CPUC Aims to Block Legislation Hindering Gas Restructuring
California energy regulators, all appointees of outgoing Gov.
Pete Wilson, last week requested a meeting after Labor Day with the
governor in an attempt to head off new state legislation that could
further hinder ongoing attempts to streamline regulation and inject
more competition into the natural gas industry. The president of
the California Public Utilities Commission calls one of the bills
"truly anti competitive."
Two eleventh-hour pieces of legislation passed by the state
legislature in its last day of this year's session (Aug. 31) have
caused concern among the five-member, governor-appointed CPUC
because one bill further hurts its attempt to gain "competitive
parity" between the state's ongoing efforts to open up the
electricity and natural gas industries and a second new piece of
legislation threatens to create what one CPUC senior adviser called
CPUC President Richard Bilas and P. Gregory Conlon, a former
CPUC president, want to personally brief Gov. Wilson before he
considers signing the two pieces of legislation. The governor has
until the end of this month to decide whether to veto, sign or let
the bills become law without his signature. Earlier in the waning
days of the state legislative session, a third bill was passed and
quickly signed by the governor (1602), preventing the CPUC from
proceeding with any new retail natural gas unbundling before 2000.
It was requested by utility labor unions with either active support
or "neutrality" from the state's major natural gas utilities. The
law ostensibly is to allow more time to work out safety and
consumer protection concerns related to opening up parts of natural
gas service to competition, although the pipeline network would
remain a monopoly function of the utilities.
Political and regulatory observers view this as another example
of the state political leaders reining in energy regulators before
they go too far on natural gas restructuring, similar to what
happened two years ago when they created AB 1890, the state's
electricity reform law.
Bilas said Friday the regulators are working closely with
legislative leaders to clarify the extent of the new law's limits
on the commission. For example, he and his colleagues think the
CPUC can proceed with removing all limits from the gas aggregation
program for residential and small commercial customers, as well as
instituting additional consumer protection measures for natural gas
consumers, Bilas said.
"We would hope that we will be able to talk to the governor and
point out where we think there are weaknesses in both bills and
point out the consequences of those significant weaknesses," Bilas
One bill that troubles Bilas attempts to add to the natural gas
restructuring slowdown (SB 1757) by prohibiting Southern California
Gas Co. from offering metering services to Southern California
Edison Co. electric customers until Edison is allowed to offer the
same services to gas utility customers. Bilas sees this as
"anti-competitive" because it restrains competition in the electric
business which has already unbundled metering and billing services.
The bill further mandates that the CPUC and the statewide
oversight board for the electric industry's state chartered
independent system operator (ISO) and power exchange (PX) establish
a "memorandum of understanding" specifying which body represents
the state at the Federal Energy Regulatory Commission regarding
specific electricity issues.
Bilas said this law is "totally unnecessary" since his agency,
the oversight board and the state energy commission are already
working out a formal understanding and have an interim process
currently in place.
"In fact, we are meeting Thursday Sept. 10 to establish a set of
principles among the CPUC, oversight board and energy commission,"
he said. The other bill before the governor concerns opening up
the CPUC to full judicial review. Historically, the state
constitutionally-based commission's decisions are only appealable
to the California Supreme Court, so effectively very few utility
decisions are subject to court review.
Last year, Gov. Wilson vetoed a similar bill that would have
opened the CPUC to state appellate court reviews, noting that when
there was more energy industry competition such legislation might
make sense. At the same time, a narrower bill to open compliance
and enforcement decisions to judicial review was signed by the
The current bill (SB 779) is flawed, according to Bilas, because
it does not specify one of the state's six appellate court circuits
for the review, opening up the possibility of "forum shopping"
among utilities and consumer groups over the same decision, which
Bilas thinks could bring "chaos" to the regulatory process. Bilas
is not against opening up CPUC decisions to wider court review if a
specific circuit is named. Commissioner Conlon, however, is against
it in total because he thinks its will further delay and complicate
what is already a slow, complicated process.
"Perhaps with more competition it is appropriate to have full
judicial review," Bilas said. "I'm certainly not opposed to people
getting more due process. But there are some serious questions also
among the legal community as to whether the courts have the
expertise to handle these cases on appeal," Bilas said. "I think
they will find some of these cases are extremely complex. "But if
you could designate a particular circuit-say the one in San
Francisco, the way the FERC designates the DC Circuit in
Washington-that court over time could generate the expertise. But
that takes resources to do that, and right now, I don't think the
courts have the resources."
Richard Nemec, Los Angeles