New Utility Affiliate Transaction Rules Proposed

Despite utility claims that current California Public Utilities Commission affiliate transaction rules are adequate, a proposed regulatory decision would tighten several areas of intracorporate dealings. The October 10 proposed ruling would prohibit corporate parents, utilities, and other affiliates from sharing regulatory affairs management, lobbying, risk management, legal services, and financial planning. However, continued sharing of legal services "if they are necessary to the provision of other services" between the regulated and unregulated entities would be allowed. The regulatory review of the rules was triggered by the 2005 repeal of the Public Utility Holding Company Act. State regulators can no longer petition the Securities and Exchange Commission if a utility holding company's operations threaten "effective state regulation." The decision by administrative law judge Jean Vieth was skeptical of utilities' claims that "no problems exist." Utilities contend that the act's repeal doesn't necessitate regulatory review. However, Vieth cited audits, particularly from Sempra utilities San Diego Gas & Electric and SoCal Gas, identifying problems with sharing services with affiliate Sempra Energy Risk Management. The auditors recommended, for instance, that SoCal Gas stop transmitting market-related information to Sempra Energy Risk Management. Among other mandates, the proposed decision would "prohibit utility resource procurement from affiliates without prior commission approval." Southern California Edison, for instance, has sister affiliate Edison Mission Energy. Edison Mission plans to build new power plants to serve the utility's grid and is currently in a bid process to do so. - J.A. Savage

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New Utility Affiliate Transaction Rules Proposed

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