Subjectively Conflicted

By Published On: March 12, 2005

During high school, a good friend refused to secretly smoke cigarettes with the rest us?in spite of peer pressure. It wasn?t because my friend Cindy, who usually showed little restraint, realized there would be long-term health consequences from puffing away. It was because she faced a conflict of interest. Her grandmother promised her $1,000 at graduation if she never let a cigarette touch her lips. Being obnoxious teenagers, we routinely tested her resolve, including pointing out that she could take a drag or two and her grandmother would never know. But Cindy?emphasis on ?Sin,? as we used to say?wouldn?t even consider it. In fact, she would scream if legal smoke got even close to her mouth. Her unshaken resolve left a lasting impression on me. This week I was duly impressed by Dian Grueneich, the newest California Public Utilities Commission member, who is working hard to be squeaky clean on the conflict-of-interest front. Admirable as it is, there is a real downside to her position, unlike my high school friend, who not only got $1,000, but avoided lung cancer. Grueneich noted that she?ll abstain from voting on any matter that would be, or could be, or could appear to be, a conflict of interest. ?I am trying to be very careful,? she said. Potential conflicts that arise as a result of her energy work prior to her appointment will, she said, be prudently assessed on a case-by-case basis. Her energy law firm represented environmental, consumer, and direct-access groups. Grueneich?s conservative conflict-of-interest stance is welcomed by many. ?We hope she sets the standard that others will follow,? said Matt Freedman, TURN attorney. At the same time, her stance is worrisome when it crosses from the realm of real conflicts into the murky area of possible ones. Her abstinence from voting on energy matters when there may be a possible conflict?which could affect many cases?does not allow for a full debate on those issues before the commission. That is a bigger deal now because there are only three voting commissioners?president Mike Peevey, Susan Kennedy, and Geoffrey Brown. Her abstentions give the upper hand to Peevey and Kennedy, who are considered pro-industry and often aligned. Freeman noted that another problem is the disparity among commissioners? conflict-of-interest standards. Grueneich ?has been muted,? said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights. Heller also questioned why Governor Arnold Schwarzenegger would pick an ?environmental voice? who faces real and perceived conflicts on very important matters. ?No one is holding down the public-interest side,? Heller warned. In other words, her appointment makes the governor look good but doesn?t amount to a whole lot if her hands are tied. The governor?s other CPUC appointee, Steve Poizner, appears to be hamstrung by far more notable potential conflicts involving his hefty investments. His appointment makes me wonder whether or how thoroughly the administration assessed conflicts when considering possible candidates. The wealthy Poizner is said to have substantial investments in telecommunications?matters regulated by the commission to which he was appointed. Staff at the governor?s office would not address specifics but did say they expected Poizner to become a sitting CPUC member. That makes me wonder how often he would, or should, recuse himself on telecommunications votes in times when a major battle is raging over consumer protection. The commission?s rules on conflicts of interest are complicated, and where there is no clear financial link involved, an assessment of real or potential conflict becomes a subjective determination. Commissioners, past and present, have taken a wide range of positions on the matter. ?There is a lot of room for interpretation,? said former commissioner Carl Wood, who recused himself on a number of items because of his union work or personal relationships. ?How you see your action may be very different from how you look from the outside,? he added. At one end is Grueneich, who, like Wood, treads very carefully. At the other end is commissioner Henry Duque, who was sued and recently fined by the Fair Political Practices Commission for voting numerous times on matters affecting a company in which he held stock. His defense was ignorance of the law, which is no excuse. Somewhere in between is Peevey. Last summer, consumer representatives challenged him for approving a power agreement between San Diego Gas & Electric and Calpine that he helped broker. In a petition for rehearing on the CPUC approval of the Otay Mesa deal, which has yet to be set for a hearing, TURN and the Utility Consumers? Action Network assert that Peevey?s vote on the power contract was improper because the CPUC is supposed to be an impartial arbiter of disputes. They state in their petition, filed last July, that the ?principles at stake carry huge consequences for the future of electricity policy in California.? Peevey consultant Pete Arth was unapologetic for his boss?s vote. ?While he is respectful of the commission?s rule of practice and procedure, it doesn?t require him to be as passive as a potted plant as far as helping projects that are meritorious,? especially ones that help the utilities ?meet the state?s critical needs.? Because of the range of subjective interpretations, at first blush tightening and/or clarifying the conflict-of-interest rules to apply a similar standard would appear to be a good thing. But the bigger question is just who is in charge of ensuring that the existing rules are routinely followed. ?There is no real close surveillance on the commissioners to make sure they follow the rules closely,? Wood warned. ?The commission moves so much money around,? and avoiding conflicts of interest ?is no easy thing to live with,? he added. While I want policy makers to be squeaky clean, I also want them to make policy. To get around this subjective and ad hoc decision making about possible conflicts, creating an independent panel to decide or at least evaluate commissioners? conflict calls could level the playing field. Thus, like my high school friend who did not let smoke get near her lips or lungs, the commission would steer clear of trouble down the road. <b>Grueneich on the Record</b> During her first formal interview as a California Public Utilities Commission member, Dian Grueneich said March 7 that one of her top goals was to bring credibility to the commission. She did not point any fingers, saying only that she was ?viewed as someone who looks at the facts and listens carefully to people.? On the environmental side, she listed beefing up existing energy-efficiency programs?getting ?more sign-ups and savings??as a top priority. She said she would also work to ensure the CPUC meets its December 2006 deadline for approving utility efficiency programs. She supports the state?s lead on tackling climate change. On the supply side, Grueneich wants to see more transmission line projects approved and built as soon as possible. She supports liquefied natural gas development as a means of increasing gas supplies but has not taken a position on any specific project. The CPUC should have a role in the siting of in-state LNG facilities, she said, to protect the health and safety of Californians. ?Clean coal? development has caught her interest. Grueneich said she?s ?very supportive? of research and development of emerging technology that could reduce pollution from the fossil fuel. In addition to those goals and challenges, other immediate issues include working her way through the huge stacks of documents in her office and getting pictures on the bare walls. Grueneich was appointed in mid-December, and her first meeting as a sitting commissioner was January 27.

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