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Political Shift in CPUC Emerges in Two Recent Cases

California's five-member state regulatory commission is showing some cracks in its usual solid consensus after 10 years of being headed by a former utility senior executive. This became apparent Thursday when a proposal by Pacific Gas and Electric Co. (PG&E) to invest utility ratepayer funds in a solar demonstration facility was rejected on a 3-2 vote.

It was a rare instance in which long-time head of the California Public Utilities Commission (CPUC), Michael Peevey, was on the losing side of the vote. In fact, Peevey sponsored an alternative order that would have approved PG&E's plans to invest $9.9 million in a solar photovoltaic (PV) facility through the Silicon Valley Technology Corp, but it was rejected by a majority of his colleagues.

Then, in a subsequent matter of providing new guidance to the state's major energy utilities on various energy efficiency programs, the CPUC adopted one commissioner's proposal unanimously, but Peevey expressed a lot of misgivings about the approach being too prescriptive and overbearing on the utilities.

The former president and board member at Southern California Edison Co. (SCE), one of the utilities he oversees, Peevey publicly voiced disappointed with his three colleagues, all of whom are new to the commission having been appointed last year by Gov. Jerry Brown. Peevey's tenure goes back to appointments by former Govs. Gray Davis and Arnold Schwarzenegger.

Used to having his recommendations followed, Peevey was unable to convince the CPUC's newest members that it was prudent to allow utility ratepayers to take an equity interest in a renewable energy firm.

Commissioner Catherine Sandoval called the issue complex and was troubled that it involved ratepayer funds, both of which concerned her enough to join colleagues, Mike Florio, a former consumer group attorney, and Mark Ferron, a former investment banker, in the rejection. While the proposed solar PV investment has a goal of helping lower the cost of producing PV equipment, Sandoval said the potential benefits to PG&E's utility customers were not clear. "Whatever benefits are likely will come far in the future, and in the meantime there is tremendous competition from other sources," she said.

Saying he tries to treat ratepayer dollars "more carefully than I would treat my own money," Ferron said he does not believe the PG&E proposal was a "good financial investment for ratepayers." There is no guaranteed return on the project, and the utility acknowledges that it should be treated as a "research and development project," he said.

After the vote, Peevey called the action a "dark day for California," noting his colleagues "had spoken," however.

On the other energy action item, the regulatory panel provided what they called "multiple forms of guidance" for the state's private-sector utilities, helping shape their upcoming 2013-14 energy efficiency programs. A CPUC spokesperson said the decision ":identifies what is working well in the energy efficiency market and builds upon it, removing what is not working well and modifying programs that have merit but are not realizing full consumer benefits."

Peevey said he has always been a "champion for energy efficiency," but he was "troubled greatly" by the decision being what he called "too prescriptive and too complicated, and in some aspects may not be workable." However, he said that Ferron agreed to allow utilities to file alternative plans to what is covered in the guidelines when they submit new plans in July.

"So I will support this decision as written, even though I have considerable doubts about aspects of it and its workability," Peevey said.

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