Leno: ‘It’s Time for Reform’ at the California Public Utilities Commission

“I can’t tell you I know that it can be definitively done,” state Sen. Mark Leno (D-San Francisco) acknowledged in a recent interview with KQED. “But we’ve got to start somewhere.”

Leno’s starting with Senate Bill 660, legislation he co-sponsored to restructure the way business is handled at the California Public Utilities Commission.


California Sen. Mark Leno, shown here at a rally in San Francisco in September of 2011, is cosponsoring legislation to reform operations at the California Public Utilities Commission. (Chris Penalosa/KQED)

“They have lost their way – seriously lost their way,” Leno said of the agency, which oversees safety and enforcement in utility operations and has come under close scrutiny in the years since the fatal 2010 San Bruno pipeline explosion. “And so it’s time for reform.”

The proposal, co-authored by Sen. Ben Hueso (D-San Diego), seeks to impose stricter controls on “ex parte” communications, private contact between utilities and regulators held outside the formal public process. It won approval in the state Senate in early June and is now headed to the Assembly.

CPUC President Michael Picker agreed that the agency needs to change the way it does business. Picker said that the CPUC is currently examining how other states handle ex parte communications.The proposal, co-authored by Sen. Ben Hueso (D-San Diego), seeks to impose stricter controls on “ex parte” communications, private contact between utilities and regulators held outside the formal public process. It won approval in the state Senate in early June and is now headed to the Assembly.

“You don’t overcome 20 years of erosion overnight,” he said. “We’re going to have to consciously rebuild that.”

Deborah Behles, a law professor at Golden Gate University, said she was surprised to discover how lax California’s ex parte communication laws are in comparison with that of other states.

“California is an anomaly,” Behles said. “There are only a few other places that have such a broad allowance for ex parte contacts, and especially in a rate-making setting.”

And as a trove of emails PG&E was required to release under court order clearly demonstrate, even these relatively low standards have sometimes been ignored.

A flurry of news reports in recent months highlighted a scandal in which a PG&E executive lobbied Commissioner Mike Florio and then-Commission President Michael Peevey’s chief of staff regarding  the appointment of a judge in a case pending before the commission.

That executive, Brian Cherry, repeatedly pushed for an administrative law judge he felt would be more likely to rule in the company’s favor. A host of other email exchanges between PG&E executives and high-ranking regulatory officials documented social engagements, frequent information sharing, and plans Peevey and Cherry made to visit together and drink wine on holiday getaways.

While three PG&E executives were fired for the emails, CPUC staff have either left or been disciplined. Only state lawmakers can remove CPUC commissioners.

Behles co-authored an academic paper on ex parte communications and also represents clients who weigh in on CPUC proceedings from an environmental or consumer advocacy perspective. Under existing rules, public-interest advocates “can expend significant resources and energy” to weigh in on CPUC decisions, she said, “and in the end, it could all be undone by a few closed-door communications. That is absolutely a concern and it has led to questions about the fairness of the process.”

Aside from handling safety issues, the CPUC oversees rate setting for gas and electricity service, monitors utility spending, and decides on energy projects and policies with far-reaching implications for California’s energy future. Decisions are made by five commissioners appointed by the governor.

“We’ve been rather lax,” Leno said, “and we’ve seen the unfortunate results,” including “the serious tragedy of San Bruno.” He added, “We know that the record keeping of the upkeep of their infrastructure was not only lax, it was nonexistent. That’s not only the fault of the utility, it’s the fault of the commission.”

Leno’s bill also seeks to tighten conflict-of-interest rules that currently give each commissioner the sole power to determine whether he or she should be barred from voting due to bias. It would also limit the CPUC president’s powers.

The legislation had been drafted with input from The Utility Reform Network (TURN), a consumer advocacy organization that has been one of PG&E’s most vocal critics. Mindy Spatt, a spokeswoman for TURN, said she was hopeful the bill would bring about systemic change at the CPUC, but she questioned why some high-ranking regulatory staff never faced consequences.

“What’s been really disturbing is how many people at the PUC have basically been let off the hook,” Spatt said. “It’s a strange form of housecleaning, to sort of just let people off the hook. But just the same, we want to see the house cleaned.”

Criminal investigations at the state and federal level are focused on allegedly improper ties between CPUC regulators and PG&E executives. And close public scrutiny of these cozy ties has been followed by a series of departures of CPUC officials.

PG&E fired Cherry, his supervisor, and another company vice president last year. In late May, PG&E President Chris Johns announced he would retire by the end of the year. Meanwhile, Peevey stepped down after his term came to an end in December of 2014, and Carol Brown, Peevey’s chief of staff, also retired last year. CPUC executive director Paul Clanon, who exchanged dozens of chummy email exchanges with Cherry, also resigned last year, announcing plans to study music.

CPUC spokeswoman Constance Gordon told KQED that internal policy reform is also underway at the regulatory agency.

“We have commissioned an independent report that will come out soon that is reviewing best practices that would strengthen ex parte rules,” Gordon said.

She added, “Our new president and executive director have stated their goal of moving the CPUC forward with openness, transparency and a commitment to safety.”

Read the original story herehttp://ww2.kqed.org/news/2015/06/19/leno-its-time-for-reform-at-the-california-public-utilities-commission