Viewpoints: PUC is too cozy with utilities it regulates

On Monday, Pacific Gas & Electric Co. released another series of emails demonstrating improper private communications between high-level utility officials and decision-makers at the California Public Utilities Commission. They show PG&E pushing aggressively for the assignment of an administrative law judge to preside over a contested ratemaking case because another judge “has a history of being very hard on us.”

Two commissioners and a senior PUC official involved in the email exchanges did not report these improper communications or insist that they stop. Far from it, these officials actively participated in the exchanges and, if anything, seemed to encourage them. When asked about the failure to do the right thing, one commissioner reportedly stated that he was unaware that the rules prohibited such a contact, and that commissioners would “take a refresher course on the rules.”

A refresher course is not the solution.

This latest disclosure shows why California needs to join most states by banning all such private communications related to contested proceedings. Though current rules prohibit communications regarding the assignment of a proceeding to a particular administrative judge, the rules broadly allow private contacts in rate-making cases as long as notice is provided to other parties.

Ratemaking proceedings are at the heart of what the PUC does. It passes judgment on proposals to include the cost of new power contracts and new infrastructure in rates, which in turn determines where most Californians get their electricity and how much it costs. Decision-makers in the PUC regularly engage in off-the-record communications with utilities and other stakeholders, creating a culture of decisions and discussions behind closed doors. This seriously compromises the integrity and the fairness of the process and the public’s right to have a real say in the makeup of the electrical grid.

One of the best ways to eliminate questions related to the proper scope of private contacts is to prohibit them in all contested proceedings. They have long been banned in a judicial setting because they violate the right to a fair hearing. Private contacts also often cannot be rebutted in the adversarial system, and they can carry more weight than the official record.

Improper private contacts, such as those revealed by PG&E, raise suspicions of wrongdoing and an unfair process. While the emails have been disclosed, it is unclear what has been said in face-to-face conversations and at industry soirees. In addition, allowing private contacts can consume significant amounts of decision-makers’ time – time that could be better spent evaluating the official record.

Considering all the problems with private contacts, it is not surprising that most states prohibit private contacts in contested proceedings unless all parties can participate. The Federal Energy Regulatory Commission similarly prohibits private contacts in all on-the-record contested proceedings.

California has often taken a leadership role in its progressive energy and environmental policies. But it cannot maintain this high ground unless it ensures that the decisions are transparent and based on the official record. Communications behind closed doors breed cynicism and distrust, and they actually reduce the likelihood of good decision-making. California should align itself with the majority of states and prohibit private contacts in contested proceedings. This would be a first step toward restoring the integrity of the decision-making process at the PUC.