Consumers losing two friends on PUC;

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San Jose Mercury News (California)

The powerful state panel that regulates what Californians pay for energy and phone calls is about to lose the two members considered most sympathetic to consumer interests, and ratepayer advocates are fretting over whom Gov. Arnold Schwarzenegger will name to replace them.

Carl Wood and Loretta Lynch often were on the losing end of 3-2 votes at the five-member California Public Utilities Commission. But consumer advocates said they balanced a business-friendly majority that they fear will solidify with the Republican governor’s appointments.

”I think the only thing worse for the consumer than losing 3-2 is losing 5-0,” said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights. ”When there’s no dissension, there’s no compromise.”

Business advocates, however, see Wood and Lynch not so much as dissenters but obstructionists and are hopeful Schwarzenegger’s appointees will inject some cooperative spirit into the quarrelsome panel.

”Dynamic tension is good for policy-making; however, when it devolves into conflict and stalling, it doesn’t serve ratepayers or the economy,” said Justin Bradley, energy and economic-vitality director for the Silicon Valley Manufacturing Group.

The end of Wood and Lynch’s terms comes as the commission is set to tackle crucial decisions on California’s energy and telecommunications industries, such as whether to allow electricity consumers to shop around for lower-cost providers and whether to regulate phone calls over the Internet.

”These are hugely significant appointments to California’s consumers and economy,” said Bob Finkelstein, executive director of The Utility Reform Network, a San Francisco consumer group.

Schwarzenegger as a matter of policy does not comment on pending appointments, said spokeswoman Julie Soderlund.

Commissioners, appointed by the governor, serve staggered six-year terms with a salary of $114,000. The current commissioners are all appointees of former Democratic Gov. Gray Davis.

Rumors around the Capitol are that possible candidates include termed-out lawmakers with experience in utility and environmental matters. It is unclear when Schwarzenegger would announce the appointments.

Consumer advocates said that with the commission currently stacked in favor of business interests, Schwarzenegger should appoint replacements who will champion the small ratepayer.

”Will he side with special interests or the public’s interest?” Heller said. ”The special interests have their place on the PUC, but who will speak for the consumer?”

But Bradley said commission infighting has impeded progress in important issues. The commission, he said, has taken too long to implement energy policies outlined two years ago under state legislation, AB 57, calling for utilities to plan for future energy needs.

”There’s nothing wrong with disagreement — that’s not been the problem,” Bradley said. ”It’s been a lack of healthy relationships, a propensity to litigate rather than cooperate and a lot of decisions that just have taken way too long.”

Wood bristles at such criticism, saying he and Lynch have championed due process to ensure that consumers had a voice in decision-making and that environmental concerns were considered.

Costly disasters

Rushing decisions on energy policy, he said, could invite costly disasters such as the overpriced long-term energy contracts the state signed at the height of the energy crisis, Wood said. And industry advocates have tried to delay decisions they didn’t like such as cell-phone-user rights, he said.

”When we raise procedural issues, we’re accused of stalling and gumming up the works,” Wood said. ”Consumers don’t have full-time lobbyists who work the commission like big businesses do.”

Established in 1911 as the state Railroad Commission, the Public Utilities Commission regulates privately owned telecommunications, electric, natural gas, water, railroad, rail-transit and passenger-transportation companies. It has a $96 million budget and a staff of 800 economists, engineers, administrative law judges, accountants, lawyers and transportation specialists.

The commission has become a lightning rod of contention as market competition has transformed the monopoly industries it oversees.

Nowhere has that been more apparent than with electricity, where California’s deregulation attempt imploded in a multibillion-dollar market meltdown four years ago.

Putting the state’s energy market back on track is perhaps the biggest task facing the commission. Schwarzenegger recently vetoed legislation that would have set energy market rules, saying he wanted to leave that to the commission under authority granted in AB 57.

Shielding consumers

The new commission will have to decide whether to keep shielding most residential consumers from recent rate increases, something businesses complain has forced them to pay excessively high bills. It will have to decide how much more power the utilities will need to buy in coming years, an issue consumer advocates say could lead to unnecessarily costly investment in private power sources. And it will have to decide whether to let customers shop for power suppliers again, a marquee feature of deregulation hotly opposed by consumer groups.

The commission also will have to grapple with how to regulate the rapidly evolving telecommunications business, where wireless, Voice over Internet Protocol and broadband-over-power-line technologies have upended the old Bell monopoly.

Consumer advocates would like to see the commission assert some control over the emerging technologies, as it did to a limited degree with this year’s cell-phone-user bill of rights, while business groups favor a hands-off approach.

Commissioner Geoffrey Brown, considered a moderate swing vote, agreed that ”consumer interests are losing powerful allies” in Wood and Lynch, but said their replacements should not be prejudged on their background.

”You can’t gauge how a commissioner is going to act until they’ve had some time in the job,” Brown said. ”Once a commissioner gets confirmed and finds his or her footing, you’re going to find an individual. I doubt you’ll find a commission that’s all in lock-step.”
Contact John Woolfolk at [email protected]

Consumer Watchdog
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