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Reforms Advance For Utilities Commission

THE SAN DIEGO UNION-TRIBUNE
http://www.sandiegouniontribune.com/news/2016/jun/27/reforms-advance-for-utilities-commission/

Brown, lawmakers reach pact on transparency, accountability

Gov. Jerry Brown has agreed to significant reforms at the California Public Utilities Commission, which has been under criminal investigation over the shuttered San Onofre nuclear power plant and finds itself in the middle of several other controversies.

The deal was announced Monday by Brown and lawmakers after a series of utility failures resulted in an explosion that killed eight people in the Bay area, a massive gas leak in Los Angeles and the premature shutdown of the nuclear power plant in San Diego.

The move also comes after the Assembly overwhelmingly passed legislation to take away virtually all of the commission’s authority and split up its duties among other state agencies.

The agreement announced Monday, which must be approved by the Legislature, doesn’t gut the commission, though it does take away some of its responsibility.

Among other things, the pact transfers some enforcement duties over the ride-sharing industry and other transit-related matters to the California State Transportation Agency and calls for re-assessing the commission’s oversight of telecommunications firms by the end of next year.

The agreement further tightens reporting rules on ex parte, or private, communications between regulators and people or groups with business pending before the commission, but it stops short of banning such contact.

Requests for public records also could be appealed directly to superior court when they are denied by the commission, a move regulators have resisted for years.

Access to documents is critical because the framework for the San Onofre settlement charging ratepayers the lion’s share of $4.7 billion in closure costs was sketched out in secret in Warsaw, Poland, between majority plant owner Southern California Edison and then-commission President Michael Peevey.

Commission lawyers are now fighting a superior court case over emails related to the San Onofre closure, saying the court lacks jurisdiction.

Lawmakers and the governor also agreed that utility executives would be barred from serving as a commissioner for 24 months after leaving a regulated utility. That that provision would not have prevented Peevey from serving because he was an executive at Edison years before he was appointed to the commission.

The deal also calls on the commission to work with the Nuclear Regulatory Commission to relocate nuclear waste from the shuttered San Onofre power plant.

Brown and lawmakers hailed the agreement as a tough new standard for the state utilities commission, which has been under criminal investigation for possible corruption since 2014.

"These reforms will change how the commission does business," Brown said in a statement. "Public access to meetings and records will be expanded, new safety and oversight positions will be created and ex parte communication rules will be strengthened."

The commission issued a statement in support of the changes, saying regulators are committed to providing enhanced accountability and transparency.

"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," the statement said.

Uber and Lyft, two major ride-sharing companies subject to commission regulations, issued statements saying they were reviewing the proposals.

Early reaction from consumer advocates was mixed, with some giving state officials credit for addressing serious problems at a critical government agency and others calling the reforms little more than window dressing.

San Diego attorney Michael Aguirre, who is suing the commission over access to internal emails between regulators and the Governor’s Office, said the reforms show real progress on Brown’s part.

"I praise him for agreeing to make the CPUC subject to the Public Records Act the way other state entities are," he said. "And most important, for directing the PUC to work with the Nuclear Regulatory Commission to relocate the waste at San Onofre."

Jamie Court of Consumer Watchdog said the reforms don’t go far enough.

"They don’t necessarily change the balance of power at the commission in a way that creates more power for ratepayer interests," said Court, who alleged in a complaint last March that Brown’s chief of staff improperly interfered in commission business.

Court cited a Consumer Watchdog analysis showing that Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric donated almost $6 million to Brown and his causes and the state Democratic Party and central committee since 2010.

Also, Brown’s sister serves on the board at Sempra Energy, which owns SDG&E, and several of his top aides and appointees previously worked for utilities.

"The real change needed is a legal obligation that ratepayer interests have to come before investor interests," Court said.

The agreement includes many of the reforms contained in a series of bills that passed unanimously in 2015 but were vetoed by Brown last year.

In response, Assemblyman Mike Gatto, D-Los Angeles, introduced a constitutional amendment early this year that would have shifted most commission authority to other areas of the state government.

That bill, known as Assembly Constitutional Amendment 11, passed the Assembly early this month on a 61-9 vote and was winding through the Senate until the announcement Monday. If passed by the Senate, the bill would not need Brown’s approval and voters would have decided in November whether to curtail commission powers.

"These reforms mark a new beginning for the CPUC," said Gatto, who negotiated the agreement with Brown. "The commission will become transparent and accountable to Californians and focused on the safety of our communities."

In addition to their handling of the San Bruno disaster, state utility regulators were criticized — and investigated — for their response to the 2012 shutdown of the San Onofre nuclear plant and the 2015 gas leak near Porter Ranch.

The agreement Monday makes additional changes the governor and lawmakers said would improve oversight and benefit consumers.

Specifically, it requires organizations that lobby the commission to register, much like they do when contacting legislators. It also calls for greater distribution of transcripts, comments and other documents.

The deal tweaks the intervenor compensation program to allow participants to receive payment when they contribute to a proceeding even though they did not participate in a settlement.

It also allows commissioners to discuss administrative and managerial issues in closed-session meetings to promote better practices, and directs regulators to work with state colleges and universities to develop curricula specific to utility regulation.

The university research was apparently included to counteract the phenomenon known as regulatory capture, a condition in which government regulators are all but controlled by the entities they are supposed to oversee.

Former utilities commission President Loretta Lynch said the reform package could have been much stronger, and predicted business as usual at the regulatory body.

"Until PUC decisions are reviewable by the courts to the same extent that all other administrative agencies are, then the collusion will continue and the PUC will continue to be a rogue agency," she said. "Until the courts can keep the PUC in line, nothing will really change."

The constitutional amendment that passed the Assembly early this month now will be on hol until the new reform legislation is drafted and signed into law, Gatto said. The bill would likely go into effect Jan. 1, 2017.