State auditor threatens to subpoena PUC

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Sacramento Bee

The state auditor last week threatened to issue subpoenas forcing the California Public Utilities Commission to cooperate with an investigation into the state’s embattled power market.

The auditor has been attempting since November to obtain information from the commission, an effort that culminated in a Jan. 11 letter to the PUC demanding cooperation and threatening subpoenas.

On Wednesday, PUC President Loretta Lynch said she believes the “miscommunication” has been resolved, and that an arrangement has been made to provide the auditor with the necessary documents.

Lynch said the commission has been preoccupied with the energy emergency, and hasn’t had time to respond to the auditor’s requests.

“We only have so many people who can respond to the Legislature and governor, and make sure that the lights stay on before they can respond to a request for historical documents,” she said.

But critics said there’s no excuse for delay, particularly when California is in the middle of an electricity shortage that has sent the state spiraling into crisis.

“We know the public is being taken advantage of. We know the energy industry is manipulating supplies to force higher prices,” said Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights. “We’ve got to find out who is responsible for this disaster.”

In addition to the auditor’s investigation, state Attorney General Bill Lockyer is investigating alleged price fixing, and the Assembly’s government oversight panel is looking at the entire energy situation.

State Auditor Elaine Howle originally contacted the PUC by letter in November, informing the commission that her staff needed access to records and property for the investigation. Howle heads the Bureau of State Audits, which conducts independent, non-partisan assessments of the state government’s financial and operational activities.

“The California Government Code … gives the bureau complete access to all records and property of state agencies,” Howle wrote at the time.

The energy investigation was triggered in August, when state Sen. Steve Peace, D-El Cajon, requested an audit examining the relationship between the Independent System Operator and the Power Exchange, and whether their activities have contributed to the rising cost of power in California. The ISO runs much of the state’s electric grid, and the PX handles electricity trading.

In the course of the audit, Howle determined that she couldn’t delve into the ISO and the PX without considering the PUC and its regulatory authority.

“For us to do the job that the Legislature and Sen. Peace asked us to do, we felt we needed to include the PUC in some of our work,” Howle said.

But the PUC balked at providing information, and according to the Jan. 11 letter sent to the PUC by the auditor, has questioned the auditor’s authority to investigate the commission.

In response to the subpoena threat, PUC General Counsel Peter Arth Jr. responded that the commission wants to develop a “written work plan that balances your needs for assistance with the needs of the commission and California’s ratepayers and taxpayers.”

In light of the electricity crisis, however, Arth told the auditor that the PUC will continue to resist attempts to “direct the priorities and time commitments of our key expert staff members.”

Peace has taken the PUC‘s side, and has asked the auditor to “back off on that (the PUC) component until they get through the next few weeks,” he said. Peace believes the substance of the audit won’t suffer if the auditor waits a little longer for information.

Howle said she respects the fact that the PUC has been under tremendous pressure.

Based on conversations she and her staff have had with the PUC in the past few days, Howle said she expects full cooperation from the PUC in the future.

“We’ve worked out agreements as far as making sure that we’re respectful of situation they’re in, and they’re being respectful of the work we’re doing,” she said.

Consumer Watchdog
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