Dan Walters

Will California Public Utilities Commission get the reform message?

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.

The California Assembly has shown a certain appetite for institutional reform this year – noteworthy because it happens so rarely in the Capitol.

One example is the Assembly’s refusal to approve a routine increase in State Bar dues without long-overdue structural changes in the quasi-public agency that licenses and supposedly regulates the legal profession.

It passed a fairly strong State Bar reform bill, only to see the legal establishment, including Chief Justice Tani Cantil-Sakauye, persuade key senators to stall action.

An even more important example is the Assembly’s strongly bipartisan, 61-9 vote in June to overhaul the California Public Utilities Commission.

The PUC, like the State Bar, has become arrogantly insular, riven by scandal and too cozy with the huge utility monopolies it is supposed to regulate.

Assembly Constitutional Amendment 11, carried by Assemblyman Mike Gatto, D-Los Angeles, would have authorized the Legislature to reallocate the PUC’s duties, and, as Gallo said, “treat the PUC like any other executive branch agency.”

The Assembly’s overwhelming approval of ACA 11 sent a shock through the utility industry and moved Gov. Jerry Brown to embrace PUC reforms he had previously shunned.

Less than a month later, Brown and legislative leaders announced a compromise that will, he said, “change how this commission does its business,” including shifting some of its regulatory duties to other agencies and tightening up the commission’s operational ethics.

While the compromise awaits final action, the PUC itself has a chance to demonstrate that it’s gotten the message.

The biggest scandal to hit the agency was the revelation that its former president, Michael Peevey, had met secretly with representatives of Southern California Edison (SCE) in a Warsaw hotel to make a deal on shutting down the San Onofre nuclear power plant.

The deal placed 70 percent of the $4.7 billion in shutdown costs on ratepayers, thus protecting the utility’s financial position, even though there were credible allegations that mismanagement had precipitated the closure.

Peevey is also a former SCE president and the deal, which included utility donations to a pet Peevey research project, was later approved by the entire commission.

Peevey eventually was forced to step down and a state Department of Justice criminal investigation of the deal continues, albeit in slow motion. Eventually, too, the PUC fined SCE for its “ex parte” communications with Peevey and reopened the San Onofre case.

Nothing less than a complete reconsideration, beginning at the beginning, would remove the stain. Incredibly, however, SCE this month petitioned the PUC to re-ratify the scandal-tainted deal without change.

Meanwhile, the PUC should relent on its legal battle to avoid release of communications between Brown and the PUC regarding the San Onofre case, claiming that they are exempt from the Public Records Act.

Brown’s office insists that he was not complicit in Peevey’s secret deal, but if so, the governor should not have any problem making his communications public.

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