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California Lawmakers Push CPUC Reform Via Constitutional Amendment

A group of state lawmakers in the lower house California Assembly on Wednesday unveiled an effort to change the state's constitution to shut down the California Public Utilities Commission (CPUC), an institution that has come under increased political and consumer criticism in the past two years.

The proposal would disperse to a variety of agencies the CPUC's current authority over natural gas, electric, water and telecommunications utilities, along with trains, public transit and taxis, leaving the successor as perhaps only a gas/electric regulatory body.

Assembly Utilities and Commerce Committee Chairman Mike Gatto cited the three-month-old storage well leak at Southern California Gas Co.'s (SoCalGas) Aliso Canyon underground facility in calling for a constitutional amendment to "restructure and reform" the CPUC. A Democrat, Gatto was joined by Assemblymembers Scott Wilk (R-Santa Clarita) and Mark Levine (D-San Rafael).

Gatto called the CPUC "scandal-ridden" while acknowledging that it enjoys state constitutional protections that prevent wholesale changes by the legislature without amending the constitution. "After hearing about how the clear warnings of the impending Aliso Canyon gas leak were lost in the shuffle, I have concluded that we need to rethink the way we regulate utilities in this state," Gatto said. "Our concern is that the CPUC is too big to succeed; it is time to hit the reset button."

A CPUC spokesperson said the regulatory body already is taking steps to reform itself, and has highlighted plans for more reforms in an annual report it filed with the governor and state lawmakers on Monday. The report outlines a plan for working with the state legislature this year "to effectively implement legislation and continue to improve accountability and transparency."

The assemblymembers have proposed the Public Utilities Reform Act to change the state public utilities code to "modernize" the CPUC, reassign regulation of industries unrelated to the CPUC's core functions to more appropriate state agencies, and "provide greater accountability to Californians." The proposed legislative act "acknowledges what we all seem to know -- the current system of regulating utilities and common carriers in our state is broken," Gatto said.

The three lawmakers said their proposal "recognizes that the 21st Century no longer requires the CPUC to be enshrined in the California constitution," so it would foster a statewide ballot initiative to urge voters to repeal the current constitutional mandate and authority of the five-member regulatory panel that wields strong economic power throughout the state.

Providing an interim grace period through mid-2018, the proposal would sunset certain authorities and functions under the state public utility code until July 1, 2018. During that period, the state legislature would reallocate the functions of the CPUC to existing departments and agencies or to a successor entity.

Since the Pacific Gas and Electric Co. (PG&E) fatal natural gas transmission pipeline rupture in San Bruno in 2010, and followed by the more recent controversies over the San Onofre nuclear plant closure, smart electric meters and ex parte communications violations involving CPUC commissioners and staff, the legislature and other elected officials in the state have grown increasingly critical of the regulatory commission.

The CPUC, itself, last summer held an unprecedented public hearing on reforming the five-member regulatory panel's inner workings, but much of the feedback it received pointed toward proposed legislative reforms (see Daily GPIAug. 14, 2015).

"The people of California are deeply concerned by the CPUC's failures in recent years," Gatto said. "You have folks in the Bay Area justifiably concerned after a pipeline explosion, Orange County worried about nuclear waste, Sacramento and the Central Valley are on edge with oil trains, and, of course, Los Angeles residents are deeply concerned after a gas leak."

Gatto noted that the state legislature has made several attempts in recent years to reform the CPUC, and those advances were all vetoed by Gov. Jerry Brown.

Regarding the gas well leak, Gatto said as long ago as 2014, the CPUC was warned about potential corrosion and aging infrastructure at Aliso Canyon "and as far as we can tell they did nothing." He said this has caused doubts about whether the CPUC "can adequately fulfill its duties." He called it an agency with too broad a mandate that has been "spread too thinly."

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