Governor demotes Lynch in CPUC shake-up

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Gas Daily

California Gov. Gray Davis rang in the new year by shaking things up at the California Public Utilities Commission, appointing Commissioner Michael Peevey to replace Loretta Lynch as president of the five-member panel. Davis also tapped his cabinet secretary, Susan Kennedy, to fill a vacant seat.

Peevey was president of NewEnergy from 1995 until he retired in 2000. He also recently served on the board of directors of Excelergy, an energy software company. He was appointed to the CPUC in March 2002.

The changes, announced by Davis on New Year’s Eve, put Peevey — a former executive at Edison International and its utility subsidiary, Southern California Edison — at the helm of the state’s powerful energy regulatory body. His background is in sharp contrast to that of Lynch, who had previously worked in Davis’ administration and was charged with ensuring compliance with environmental, land-use and other regulations.

Davis offered no reasons for his decision to replace Lynch with Peevey, and his office did not return calls for comment Thursday. Lynch will continue to serve on the CPUC as a commissioner.

Leadership of the commission by someone with close ties to the industry did not sit will with some consumer groups, which would have preferred to see Lynch remain in that post. Lynch has been an outspoken critic of gas and power companies inside and outside California and launched several investigations into pricing and alleged market manipulation during her two-and-a-half-year tenure as CPUC president.

The Foundation for Taxpayer and Consumer Rights already has called for the California state Senate to reject Peevey’s appointment.

”Making Mike Peevey the head of the PUC is like asking Kenneth Lay to run the SEC,” said FTCR’s senior consumer advocate, Doug Heller. ”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.”

According to the FTCR, Peevey has ”consistently sided with energy firms and big business interests and against the needs of consumers.”

The FTCR is also opposed to Kennedy’s nomination, saying she is too close to Davis and her presence would not leave enough distance between the governor’s office and the CPUC. Kennedy was nominated to fill a vacancy left by Commissioner Henry Duque.

“Gov. Davis is cloning himself at the PUC to make sure he can get whatever he wants out of that agency,” Heller said. ”The governor tries to keep his distance whenever the PUC raises rates, yet he continues to appoint people from his inner circle. There is no distance between the governor and the PUC.”

Kennedy has worked for the Davis administration since January 1999 and before that served as communications director for Sen. Dianne Feinstein, D-Calif. Prior to that, she was executive director for the California Democratic Party from 1991 to 1994.

Neither Peevey nor Kennedy could be reached for comment on Thursday.

Lynch was appointed by Davis to be commission president in March 2000. Before that, she was director of the state’s Office of Planning and Research, which develops policy and projects for the governor as well as fulfills environmental regulations on land use.

Lynch issued a statement following Davis’ decision, saying ”it has been a privilege to lead the [CPUC] as it redirected itself to the public interest. It has been a challenge to guide the agency through such turbulent times.”

Lynch said that as a commissioner, ”I will continue to fight for consumers and for California’s families and businesses. I am proud of my record as president of the commission in defending consumers and the public interest. It is the governor’s prerogative to choose the president of the PUC.”



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