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Part of CPUC Reform Fails to Pass in California Legislature

Full-blown reform of California's principal energy sector regulation will have to wait another year as two bills (SB 512 and AB 2903) aimed at completing the job failed to get out of last Wednesday's typically frantic end to the state lawmakers' 2016 session.

A bill (SB 215) to increase transparency and regulator accountability at the five-member California Public Utilities Commission (CPUC) a week earlier was passed by state lawmakers, and Gov. Jerry Brown is expected to sign it (see Daily GPI, Aug. 31).

Earlier in the year, the state regulatory body created more than a century ago voted unanimously to sponsor six regulatory reform bills in the state legislature this year (see Daily GPIMarch 22).

The CPUC submitted three bills in each legislative house -- Assembly and Senate -- to address a number of consumer-related issues, including more transparency, accountability and regulatory efficiency by the agency, which oversees energy, telecommunications, transportation, water and other industries.

Local news media portrayed the failure of SB 512 and AB 2903 as the clock running out on CPUC reform efforts, but if Brown signs SB 215, there will be changes, and the regulatory commission itself is making changes.

As happened in June, Brown and legislative leaders are on record as wanting to restructure and refocus the CPUC, stripping away some of its non-energy industry responsibilities in transportation, for example (see Daily GPIJune 28). They labeled their approach as "sweeping reforms" for the CPUC, with the intention of changing how the regulatory panel does business.

"We ran out of time and we ran out of consensus," said Sen. Jerry Hill, a critic of the CPUC whose district includes San Bruno, the site of a fatal natural gas pipeline explosion in September 2010.

Under the two measures that failed to win final approval, the CPUC would have been required to increase its internal auditing and whistleblowing procedures, along with spinning off its transportation oversight. The bill remained stuck in policy committees in the final hours of the session, which ended at midnight last Wednesday.

While many advocates were pushing for the two additional bills, critics have maintained that SB 512 and AB 2903 still didn't go far enough to break up what they consider too much "coziness" between the regulators and the major companies they oversee.

SB 215 is aimed at increasing transparency and regulator accountability at the five-member CPUC. It was passed earlier in August by state lawmakers and is expected to be signed by Brown.

Ultimately the president of the CPUC, who is appointed by the governor, is needed to support reforms, and current CPUC head Michael Picker was not supportive of all aspects of the two failed reform bills. Earlier, Picker's CPUC came up with its own proposals to address a number of consumer-related issues, including more transparency, accountability and regulatory efficiency while preserving the constitutionally based agency that oversight.

An impetus for the CPUC's action came last February when a group of lawmakers in the Assembly unveiled an effort to change the state's constitution to shut down the CPUC (see Daily GPI,Feb. 4). The proposal would have shifted 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. Brown and legislative leaders later pushed aside that proposal.

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