OPINIONATED: What Happened to Legislative Reform of the CPUC?

29 Sep 2016

by Todd Edmister

 

This summer, large-scale legislative reform of the California Public Utilities Commission seemed inevitable.

Two bills that would have stripped the CPUC of some of its jurisdiction while creating an internal audit process, AB 2903 and SB 1017, were moving through the Legislature.

On June 3rd, the Assembly passed ACA 11, repealing “provisions of the California Constitution pertaining to the commission effective Jan. 1, 2019,” and also authorizing the Legislature “to reallocate or reassign all or a portion of the functions of the commission to other state agencies, departments, boards, or other entities, consistent with specified purposes,” according to the Legislative Counsel’s Digest.

On June 26, Gov. Jerry Brown announced in a press release “a sweeping package of reforms to bolster governance, accountability, transparency and oversight of the California Public Utilities Commission.”

Now fall has arrived, and with it an opportunity to take stock. What do we have to show from this summer’s activity?

A number of smaller CPUC-reform related bills made it to the governor’s desk, which were signed yesterday. They are:

  • SB 215 – Ex parte communications.
  • SB 62 – CPUC Office of the Safety Advocate.
  • SB 512 – Commission reporting requirements, workplan, and intervenor compensation eligibility.
  • AB 2168 – CPUC Audit Compliance Act of 2016.

These reforms bills principally tweak the CPUC’s ex parte rules, add some reporting requirements and performance benchmarks for the CPUC, and create a safety advocate office that the commission was already putting in place. They are certainly short of what advocates for CPUC reform had in mind just a few months back.

Why is it that, year after year, despite scandal after scandal, we see so little visible change to (or at) the CPUC?

At a Power Association of Northern California luncheon this week, Assemblymember Mike Gatto, who authored SB 215 as well as other CPUC reform legislation that did not make it to the governor’s desk, gave one answer to this question. In his view, any governor who appoints CPUC members will not want to undo those commissioners’ handiwork. This challenge to implementing CPUC reform legislation is structural.  It will crop up regardless of who the governor is, and regardless of the governor’s party affiliation.

While this theory has issues in its particulars,[1] Gatto’s basic point seems unassailable. As long as those in positions of power generally approve of what the CPUC is doing, there will be no rush to revamp it.  Governor aside, there are a surprising number of people–surprising to outsiders weaned on a steady diet of terrible headlines, anyway–who are basically satisfied with the CPUC.  And these folks are quietly carrying the day.

You won’t see many (any?) people publicly acknowledge a liking for the CPUC’s process, or for much of the substance of its work. Certainly not in the wake of the various high-profile utility disasters and agency scandals of the past several years, capped off last week with a disapproving State Auditor report on CPUC contracting practices.

But in private interviews, as reported in the CPUC-commissioned report from Stumwasser et al., many practitioners within and before the commission candidly expounded at length on why they “choose to engage in ex parte communications to convey information to decision-makers, rather than relying exclusively on the Commission procedures…to bring this information into a proceeding.” Plenty of those with business before the commission, as well as elected officials at both state and local levels, like being able to go directly to decision makers, and otherwise avoid open processes.

Substantively, if you are able to look past the scandals and disasters, you will see that the commission has accomplished yeoman’s work in support of various gubernatorial and legislative initiatives across multiple Republican and Democratic administrations over the past fifteen-or-so years. The CPUC has kept the lights on, advanced the state’s climate change policies, “gotten things built,” and generally played the good soldier, even while being publicly lambasted as corrupt and incompetent.

The state of play with reform efforts reflects these twin realities: insiders’ perceive (and like) that the game board is tilted in their favor, while a wide array of outside constituencies have benefited from commission policies under the existing framework, and hope to continue to do so.  If you fall into one of these buckets, you are understandably going to be leery of major change.

So what, then, for CPUC reform? Presumably the authors of this session’s reform bills will try again next session; Assemblyman Gatto said as much at this week’s luncheon.  That the best the Legislature could manage this session was tweaks around the edges of the CPUC’s rules and procedures augurs poorly for legislative reform efforts next session.

The CPUC’s internal reform efforts will also continue to grind along. But none of this will amount to much unless and until there is a true appetite for change on the part of all the major regulated industry players, public and private alike. That has been sorely lacking that last two years.

In the meantime, perhaps some of the suggestions from my article Five Easy Pieces, published in these pages June 10, will gain some traction.  “Better pay for bureaucrats” may not seem like much of a rallying cry, but it might succeed where other reforms have failed because it is something that all interested parties can get behind.

Todd Edmister, Of Counsel at Morrison & Foerster LLP, is a former CPUC Administrative Law Judge

[1] Governors often inherit a prior administration’s CPUC appointees.  Further, PUC Commissioners are relatively independent of the Governor compared to most agency heads, and so even a Governor who had a say in Commissioner appointments would presumably benefit from restructuring that reins in Commissioners.  Finally, I note that the big reform bills died in the Legislature, so the fate of CPUC reform legislation is not solely down to the Governor.  And Governor Brown, as recently as his signing statement on the bills that did pass, expressed continued support for CPUC reform.

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