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Wilson Vetoes Gas Bill; Approves Judicial Review of CPUC Rulings

October 5, 1998
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Wilson Vetoes Gas Bill; Approves Judicial Review of CPUC Rulings

California's Gov. Pete Wilson has signed into law a measure that for the first time allows full judicial review of California Public Utilities Commission decisions. This could mean more court challenges to future energy decisions when the law goes into effect Jan. 1, 1999.

At the same time, Gov. Wilson vetoed a separate bill (SB 1757) aimed at further slowing down the energy regulators' previously announced natural gas industry unbundling. CPUC officials are hoping the veto may help salvage some of the natural gas actions already under way that are now expected to lead to gas unbundling in the year 2000, such as removing any limits to the core aggregation program. But that clarification is still to be worked out with legislators and the parties to the ongoing statewide natural gas strategy proceedings.

Historically, the state constitutionally-based commission's decisions can only be appealed to the California Supreme Court, so effectively very few utility decisions in California have been subject to court review. Last year, Gov. Wilson vetoed similar legislation 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 governor in 1997. Since that time, the CPUC has decided about a dozen compliance and enforcement cases, none of which have been appealed to courts.

After its passage at the end of this summer's legislative session, CPUC President Richard Bilas called the new law (SB 779) flawed because it fails to specify one of the state's six appellate court circuits or districts for the review, thus, 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 said he is not against opening up CPUC decisions to wider court review if a specific district is named. Other commissioners, however, are against it in total because they think it will further delay and complicate what is already a slow, complex 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." Critics have questioned whether the appeals courts have the expertise and resources to handle a deluge of appeals-if they do, in fact, materialize. They suggested that establishing one of the districts to handle all CPUC appeals would allow that particular court to marshal the added resources and expertise over time.

Bilas and immediate past CPUC president, P. Gregory Conlon, met Sept. 21 with Gov. Wilson to head off both pieces new state legislation, particularly AB1757 because they felt it would further hinder ongoing attempts to streamline regulation and inject more competition into the natural gas industry. Bilas had called the natural gas slow-down bill "truly anti-competitive."

Earlier in the waning days of the state legislative session, a third bill was passed and quickly signed by the governor (1602), effectively preventing the CPUC from proceeding with any new retail natural gas unbundling before the year 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.

Bilas said that realistically the delay until Jan.1, 2000 in starting gas unbundling makes marketers and other potential participants wait only another six months, since it is unrealistic that the CPUC can conclude its current fact-gathering and hearing process before mid-1999.

"The fact of the matter is that we're living under the (PG&ampE) Gas Accord in northern California and the (SoCalGas) Global Settlement in southern California," said Bilas, referring to two major bases for wholesale gas unbundling over the past four years.

"They affect future decisions at the commission. And one of the reasons for the slowing down is that we have these two agreements in place, so a new (CPUC) gas strategy put in effect now would undo parts of these settlements. That might not be the best thing to do from a policy standpoint."

Richard Nemec, Los Angeles

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