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‘Improper’ Energy Utility Contact Has California Legislature Eyeing State Regulatory Reform

The head of the California Assembly's Utilities and Commerce Committee said on Tuesday he plans to hold oversight hearings beginning in March to examine allegations of cronyism and improper contacts by California regulators with some of the energy utilities they oversee.

Most of the focus has been on San Francisco-based Pacific Gas and Electric Co. (PG&E) since it self-reported ex-parte communications violations last fall (see Daily GPISept. 16, 2014). However, the spotlight has widened to include Southern California Edison Co. (SCE) and its decision late last year on its closed nuclear plant by the California Public Utilities Commission (CPUC).

A request made last Friday by California State Association of Electrical Workers to Assemblyman Anthony Rendon, utilities committee chairman, prompted the state lawmaker to set a hearing for March 16 to "review activities" of the CPUC and its Office of Ratepayer Advocates. He told the Los Angeles Times the activities were “alarming and something we need to look at.”

State Sen. Mark Leno, a vocal critic of the CPUC, last Thursday proposed SB 215 to prevent "unethical back-channel communication" between the CPUC and utilities.

"The CPUC's mission is to protect consumers, but it has lost sight of that goal," said Leno, a Democrat from San Francisco. He said public trust had been undermined by "improper private communications and a lack of transparency and accountability at the CPUC."

SCE on Tuesday pushed back against the electrical workers union allegations, noting that union officials were posturing for upcoming labor negotiations. Union and legislative allegations have been pointed at the multi-billion-dollar rate-setting settlement the CPUC approved last November for the closure of the San Onofre Nuclear Generating Station (SONGS), in which SCE is the majority owner/operator.

Some consumer activists in Southern California are calling for that deal to be thrown out by the new leadership at the CPUC, but SCE said the state's major consumer organizations were parties to the settlement that decided utility ratepayers would pay $3.3 billion of the estimated $4.7 billion costs to close SONGS over the next decade or so.

"SCE will continue to welcome and respond to questions from regulatory and legislative bodies," a spokesperson told NGI on Wednesday.

State Sen. Jerry Hill, a long-time critic of the CPUC from San Bruno, also has proposed legislation to dilute the powers of the governor-appointed president of CPUC following allegations recently retired President Michael Peevey, a former top executive at SCE, abused his powers while at the commission (see Daily GPIDec. 19, 2014).

One veteran Sacramento energy player in the state capitol said that SB 215 and SB 48 would be the bulk of the legislative proposals aimed at the CPUC this session, but the hearings and discussions may be much broader. He told NGI that Rendon's hearings would most likely be finished before the new bills are considered.

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