Update: Legislative sources responded angrily to this post. They contest the notion that it is a forgone conclusion that a Western regional entity will take over the California Independent System Operator's overseeing of California's bulk electric system, transmission lines, and electricity market. They say that SB 350 provides significant legislative checks before final approval.
Why is everyone fixated on a $34 bathroom scale and Governor Jerry Brown’s move to the newly-renovated governor’s mansion when there are far more dollars at stake in the Governor's handling of the Public Utilities Commission?
At the end of this legislative session, Californians were looking forward to passage of a package of reforms aimed at the scandal-ridden PUC. No more Warsaw hotel room deals between commissioners and utility pals to sock ratepayers with billions to cover the San Onofre nuclear generating station boondoggle. No more penalty reductions for PG&E’s shoddy maintenance that killed eight people in the San Bruno pipeline disaster. No more PG&E money set aside for pipeline safety being used for executive compensation.
Instead we got the ugliest veto of the year, with Governor Jerry Brown calling the legislation “unworkable.” Utilities and PUC commissioners, sources in the know say, refused to back reform unless Governor Brown would first sacrifice open government laws like Bagley-Keene. From their point of view, banning a quorum of the PUC from talking about a matter without the discussion being public is very inconvenient. So are public notifications, and public testimony at public meetings.
The problem is the legislative package would have worked only too well to tighten rules on backchannel communications between utilities and regulators, rules on conflict of interest, and would have limited the PUC Chair’s powers. It would have increased open meeting requirements and created an inspector general with independent power to investigate.
The real elephant in the room is the impropriety of Jerry Brown’s closeness to the utility industry. Brown’s call for Bagley-Keene “reform” in his veto message is far more outrageous than Brown's purchase of a $16,609 fridge that the maker calls "a monument to food preservation." The scandal-plagued PUC got in trouble in the first place for covert communications. Former Southern California Edison president, and now ex-PUC Chair Michael Peevey stepped down under a cloud of federal and state investigations for crossing the line with industry, though Brown supported and praised this friend to the last.
The impropriety starts with Brown’s acceptance of utility friends into the inner sanctum of his administration. In 2011, Brown appointed his two most powerful staffers from the ranks of PG&E.
Nancy McFadden, Brown’s chief of staff who serves as his personal Cerberus, and Dana Williamson, the Governor’s cabinet secretary who reigns over external affairs here and in Washington, both held high PG&E positions. McFadden was senior vice president and senior advisor to the chairman and CEO of PG&E. Dana Williamson was director of public affairs for PG&E.
In light of these relationships, Brown’s veto makes sense. And so does the impropriety of other major utility wins this legislative session.
Former PUC Chair Loretta Lynch opined in an Op Ed that provisions slipped in at the last minute to the Clean Energy and Pollution Reduction Act of 2015 “disembowel the power of this governor and all future governors to control California’s energy policy.”
Indeed, the legislation now directs California to fold its utilities into a regional organization that would slip out of California’s grasp and answer to the Federal Energy Commission. This evokes the days of Enron when California’s deregulation meant that secretive energy pirates manipulated and price-gouged while the feds cheered them on.
But in a sly twist, the law guarantees electric utilities billions in new revenue from Californians. To help double the use of renewable energy, the law charges up electric utilities by giving them a new monopoly. It requires them to accomplish "widespread transportation electrification" through projects "deploying electric vehicle charging infrastructure."
With billions in ratepayer dollars on the line, utility business shouldn’t be conducted in the dark. All that is said between energy pirates, PUC commissioners, and investor-owned utilities should be public.
Utilities like PG&E are submitting hundreds of millions of dollars in rate hike proposals for such projects. But with the thinnest of evidence that their gold-plated proposals will stimulate demand for electric vehicles, or result in anything but inflated costs for idle electric vehicle charging stations.
In fact, the wording of the Pollution Reduction Act appears to give utilities such carte blanche that their takeover of the electric charging market is practically a foregone conclusion, and so is the PUC's rubber stamp. That could be the death knell for a growing competitive charging station and service market already making inroads in California. And with no government plan to provide major Norway-style subsidies that make electric vehicles cheaper to buy than gasoline-powered cars, the switch to electric vehicles could easily stall.
Brown is loyal to his friends. But it raises serious questions about his loyalty to Californians by making the PUC deliver on its mission of ensuring “safe, reliable utility service and infrastructure at reasonable rates."
Last week, Governor Brown promoted electric vehicles at the “Drive the Dream 2015” event on L.A's Avenue of the Stars. But his friends in high places have him driving in the wrong direction by setting the stage to release them entirely from California’s regulatory grasp, while guaranteeing them billions in new business at the expense of ratepayers. That is quite a coup. Brown should think twice. When the public hears that his solution to PUC reform is creating more secrets, he may have just turned his own legacy into a third rail.
