SESCO Under Fire—Again

By Published On: December 10, 2004

In an unprecedented move, the California Public Utilities Commission subpoenaed SESCO and signaled that it plans to audit the independent energy-efficiency provider on how it runs efficiency programs. This is not the first time SESCO has been in hot water. In 2000, the California State Licensing Board sanctioned the New Jersey-based company for conducting close to $39 million of weatherization work for Pacific Gas & Electric without proper authorization. Despite these violations, the CPUC later awarded the company about $2.4 million to run 2002-03 efficiency programs and roughly $2.5 million for the current 2004-05 cycle. After the company resisted the November 1 subpoenas and called them overly broad and irrelevant, the commission issued a November 30 ruling demanding compliance. Among other things, the Energy Division wants to look at the company’s financial transactions, flow of funds, and accounting for payments received by SESCO and its affiliates between 2001 and October 2004, as well as lease and rental agreements. The Energy Division will meet with SESCO in December to taper the subpoena’s laundry list to ensure that data sought focus on programs under review. SESCO has nothing to hide and has been running programs in an above board manner, said Richard Esteves, SESCO vice president. During implementation of 2002-03 programs, which are now being questioned, no questions were raised about program information provided, he added. “It’s common courtesy if someone is under scrutiny to specify what has been done wrong, and we’ve not received that courtesy,” said Esteves, referring to the Energy Division. Nevertheless, he said the company will supply required information. The CPUC’s move to subpoena SESCO calls into question the commission’s ability to control and police third-party programs, according to Don Wood, retired San Diego Gas & Electric senior program adviser. At the same time, Wood doesn’t think other independent providers’ reputations will be tarnished or their ability to run programs will be impeded if SESCO is found to have skirted rules or committed fraud, given what he called the company’s “checkered past.” Barbara George, Women’s Energy Matters executive director, claims the Energy Division singled out this provider because it has been a big thorn in utilities’ sides. SESCO has long maintained that independent companies can run efficiency programs more effectively than utilities, she noted. “None of the other third-party providers undergo the kind of scrutiny that SESCO faces.”

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