Loretta Lynch, former president of P.U.C., says it is a “corrupt, co-opted agency

By now, savvy folks know that the California Public Utilities Commission has to clean up its act — thoroughly. Commissioners and staff members used illegal, back-channel communications with Southern California Edison to fleece ratepayers over costs of closing the San Onofre nuclear plant. Similarly, commission members were secretly helping Pacific Gas and Electric in its attempt to get a light penalty for its negligence leading to the 2010 San Bruno gas pipeline explosion that killed eight people and incinerated a neighborhood.

But the commission is not giving itself a thorough bath. It’s taking a cowboy bath at best.

Example: at the same time that the utility regulator was not turning over documents requested in a search warrant from the state’s attorney general, it was gathering legal opinions on how it could restore public confidence. Hmmm...

Strumwasser report

The utilities commission paid the law firm of Strumwasser & Woocher to make recommendations on the ex parte (one-sided) meetings between regulatory officials and utilities that led to the anticonsumer actions over San Onofre and San Bruno. It also had a staff lawyer, Ed O’Neill, prepare a report on both the secrecy and necessity of bringing efficiency to the decision-making process. O’Neill, who had worked for the commission before representing energy and telecom firms, was hired to “modernize” the commission’s decision-making process.

This “modernizing” involved suggested changes in the California Bagley-Keene Open Meeting Act, even though the original purpose of that act was to sacrifice efficiency in favor of the public’s knowledge of and participation in commission decisions.

Generally speaking, the Strumwasser recommendations are considered sound. The report said that in cases involving rate-setting, current ex parte practices “systematically favor the interest of utilities and other well-funded parties.” (Given the San Onofre and San Bruno slime, the report could hardly have said anything else.) The report recommended that substantive ex parte communications in cases involving the setting of rates should be prohibited.

“Strumwasser wrote a good report,” says Bill Powers of San Diego’s Powers Engineering. “It shows how the formal decision-making process is corrupted by the free-wheeling heavy hitters, the utilities. The system is stacked against the little guy, and the only defense for the little guy is sunlight” — openness, transparency.

Says Mindy Spatt of the Utility Reform Network of San Francisco, “The commission has been mired in scandal and corruption because these backdoor meetings have been allowed. It is time to shut the door,” and the Strumwasser report should be helpful in accomplishing that. Her group is in favor of banning ex parte huddles in any matter involving rate-setting.

Bagley-Keene Open Meeting Act softened

But then there is the report by O’Neill. On June 22 in Sacramento, Timothy Sullivan, the new executive director of the commission, held a workshop for those with an interest in commission procedures and decisions. O’Neill was a speaker. “The Bagley-Keene Act discourages deliberation,” said Sullivan, summing up O’Neill’s points. The act’s provisions “hinder decision-making and deliberation.… [They] have stifled any deliberation.” Sullivan admitted that “lack of trust is a major problem” for the commission, but Bagley-Keene won’t restore that trust, O’Neill insists. Sullivan called for “a workable balance between openness and transparency, on the one hand, and the need for effective and efficient regulatory proceedings, on the other hand.”

Balderdash. One critic says O’Neill is looking for ways to “get around having independent [administrative law] judges and ex parte rules” so that rates can be jacked up “without public and expert scrutiny.” (For example, after the San Onofre closing, former commission president Michael Peevey managed to shut down a required study by an expert, then blindfolded and fleeced the public in his ex parte meeting in Poland with an Edison executive. Peevey is under criminal investigation.)

O’Neill would eliminate the role of independent administrative law judges except in minor cases. Thus, commissioners could “meet with utilities, including Edison, Sempra, and [Pacific Gas and Electric] unfettered by any ex parte rules, make deals, have discussions in closed-door meetings,” and plot to rape ratepayers, says this critic. O’Neill would have the chief administrative law judge serve at the pleasure of the commission — a blatant conflict of interest.

Joseph Como, acting director of the Office of Ratepayer Advocates within the commission, says, “Commissioners don’t have a compelling reason, as fact gatherers or decision-makers, to entertain ex parte meetings.… [T]here are better tools than ex parte meetings” — for example, consulting with the 800-person staff, which is often isolated from commissioners, and with administrative law judges, “the first line of knowledge.”

Utilities Commision “Corrupt, co-opted”

Loretta Lynch, former president of the commission, says the regulatory body now is a “corrupt, co-opted agency that makes decisions behind closed doors.” It “does what it wants” no matter what administrative law judges say. For example, the commission is spending more than $5 million on attorneys to represent the commission in state and federal investigations. But an indictment of a state agency is out of the question. Thus, she asks, “Is the [commission] trying to help Peevey by hiring criminal defense lawyers? Are they impeding the investigations?”

Lynch says the O’Neill and Strumwasser studies are “not bad,” except to the extent they are repetitive. “All these attempts at reform…might be a good start, but they are certainly not a finish until commissioners read the law, follow the law, and do not break the law.”

Edison controls SoCal regulators

The so-called reform attempts “don’t attack the core problem, which is utilities providing funding to the decision makers — free trips, dinners, contributions, employment opportunities down the road,” says Mike Aguirre, San Diego attorney who is fighting the predations of Edison and the commission. He says that O’Neill calls the use of the defective parts at San Onofre an accident that can’t be blamed on anyone. “The steam generators failed in a year. They were supposed to last 40 years. Nobody’s fault?” The report is “pabulum and tranquilizers.”

The Southern California legislators “that Edison controls” will block any meaningful reform legislation, says Aguirre. “Ex parte is not the problem. It is a symptom of the problem. There will be backroom deals unless we have strict enforcement of open meeting laws.”