THE ELECTRICITY DAILY

California Gov. Gray Davis has named energy veteran Michael Peevey as president of the California Public Utilities Commission, demoting Loretta Lynch, a Davis appointee who will remain on the CPUC. Peevey was president of Southern California Edison from 1990 through 1993, and was a contender for the job of CEO of the giant investor-owned energy company when former CEO Howard Allen retired. He lost out to John Bryson. In 1995, Peevey founded New Energy Ventures, a retail energy services company that was eventually sold to AES Corp. Davis appointed Peevey to the CPUC last March.

The appointment drew a raspberry from consumer advocate Doug Heller of the Foundation for Taxpayer & Consumer Rights. Heller said in a written statement, “Making Mike Peevey the head of the PUC is like asking Kenneth Lay to run the SEC. After what the energy industry did to California it is shocking that Davis would give an energy company executive such a prominent position. Not only has Davis failed to place an independent consumer voice on the commission, he is letting the energy industry run the agency”

Davis also named Susan Kennedy to the CPUC, filing a vacancy that came open Jan. 1 when Henry Duque left the commission. Duque was the sole remaining appointee of former Republican Gov. Pete Wilson. Kennedy is currently Davis s cabinet secretary. Heller also blasted that appointment, claiming that Davis “is cloning himself at the PUC to make sure he can get whatever he wants out of that agency.” All five CPUC seats are now held by Democrats named by Davis.

Last month, with California s budget deficit spiraling out of control, Davis named a new chief budget officer that had some state energy veterans scratching their heads in disbelief. Davis tagged former Democratic State Sen. Steve Peace, the chief author of California s disastrous electricity market experiment, to manage the state budget. Noted one observer, “Kind of ironic that he will be overseeing the budget deficit, much of which was caused when the state used its budget reserves to buy electricity for the state.” Peace s other claim to fame came in the 1970s, when he produced the movie Attack of the Killer Tomatoes, which won a Golden Turkey award as one of the worst films of all time.

In another California development, the state on Dec. 31 relinquished a job that it demonstrated it could not handle: buying power. The Department of Water Resources, brought in by Davis during the crisis to negotiate long-term contracts designed to bring down soaring spot market wholesale prices, and then criticized for cutting deals that were considerably above the market price once the volatile market settled down, has returned the task to the state s three major investor-owned utilities. The state arguing that it was hoodwinked in those negotiations by sharp-elbowed energy suppliers is asking the Federal Energy Regulatory Commission to void or reduce the $43 million in long-term energy contracts. Late last year a FERC administrative law judge recommended that similar contracts in Nevada stand.