Utilities panel starts new year with new president

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The Orange County Register

SACRAMENTO: Gov. Gray Davis on Tuesday replaced the head of the California Public Utilities Commission with a former utility executive who served as one of Davis’s top energy advisers during the state’s power crisis.

Michael Peevey, 64, who was president of Southern California Edison from 1990 to 1993, will replace PUC President Loretta Lynch, a San Francisco attorney who has headed the commission since May 2000. Lynch will remain on the panel as commissioner.

Davis’ action was denounced by consumer groups and welcomed by Edison, the company that provides electricity to most of Orange County. Peevey last year helped engineer a lawsuit settlement between the PUC and Edison that enabled the utility to avert bankruptcy. He was not available to comment.

The five-member PUC decides electricity rates for millions of Californians and regulates utilities, natural gas firms and telecommunications companies doing business in California, among other duties. Davis appointed Peevey to the commission in March.

Key issues facing the commission in 2003 include deregulation of the natural gas market, a reduction in consumers’ electricity rates approved during the energy crisis and the monitoring of utilities as they begin buying power on their own for the first time in two years.

The PUC president earns $118,000 annually and has broad authority over the PUC‘s 900-member staff, including setting the commission’s meeting agenda and appointing department heads.

Peevey’s appointment comes “as absolutely no surprise,” said James Weil, a retired PUC administrative law judge who now runs a consumer advocacy group called the Aglet Consumer Alliance. “The only real uncertainty in spectators’ minds has been whether or not Peevey would accept a new appointment.”

From a consumer’s point of view, “I would say that Lynch had ratepayer interests in mind more than Peevey,” Weil added.

Others agreed, but in stronger language.

“It’s like putting an energy company at the head of the PUC,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights.

“He’s tended to vote more in line with the companies than consumers,” added Mindy Spatt, spokeswoman for The Utility Reform Network.

Davis made the change, effective New Year’s Day, because “he just wanted a new perspective on the issues facing the commission. (Davis) appreciated Loretta’s hard work during the energy crisis,” said Davis spokesman Steve Maviglio.

Privately, Davis and Lynch have feuded for months, with Davis unhappy over actions the PUC took during 2001, when the commission raised electricity rates to cover costs of the energy crisis, and Lynch unhappy at Davis’ attempts to control the commission’s actions.

“I stand on my record of defending the public. It’s the governor’s prerogative to appoint the PUC president,” Lynch said.

As a Davis adviser, Peevey, 64, helped negotiate long-term contracts at the height of the power crisis to lock in electricity supplies for the state at fixed costs. The contracts, which totaled $43 billion over two decades, look expensive now that market prices for electricity have fallen. Some of the accords have been renegotiated at terms more favorable to the state.

The Democratic governor on Tuesday also appointed one of his aides, Susan Kennedy, to the PUC to replace retiring commissioner Henry Duque of San Diego. As Davis’ cabinet secretary, Kennedy, 42, oversaw the state bureaucracy and the governor’s Capitol staff. Kennedy’s new job pays $114,000 a year.

Kennedy previously served as an aide to U.S. Sen. Dianne Feinstein and as executive director of the California Democratic Party.

Edison President Robert Foster said he was “looking forward to working with (Peevey and Kennedy) to help rebuild California’s infrastructure.”

Peevey formerly served as CEO of TruePricing Inc., which helped big companies and governments control their energy costs. From 1995 to 2000, he was President of NewEnergy Inc., then the nation’s largest non-utility electricity provider.

Lynch, 40, a Yale-trained lawyer, worked for the Legal Aid Foundation in Los Angeles, then served eight years as a staff attorney for a San Francisco firm. A Democratic activist, she worked on campaigns for former President Bill Clinton and Feinstein, then served briefly as Davis’ policy chief before taking the PUC job.

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