Consumer Group Says PUC Pres. Lynch and Comm. Brown Have Bias As A Result of Work With Administration

***Read letter to Commissioners below***

PUC President Loretta Lynch and Commisisoner Geoffrey Brown were asked to recuse themselves from an upcoming vote on a Rate Agreement between the California Public Utility Commission (CPUC) and the California Department of Water Resources (CDWR). Information indicates that CPUC President Loretta Lynch and CPUC Commissioner Geoffrey Brown worked intimately with the Davis administration and the DWR in developing the very proposal — upon which they must vote this week or next — that would forfeit the Commission’s constitutional powers to scrutinize and regulate electricity rates.

“We are informed that over the last few months … each of you has been working directly and closely with the Administration to develop the rate agreement that you are now required to review and assess,” wrote The Foundation for Taxpayer and Consumer Rights, in a letter sent Wednesday afternoon. “You each have developed a conflict of interest which has wholly compromised your independence on the grave issues raised by the proposal.”

The Rate Agreement being considered by the PUC would hand over substantial authority to the DWR. Consumer groups assert that the PUC should retain oversight of DWR activities and that more scrutiny of state energy operations is essential, in light of the tens of billions of dollars worth of energy contracts signed secretly by Governor Davis and with a series of revelations about internal conflicts of interest within the DWR and Davis administration.

“The integrity of the CPUC itself is at stake in this matter,” the letter concludes, “and the People are entitled to a vote free of conflicts of interest.”

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September 12, 2001

By Facsimile Transmission and U.S. Mail

The Honorable Loretta Lynch

President

California Public Utilities Commission

505 Van Ness Ave

San Francisco, CA 94102

The Honorable Geoffrey Brown

Commissioner

California Public Utilities Commission

505 Van Ness Ave

San Francisco, CA 94102

Re: Request for Recusal on Rate Agreement (PUC Docket # A0011038)

Dear Commissioners Lynch and Brown:

This week or next, the Commission will consider the proposed Rate Agreement between the CPUC and the California Department of Water Resources (CDWR) (A0011038). The Foundation for Taxpayer and Consumer Rights writes to urge you to recuse yourselves from any CPUC vote on the proposed rate agreement because of your role in the negotiations between the Governor’s office and the CDWR in the construction and drafting of the proposed Rate Agreement.

The proposal requires the CPUC to forfeit its constitutional authority and responsibility to scrutinize and regulate electricity rates; in effect, the CPUC will be required to rubber-stamp electricity rate increases ordered by another state agency which is, by contrast to the CPUC, lacking in any regulatory powers and is moreover wholly unaccountable to the public. Obviously, this proposal, unprecedented in the history of the Commission, is one of the most important decisions you will ever be called upon to make as members of the CPUC.

We are informed that over the last few months — as the rate agreement has taken shape informally and then formally as part of the rate setting proceeding — each of you has been working directly and closely with the Administration to develop the rate agreement that you are now required to review and assess with the independent eye of a Constitutionally-empowered Commissioner. As evidenced directly by memoranda from the Administration, and through the informal meetings, negotiations and other non-public communications with the Administration and CDWR on the matter of the Rate Agreement, you each have developed a conflict of interest which has wholly compromised your independence on the grave issues raised by the proposal. Your active involvement in the development of the Rate Agreement prior to your formal responsibility to judge it thus requires that you recuse yourself from this decision.

In promoting deregulation during the preceding decade, the CPUC bears a heavy responsibility for the debacle that now afflicts California and that has cost the People of California at least $100 billion. The proposed Rate Agreement in effect continues the policy of deregulation, violating the CPUC’s core authority under the California Constitution. The integrity of the CPUC itself is at stake in this matter, and the People are entitled to a vote free of conflicts of interest.

Sincerely,

Pamela Pressley

Harvey Rosenfield