Utilities and CPUC at Loggerheads over Affiliate Transaction Rules

The California Public Utilities Commission staff and utility representatives clashed over the commission's proposed reporting rules to protect against utilities passing intracorporate insider information. Following the repeal of the Depression-era Public Utility Holding Company Act in 2005 under the federal Energy Policy Act, the CPUC agreed to reevaluate its affiliate transaction rules and assess how money flows between utilities and holding companies (Circuit, Oct. 28, 2005). During a September 21 CPUC workshop, Sempra controller Joe Householder asserted that the proposed amendments "would bring our work to a screeching halt." He said that "shared services" between a utility and parent company, including taxes, audits, and financial reporting, would be subjected to burdensome and unnecessary paperwork. CPUC attorney Harvey Morris queried whether an exemption for those specified services would alleviate concerns about interfering with legitimate sharing of information and services. An exemption would be a step in the right direction, according to Householder, but he and other utility representatives continued to oppose the proposed amendments. They insisted that existing commission rules and federal law protect ratepayers from illegal sharing of information between a utility affiliate and the holding company. "We know there are breakdowns but we don't know about often," countered the CPUC panel moderator. Morris added that during litigation over the El Paso gas-price-fixing case, the CPUC discovered that representatives from El Paso's pipeline company shared information with its merchant plant affiliate in violation of Federal Energy Regulatory Commission rules. The proposed rules by this state's commission would cause the CPUC "to be an outlier among regulators and would send an extremely negative message to the financial markets about the regulatory climate in California," utilities argued in a September 19 joint brief. Consumer advocates, who submitted briefs but were not present at the workshop, support the proposed rule changes overall for providing more ratepayer protection

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Utilities and CPUC at Loggerheads over Affiliate Transaction Rules

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