Desmond Faces Uncertain Future as CEC Chair

By Published On: January 13, 2006

Joe Desmond’s fate as chair of the California Energy Commission twists in the wind. Governor Arnold Schwarzenegger is weighing whether to reappoint him in the face of stiff opposition by Democrats who believe he favors the power industry over state consumers. Desmond – whom Schwarzenegger appointed to fill the unexpired term of former commission chair Bill Keese in May of 2005 – can serve without reappointment through the end of the month, 30 days after Keese’s term ended January 1. He could stay on through February if the governor prevails upon the Senate Rules Committee for a 30-day extension to name an appointee to the post. If Schwarzenegger does choose to reappoint him, Desmond could serve until May and then would have to step down unless both the Senate Rules Committee and the full state Senate confirm him. “Most likely it will be ‘chairman Desmond,'” said Claudia Chandler, the commission’s chief spokesperson. She is confident the governor will reappoint the 41-year-old Pleasanton resident and former energy business executive to chair the commission for a new five-year term. More guarded was the governor’s spokesperson Darrel Ng. “The governor believes Joe Desmond has done great things in securing California’s energy future and in providing for affordable energy,” he said. “But no decision has been made regarding his reappointment.” Ng could not say whether it was unusual that the governor would not act to reappoint Desmond before his term expired, but he pointed out that many state boards function with vacant seats. A Senate aide, however, characterized the governor’s lack of action to reappoint Desmond as unusual. Desmond could not be reached for comment after repeated attempts. Schwarzenegger’s balk on reappointing Desmond comes after a meeting with Senate president pro tem Don Perata (D-Oakland). The Capitol Weekly reported that Perata told Schwarzenegger at the meeting that Desmond would never win confirmation by lawmakers as chair of the CEC. Aides to the governor and the Senate leader confirmed that the two met but would not confirm the substance of the meeting as reported. Senate Democrats are concerned about a litany of policy differences with Desmond. Aides said Democratic members of the Senate see Desmond as inattentive to high electric rates. They also oppose his moves to promote increased reliance on what they say is a “flawed electricity market.” Senator Debra Bowen (D-Redondo Beach) – a member of both the Rules Committee and the Energy, Utilities and Communications Committee – opposes Desmond’s appointment. The senator primarily is concerned that as the chief architect of the governor’s failed energy agency reorganization plan, Desmond attempted to establish himself as the state’s energy czar, exempt from conflict-of-interest standards that apply to other members of the CEC, said the Senate aide. She also faults him for promoting further deregulation in the industry and for backing coal power for California. In his short tenure at the commission, Desmond spearheaded the failed attempt to reorganize the state’s energy policy and regulatory bureaucracy. The plan would have given the CEC more control over electricity transmission, established a new secretary of energy position that would have both commanded the staff of the CEC and chaired the commission itself, and consolidated other state energy functions within the CEC. However, the proposal ran aground because of legal flaws and procedural problems, as well as opposition from key Democrats (Circuit, June 24, 2005). Desmond also championed the Frontier Line transmission project, which could deliver abundant coal power from Wyoming to California. In its 2005 Integrated Energy Policy Report, the CEC established an emissions benchmark for out-of-state coal power plants serving California based on emissions from a combined-cycle natural gas plant (Circuit, Oct. 7, 2005). That action satisfied both the Legislature and the administration that coal power for California will not be dirty, according to Gary Ackerman, Western Power Trading Forum executive director, who believes the governor will reappoint Desmond. “We’re very supportive of Joe’s bid to continue to be chairman of the Energy Commission,” said Ackerman. “He will have a tough confirmation process.” Ackerman lauded Desmond for bringing an understanding of how to make markets work in the power industry and said he expects that Desmond ultimately will be reappointed and confirmed. However, a lobbyist for The Utility Reform Network predicted that, although Desmond has been accessible to consumer and environmental groups, it would be tough for him to win confirmation given their growing opposition to his policies. “We flat out disagree on everything,” said Lenny Goldberg, a Sacramento lobbyist for TURN. “He believes in deregulated utility markets.” Goldberg criticized Desmond’s backing for direct access, which is seen by many as favoring large electricity users at the expense of small utility customers. He also called “wrongheaded” Desmond’s interest in establishing a capacity market in California, claiming that the one-year-ahead trading provision envisioned by the CEC chair would not provide enough certainty to ensure that new generation facilities are actually built. “Physically verifiable resources are better,” he said. Before becoming chair of the Energy Commission, Desmond served as deputy secretary of energy at the California Resources Agency. Prior to joining state government, he was president of Infotility, a company he helped found that provides software to the energy industry. The company develops and markets software that allows utilities, electricity service providers, and large energy users to link real-time information on energy usage from meters, energy prices, and emissions.

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