Governor?s Energy Reorg May Threaten Ratepayers

Critics raised concerns that Governor Arnold Schwarzenegger?s plan to reorganize state energy agencies would threaten the interests of ratepayers and stymie needed infrastructure projects by creating uncertainty?just as the state?s energy policy climate is settling down. Critics outnumbered supporters in a 10-hour hearing May 25 before the Little Hoover Commission. Supporters, however, vowed that the reorganization would result in efficiencies. They also have legislative rules on their side. ?This reorganization improves accountability, focuses the development of energy policy, reduces fragmentation and duplication, and improves communications with the Legislature, the public, the administration, and the federal government,? said Joe Desmond, the new California Energy Commission chair. ?It?s really fiddling while Rome burns,? countered Senator Joe Dunn (D-Garden Grove). Much of the more specific criticism focused on how ratepayers would fare under the reorganization plan. ?We look at it from the ratepayers? point of view,? said Steve Larson, California Public Utilities Commission executive director. Moving transmission and natural gas pipeline siting from the California Public Utilities Commission to the CEC, he said, has the potential to eliminate some of the ratepayer protections now afforded by the CPUC process. Sempra Energy supported the proposal in hopes it would speed approval of transmission lines it says are needed to maintain power reserves in its congested service territory. ?The benefits associated with transmission are significant,? said Thomas Brill, Sempra assistant general counsel for regulatory policy. The Silicon Valley Leadership Group, a coalition of businesses and local agencies, endorsed reorganization, saying the CEC has the capability to smoothly oversee transmission licensing given its power plant certification authority. Energy agency reorganization?s critics?including legislators, state energy officials, and major utilities?questioned whether the plan would live up to its promises. Assemblymember Lloyd Levine (D-Van Nuys) said that the public interest would not be adequately determined under the proposed process, noting, for instance, that public-interest groups would lose their right to intervenor fees. Levine also claimed that reorganizing state energy agencies would undermine the stability needed to successfully finance major energy projects. Some, such as Senator Debra Bowen (D-Redondo Beach) and Bob Finkelstein, The Utility Reform Network executive director, raised concerns that placing a cabinet-level official over the CEC would subject policy to political influence. Greater agency coordination was an agreed-upon goal, but the administration was urged to practice what it preaches. The governor recently put the state on record in support of the ?Frontier? transmission line?a high-voltage line that would run from Wyoming to California??without any public notice, hearings, or briefings, and without the input from other state agencies,? noted V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies. Southern California Edison neither supported nor opposed reorganization. ?The issue is an institutional framework that?s going to encourage investment, and I don?t see this proposal, at least the words on the paper, as doing a lot for that,? said John Jurewitz, Edison regulatory policy director. Pacific Gas & Electric does not support the plan. It sees no need to move jurisdiction over approval of gas pipelines and facilities from the CPUC to the CEC, said Christopher Warner, PG&E chief corporate and regulatory counsel. The state Attorney General?s Office and others criticized the plan because it would make the new department the only agency that could represent the state before the Federal Energy Regulatory Commission. Despite the criticism, some members of the commission showed sympathy for the governor?s plan. ?The appeal for the status quo is difficult for me because I don?t like the position the state of California is in right now on energy,? said Wayne Mansfield, a member of the Little Hoover Commission. ?It?s a question of what kind of change we make.? Schwarzenegger?s plan would create a new state department of energy, which would subsume the CEC, the Electricity Oversight Board, the Department of Water Resources? energy functions, and the services that the now-defunct California Power Authority was to provide. The CEC would govern the new department. It would be chaired by a new cabinet-level secretary of energy appointed by the governor (i>Circuit , May 13, 2005). The administration has until June 12 to submit its reorganization plan to the Legislature. Lawmakers have until the end of the legislative session to consider the plan. However, the plan?which lawmakers cannot amend?will take effect unless the Legislature disapproves it. Little Hoover?a bipartisan, independent state body created in 1962 to promote efficiency in state government?cannot amend the plan either, said its chair, Michael Alpert. It can only recommend that lawmakers adopt or reject it. Alpert noted, however, that the commission can critique the plan and that the Legislature is free to pass companion legislation to address issues raised by the panel.

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Governor?s Energy Reorg May Threaten Ratepayers

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