolve the body and let lawmakers reconstitute it. With that measure marching steadily through the Legislature, Brown and lawmakers agreed to a package of changes. In the past, Brown has vetoed bills aimed at reining in the PUC.

“This is a key restructuring of the PUC,” Gatto said in an interview, adding that he would drop his measure. “We are freeing up their time and focus to really pay attention to the important things, which is the safety and fairness of our electrical and gas infrastructure.”

Sen. Jerry Hill, D-San Mateo, whose district encompasses the site of the gasoline explosion and who has been one of the agency’s most dogged critics, said he hoped the compromise would restore public trust in an institution widely perceived as being “in bed with those utilities.”

“The problem is that it was being run by, controlled by and operated in support of the utilities. It was all really one-sided with a lack of real transparency,” Hill said. “We have a lot of work to continue to do, but this is a major reform effort and major step in the direction that will put the public back in the Public Utilities Commission.”

Less enthusiastic was Consumer Watchdog, a vocal critic of the PUC. Jamie Court, the organization’s president, wrote in a news release that the changes were “more cosmetic than substance.” He urged raising the bar for when utilities can charge ratepayers to cover the cost of new projects and said more of the PUC’s decisions should be subject to review by superior courts.

“I hope this is the beginning and not the end,” Court said. “It’s not a bad beginning, but it would be a bad end.”

Some of the key points of the agreement include:

▪ Enforcement of rules governing transportation companies would become the responsibility of the California State Transportation Agency, freeing the PUC from policing a complex and politically volatile industry.

▪ The PUC would study its responsibility for overseeing telecommunications, which could lead to shifting that responsibility to another agency.

▪ The agency would adopt more restrictions on ex parte communications, or those that occur outside official channels. When commissioners engage in such conversations around rate-setting rules, they would need to disclose them online. The California attorney general could bring enforcement actions against people who violate ex parte rules.

▪ The deal clarifies that people who lobby the PUC would need to register as lobbyists.

▪ A new ethics ombudsperson would be able to hear complaints from whistleblowers.

▪ Certain provisions of the California Public Records Act would now apply to the PUC.

▪  Former utility executives would be prohibited from serving on the PUC for two years.

The deal includes many elements similar to provisions of a half dozen bills to overhaul the commission that were passed unanimously by the Legislature last session but ultimately vetoed by Gov. Jerry Brown for being “unworkable.”

Lawmakers sought to appoint an inspector general within the state auditor’s office to oversee the scandal-ridden agency, create a weekly public log of oral and ex parte communications, require the commission to hold more of its meetings in Sacramento and post more of its documents and reports online, make it easier to bring open meeting or public records lawsuits against the agency, and allow the attorney general to take enforcement actions against commissioners who violate the rules about ex parte communications.

The deal does not, however, go as far as those bills in further restricting the backchannel talks between commissioners and interested parties in agency proceedings that have been so controversial. Gatto and Hill said there should be space for such talks to occur.

“Sometimes (commissioners) act like legislators,” Gatto said. “I cannot imagine doing my job if people couldn’t approach me at the grocery store or come see me in my office ... and talk to me about what their feelings are on a piece of legislation.”

In an emailed statement Monday, the PUC said “the reform initiatives announced today represent the start of a new chapter for the CPUC that will allow the focus to return to the work of our dedicated staff in providing for a safe and productive California.”

Jeremy B. White: 916-326-5543, @CapitolAlert. Alexei Koseff of the Bee Capitol Bureau contributed to this report.

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