Davis Appointee Michael Peevey Sides With Energy Industry, Big Business to Allow Private Side Deals for Power

Santa Monica, CA — The California Public Utilities Commission today voted to allow big businesses to maintain side deals with private power companies. The decision will force small consumers to pay billions of dollars in higher power costs to compensate for the revenue lost by allowing approximately 20% of the state’s largest businesses to buy their power outside the state power system.

“This is another failure in the Davis administration’s handling of the energy crisis,” said consumer advocate Doug Heller of the Foundation for Taxpayer and Consumer Rights (FTCR). “This decision allows the state’s biggest businesses to escape the high costs of last year’s energy crisis and forces residential ratepayers and small businesses to pay the bill. Small consumers will have to pay billions of dollars for the extra power that the state bought for the businesses that have been allowed to fly the coop.”

Last year the legislature enacted AB 1x, which allowed the state to buy power for all Californians during the energy crisis. The law required the PUC to suspend the direct access program — the adjunct to deregulation that allows customers to sign contracts with private energy suppliers. According to FTCR, the PUC delayed the suspension of direct access last summer, allowing big businesses to escape the high cost of electricity contracts signed by the governor. The PUC is, however, entitled to retroactively cancel contracts. FTCR and other consumer groups argue that no energy customer should be allowed to escape the burden of the energy crisis costs by signing private side deals with power companies. Consumer advocates contend that the private power deals should have been rejected by the PUC, as proposed by Commissioner Wood.

New PUC Commissioner’s First Vote Costs Consumers Billions

In his first major action as a PUC Commissioner, former energy industry executive Michael Peevey, demonstrated the deep conflict of interest that has consumer groups outraged about his appointment. After leaving Edison, where he had been President, Mr. Peevey created New Energy Ventures, a company that sold power to California businesses under the private direct access contracts at issue in today’s vote. Under this 3-2 decision, for which Mr. Peevey was the swing vote, the private power companies that he worked with will directly benefit because they will be allowed to retain multi-million dollar power contracts that the legislature intended to ban.

“With his first act as commissioner, Mike Peevey made the worst possible first impression. He sided with the industry for which he worked and against California consumers for whom he is now supposed to work. The California Senate must throw out his appointment.”