Gov. Brown, Legislators To Shake Up State Utilities Commission

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In a bid to end back-room deals between utility companies and their state regulators, Gov. Jerry Brown and legislative leaders proposed a sweeping overhaul of the California Public Utilities Commission on Monday, tightening ethics rules and handing some of its powers to other agencies.

The commission’s leaders would need to report in public any conversations with utility executives over setting utility rates. Should they fail to do so, the state’s attorney general could drag them into Superior Court and fine them.

The commission would also establish an ethics ombudsman to field ethics questions and complaints from commission employees and the public alike.

The proposed changes mark the latest effort to reform the powerful commission in the wake of the fatal 2010 explosion of a Pacific Gas and Electric Co. pipeline beneath San Bruno. Investigations into the blast, which killed eight people, revealed a pattern of back-channel communications between the commission and the companies it regulates.

“The utilities were controlling the commission — it became very clear that this was the problem,” said California Sen. Jerry Hill, a Democrat who represents San Bruno. “This is a tremendous step, and it moves us closer to putting the ‘public’ back in the Public Utilities Commission.”

The proposals also represent a compromise between the governor and legislators — Hill included — who wanted even tougher reforms. Brown last year vetoed a bill that would have banned private communications between commissioners and utility executives about setting rates.

More changes possible

Several legislators involved in the fight said Monday that they may push for further changes in the future.

“We’ve tightened things to the degree we could, and that in itself should communicate to all involved that we mean business, that what has transpired cannot continue,” said state Sen. Mark Leno, D-San Francisco. “Will there be a loophole? I hope not. But if there’s more funny business, we’ll come back.”

While many of the proposals concern the commission’s day-to-day procedures, some go deeper. For example, the changes would remove the commission’s authority to enforce regulations on buses, limousines and ride services such as Uber and Lyft, handing that power to the California State Transportation Agency instead.

Similarly, the package raises the possibility of removing some or all of the commission’s authority over telecommunications companies. The package calls for making an assessment of the commission’s telecommunications governance by January 2018.

Seeking a tighter focus

Both of those changes would create a commission more tightly focused on regulating electric and natural gas utilities, already the agency’s primary focus.

“The reform initiatives warrant our support, and we remain committed to an outcome that will provide enhanced accountability and transparency, and allow us to concentrate on core regulatory functions that protect Californians,” the commission reported Monday in a news release.

Many of the changes proposed are contained within separate bills now winding their way through the Legislature. Others may require further legislation, while some steps — such as encouraging the commission to hold more meetings outside of its San Francisco home base — can be handled as administrative matters within the agency.

The changes would require anyone lobbying the commission to register in public. The reform package also calls for developing an “e-comment” system that would let members of the public file comments in the official record of commission proceedings.

Many of the changes focus on ending — or at least tightly regulating — a culture of back-channel dealing among the agency’s five voting commissioners, its top staff and utility executives.

Current rules bar such “ex parte” communications in adjudicatory proceedings — such as investigations of potential wrongdoing by a utility — but allow them in rate-setting proceedings. Utility executives are required to report such meetings, but commissioners aren’t. The proposal unveiled Monday would force commissioners and commission staff to post a notice and description of any such meeting on the commission’s website.

Revelations of inappropriate communications in the wake of the San Bruno blast forced two top PG&E executives to resign and helped pressure the commission’s former president, Michael Peevey, to step down in late 2014.

Mark Toney, director of The Utility Reform Network (TURN), said the package would “limit the opportunities for private interests to seek special favors behind closed doors.”

Merely a ‘face-lift’?

But not all consumer advocates were impressed. Jamie Court, president of Consumer Watchdog, said the proposed changes would help but also represented a missed opportunity.

“It’s more of a face-lift than the kind of heart transplant we think the commission needs,” Court said. “These are not changes that are going to help ratepayers avoid the ripoffs they faced under Peevey.”

A PG&E spokesman said the utility, California’s largest, was still reviewing all of the proposed changes.

“PG&E is committed to interacting with all of our regulators, including the CPUC, in a transparent and ethical manner,” spokesman Donald Cutler said.

David R. Baker is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @DavidBakerSF

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