OPINIONATED: A New CPUC Tool to Reduce Ex Parte Exchanges

20 Feb 2018

By Todd Edmister

A recent CA Current article described a Feb.7, 2017, CPUC Commissioner informational webinar on “Impacts of Climate Change and Resulting Resiliency Challenges.” Though noticed as addressing “select questions submitted by the public,” the purpose of the meeting was limited to addressing questions from “investor groups,” as Commissioners Picker and Peterman stated in the opening minutes of the webinar. What ensued was a fascinating shadow-boxing match between the commissioners, speaking live, and their interlocutors from the financial community, speaking through written questions.

The focus of this piece is on the process of the webinar. Though Commissioner Picker characterized the webinar as “clumsy,” and “constrained,” both he and Commissioner Peterman also noted that the format was an experiment. Viewed in that light, the truly remarkable things here are (1) the commissioners’ decision to collectively communicate with the financial community in public rather than in private, and (2) their way of doing so.

Commissioner back-and-forth with financiers is nothing new. But, communications between commissioners and financial representatives historically took place in private, without any ex parte reporting. This ultimately prompted legislation (SB 215) expressly making investors and ratings agencies subject to ex parte reporting requirements. In contrast to past practice, the communications here were conducted in a publicly visible way; in fact, arguably more visible than technically required.

This is an interesting and potentially positive development in how the Commission approaches communications with those made subject to the ex parte rules under SB 215.

Stepping back a moment, let’s acknowledge that closed door communications with California Public Utilities Commission officials have always been Janus-faced. On the one hand, allowing one-on-one meetings creates the simplest, most easily understood and ostensibly open process there is: “C’mon down and see me!” Ex partes at their best simplify information-gathering for CPUC decision makers and allow them to focus on the most critical issues.

On the other hand, ex partes quickly become the domain of the insider. At their worst, ex partes can reduce more formal public processes to a sideshow, while the real action is behind closed doors.

The compelling, but fraught nature of these ex parte meetings is detailed in the Strumwasser report, “Report to the California Public Utilities Commission Regarding Ex Parte Communications and Related Practices” The CPUC commissioned this report, which is coming up on its third anniversary, in the wake of various scandals related to direct communications among commissioners and their staff, and regulated utilities. The report’s upshot was that the Commission should halt essentially all non-public dealings with “interested persons” concerning CPUC decisions—so called “ex parte” communications. Neither the CPUC nor the Legislature adopted this broad recommendation. Instead, the Legislature passed SB 215 in 2016. And, some individual commissioners adopted their own rules regarding whether and to what extent they would engage in ex parte communications. So where does this leave interest groups that want to connect with Commissioners (and vice versa)?

The webinar was the Commission’s answer to that question. The webinar here was imperfect.  But consider: there were significantly less public alternatives available to the commissioners. For instance, commissioners might simply have had ex parte meetings and left it to the ratings agencies and/or investors to report on them. Or, worse still, have had meetings with ratings agencies and/or investors, then deemed those meetings not subject to reporting requirements because no statements were made relating to any open proceeding.

It’s hard to see how either of these are a better choice from a sunshine perspective. On the opposite extreme, commissioners could have maintained radio silence; again, it’s hard to view declining to respond altogether to inquiries as promoting public access. The webinar approach beats these choices hands-down.

From my perspective as a former agency administrative law judge, the CPUC has found a useful tool that can be expanded upon as a supplement to other means of public outreach. The traditional mechanism for such outreach—public participation hearings—has its virtues, but the logistics are challenging and it is hard to hold many of them in any given proceeding. Or to hold them at all outside of a proceeding. Why not have commissioner webinars in live proceedings? Why not take questions from a broader set of folks than just the financiers? More webinars, coupled with more commissioner participation in workshops and hearings (the CPUC tracks hearing days for each commissioner; analysis forthcoming) could be just the ticket for obviating the need for many ex partes.

Whether this webinar is anything other than responding to those holding the purse strings is the question. Is this a one-off? Something only for investors and ratings agencies? Something only for instances where the CPUC can ostensibly divorce the webinar from open or planned proceedings?

My hope is that the webinar approach will be more broadly used and useful, as Commissioner Peterman suggested could be the case. Time will tell!

—Todd Edmister is of Counsel with Morrison & Foerster and was a CPUC  Administrative Law Judge.

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