Regulators’ Financial Interests

Key California officials charged with regulating the energy industry and carrying out the state’s new global warming law, AB 32, have financial interests in coal companies, electric utilities, oil and gas companies, auto companies, and solar energy. The officials serve as commissioners at the California Air Resources Board, California Public Utilities Commission, and California Energy Commission, where they all make decisions that can buoy or sink industry players. While their financial interests in the energy industry do not constitute any legal conflict of interest, they are raising some eyebrows about how they will affect public perception. The Air Board has long regulated the oil and power industries’ air pollution, and is newly charged with a more direct form of energy regulation under AB 32, the state’s law aimed at curbing global warming. With that mandate, the Air Board becomes the third member of what is now a troika of agencies increasingly charged with regulating the energy industry. The state’s regulatory reach over the industry now extends to companies that provide energy efficiency equipment, energy management services for utility customers, alternative fuels, renewable power, greenhouse gas trading and exchanges, biofuels and related farm products--in addition to regulators’ long-standing role of licensing and governing power plant operators and utilities. While yet-to-be-confirmed Air Board chair Mary Nichols recently made headlines due to conflict of interest concerns over her energy industry investments, she is only one of nine regulators reporting energy financial interests out of 20 in state agencies that oversee energy policy. The 20 at issue lead the CEC and CPUC, both governed by commissions with five members each, and the Air Board, which has 11 seats. One of those seats is vacant with the recent death of Henry Gong. The information below on regulators’ interests is from official state records for 2006. The commissioners themselves are responsible for the veracity of the statements involved. Circuit picked out only those with energy industry interests. The values of income or investments are not exact as the state only requires reporting within a range of dollar amounts. Commissioners with no reported interests in energy and automotive businesses are omitted, as are any additional interests of the members covered. In regulatory decisions, commissioners may voluntarily recuse themselves from any votes that they believe may present a conflict of interest. California Energy Commission: Commissioner Jim Boyd listed his spouse’s income of less than $100,000 from the Western States Petroleum Association, a trade group for the oil and gas industry in California. Commissioner John Geesman posted an inheritance by his daughter of Chevron stock valued somewhere between $100,000 and $1 million. The stock was acquired July 8, 2006, and disposed of on December 13, 2006. Commissioner Jackie Pfannenstiel, who chairs the agency, listed income of between $10,000 and $100,000 from a Pacific Gas & Electric defined-benefit pension plan. Commissioner Art Rosenfeld detailed holdings in energy and automotive businesses too extensive to fully cover herein. Highlights, however, included stock trades of: -Royal Dutch Shell, sold for $1,652.04, for a gain of $357.54; -Peabody Energy, sold for $2,587.78 for a profit of $407.66; -Applied Materials, which is involved in solar energy, sold for $3,417.39, a loss of $1,109.11; -General Electric, which supplies turbines and other equipment to fossil and nuclear plants, sold for $4,073.55 at a loss of $161.42; and -Caterpillar--a maker of heavy-duty engines, trucks, and equipment--sold for $35,599.00 at a gain of $95.96. Holdings at the end of the year included: -Applied Materials (in addition to the trade listed above), valued at $7,743.53; -Florida Power & Light Group, which has wind and fossil fuel plants in the state, valued at $28,768.20; -NRG, which owns several power plants in the state, valued at $952.80; and -BP, which operates refineries, gas stations, and is planning a fossil fuel-to-hydrogen plant with Edison Mission Energy in Southern California, valued at $4,406.28. Rosenfeld also held interests in several vehicle companies. The CEC oversees grant money for vehicle research and development, as well as having a hand in determining what alternative fuels, if any, should be required in vehicles. His stocks included: -DaimlerChrysler, valued at $4,609.80; -Mitsubishi, valued at $4,776.60; -Nissan, valued at $3,087.45; -Royal Dutch Shell, valued at $3,688.30; and -Toyota, valued at $5,826.50. Rosenfeld further reported trades of companies with interests in ethanol and other biofuels, including Archer Daniels Midland, ConAgra, and Monsanto. California Public Utilities Commission: Commissioner John Bohn listed ownership of stock in: -General Electric, between $100,000 and $1 million; -Emerson Electric, a company providing services to the oil and gas industry, between $10,000 and $100,000; and -Schlumberger, a company providing services to oil and gas producers, between $10,000 and $100,000. Bohn also listed co-ownership of a Connecticut-based company known at GlobalNet Energy Services, which provides turnkey energy projects for major industrial companies, between $100,000 and $1 million. Commissioner Dian Grueneich listed ownership of stock in Applied Materials, involved in solar, worth between $2,000 and $10,000. She also listed income between $10,000 and $100,000 from her closed-down law firm Grueneich Resources Advocates, part of which was for work she performed in 2004 for the anti-nuclear group Mothers for Peace. California Air Resources Board: Board chair Mary Nichols listed extensive stock holdings in the following energy-related concerns: -BP, between $10,000 and $100,000; -Chevron, between $100,000 and $1 million; -Edison International, between $10,000 and $100,000; -Florida Power & Light Group, between $10,000 and $100,000; -Knightsbridge Tankers, an oil tanker transport company, between $10,000 and $100,000; -Northern Border Partners, a natural gas pipeline company, between $10,000 to $100,000; -Peabody Energy, a coal company, between $10,000 and $100,000; -Patterson-UTI Energy, which provides oil and gas drilling services, between $10,000 and $100,000; -Royal Dutch Shell, between $10,000 and $100,000; -Southwest Gas, between $10,000 and $100,000; -Suncor Energy, an oil company, between $10,000 and $100,000; and -Statoil, between $10,000 and $100,000. Board member Lydia Kennard listed a community property interest in her husband’s firm KDG Development & Construction Services, which received income of $10,000 or more from the following: -Nevada Power; -Los Angeles Department of Water & Power; -Intermountain Power Agency, a coal plant operator; and -Glendale Water & Power. Board member Barbara Riordan listed ownership of Applied Materials stock valued at greater than $100,000.

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