2 PUC Reform Bills Die, Emails Will Stary Secret

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Governor's office notes that two other PUC measures passed

Advocates hoping for reform at the California Public Utilities Commission were disappointed twice this week, as an overhaul bill died in the legislature and a court ruling allowed certain emails regarding the agency’s response to the San Onofre failure to remain secret.

Lawmakers did pass two bills that imposed changes on the commission, which for two years has been under criminal investigation for backchannel dealings with utility executives.

Stronger reforms — agreed to in June by Gov. Jerry Brown and top lawmakers and embraced by both parties — were left in legislative limbo when the session ended at midnight Wednesday.

“It’s another broken promise to the people of California and the original promise was half a loaf to begin with,” said Jamie Court of Consumer Watchdog, a Santa Monica nonprofit group that has been critical of Brown and the utilities commission. “We are getting about two slices of the full reform loaf we should be.”

Brown spokesman Gareth Lacy issued a statement saying it’s unfortunate that two of the reform bills did not pass, but noting that two others did.

“The Legislature approved significant PUC reforms and the Governor will sign those bills,” he wrote in an email.

Among other changes, the failed legislation would have allowed for Superior Court review when regulators deny California Public Records Act requests. It also would have added an internal auditor to review commission decisions and prohibited former utility executives from serving on the commission for at least two years.

One of the two bills that did pass — and now await the governor’s signature — expands disclosure rules for private discussions between regulators and utilities or other stakeholders. It also raises the potential penalty for violations to $50,000.

The other bill sent to the governor calls on commissioners to improve transparency by making some records more available to the public.

Lawmakers who negotiated the compromise legislation this spring — winning Brown’s support — were hard-pressed on Thursday to articulate what went wrong.

“I don’t know how to explain to the people of California that their leaders let them down,” said Assemblyman Mike Gatto, D-Los Angeles, who proposed a constitutional amendment to strip the commission of most of its authority before agreeing with Brown and others to an overhaul with less fundamental changes.

“You always have to decide whether a bill failed through incompetence or something more malevolent,” he said. “I have not decided which of those ended up killing the bill.”

Sen. Jerry Hill, D-San Mateo, said one sticking point was an existing law that allows commission employees to be charged with a misdemeanor if they release confidential information.

Hill said commission President Michael Picker wanted that provision removed but some of the regulated entities lobbied for it to remain. Still, he could not blame that impasse for the demise of the larger reforms.

“You never know what the real reason is,” Hill said of the legislative failure. “You don’t know why it happens.”

Procedurally, the Assembly bill sponsored by Gatto did not receive a required hearing before the Senate Committee on Energy, Utilities and Communications — the key panel chaired by Sen. Ben Hueso, D-San Diego.

In a statement Thursday, Hueso blamed the bill’s fate on the legislative process, which required support from two-thirds of the Senate to move forward because amendments were made at the last minute.

“The (Gatto) bill did not get the rule waiver it needed to be heard in the Senate Utilities (committee) after the deadline,” he said.

The utilities commission has been under increased scrutiny since 2014, when emails released as part of a lawsuit showed that top regulators and utility executives routinely traveled, dined and socialized together and traded favors.

Last year, The San Diego Union-Tribune reported that one focus of investigators was an undisclosed meeting at a luxury hotel in Warsaw, Poland.

At that meeting, former commission President Michael Peevey discussed with Southern California Edison a framework for a deal charging ratepayers billions of dollars for the failure of the San Onofre nuclear plant north of Oceanside.

Utility officials disclosed the 2013 meeting nearly two years late and the company was fined almost $17 million. The settlement deal, which now may be reopened, cost ratepayers $3.3 billion of the $4.7 billion in closure costs.

According to search-warrant affidavits filed by the Attorney’s General’s Office last year, the criminal investigation is focused on improper discussions between regulators and utility executives, like the meeting between Peevey and Edison three years ago.

After two-plus years of investigation and at least six search warrants being executed at commission offices and elsewhere, no criminal charges have been filed.

San Diego attorney Michael Aguirre, who sued to overturn the decision charging ratepayers for the San Onofre failure, requested emails and other documents from the commission under the California Public Records Act as part of his review.

Aguirre filed another lawsuit last year after the commission identified 65 San Onofre-related emails between regulators and the Governor’s Office and declined to release them publicly.

A San Francisco Superior Court judge allowed the lawsuit to proceed but commission lawyers took their case to appellate court, saying the lower court had no legal jurisdiction to hear the case.

In a 16-page ruling issued hours before the reform legislation fizzled, the 1st District Court of Appeal reversed the Superior Court and prohibited it from conducting further proceedings in the case.

“If there is a dispute as to whether the CPUC has complied with the PRA, filing an action against the CPUC in an appellate court … will not limit the public’s right to access to the documents,” the judges wrote.

Aguirre disagreed with the ruling, noting that aggrieved parties have a right to be heard at the Superior Court level, but not by an appellate court.

“The appellate court waited until it was too late for the legislature to respond, then announced they were going to shield Gov. Brown’s files from disclosure,” Aguirre said. “They really are not interested in any kind of reform.”

Two of the three judges that signed the ruling were appointed by Brown.

Besides allowing plaintiffs to sue the commission in Superior Court over public-records disputes, the Gatto legislation would have moved oversight of car services like Uber and Lyft away from the commission.

It also would have created a deputy director position in charge of safety and a chief ethics position, and directed the commission to work with federal regulators to move 3 million-plus pounds of nuclear waste from San Onofre away from the San Diego County coast.

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