Backing off earlier proposals for an all in one strategy, Gov. Arnold Schwarzenegger’s administration announced Monday that the governor will be submitting a modified proposal later this week for creating a state energy department with a Cabinet-level energy secretary. The department will be centered on a revised California Energy Commission (CEC) consolidated with several other energy units — the Electricity Oversight Board and the basically inactive state Consumer Conservation Financing and Power Authority. The California Public Utilities Commission remains outside the fold.

The announcement immediately drew criticism from some consumer groups, whose leaders characterized the proposal as a “power grab” by the governor, according to a news report Tuesday in the Los Angeles Times. The head of the independent power producers in the state, Jan Smutny-Jones, however, praised the idea, saying it would help the state develop what he called “a coherent, focused energy policy,” according to the LA Times report.

Advisers to the governor said the formal reorganization proposal would be submitted to the state’s Little Hoover Commission, an independent board established to review reorganization plans and make recommendations to the state legislature. The state lawmakers have 60 days after receiving the commission’s recommendation to reject the reorganization or it automatically becomes effective.

Schwarzenegger’s chief energy adviser, Joe Desmond, who was named by the governor last week to chair the CEC, supported the need for a statewide energy agency, and could be in line to head it. Under the proposal, the current independent CEC would remain semi-independent by keeping four of the five governor-appointed commissioners independent of the newly created energy secretary.

The fifth commission appointment — presumably Desmond — would be named by the governor as energy secretary, heading the agency and the five-member commission that would decide power plant sitings as it does today, along with electricity transmission and natural gas infrastructure siting cases. The rest of the agency would include the Electricity Oversight Board, the state power authority and the part of the Department of Water Resources (DWR) that administers power and natural gas contracts for the state.

Schwarzenegger’s ongoing California Performance Review of state government overall had recommended last year also including the energy industry regulation functions of the CPUC, but in the proposal that will be reviewed by the Hoover panel the CPUC still stands alone, although its role in electric transmission line siting would be transferred to the new energy agency. The CPUC is a body established under the state Constitution, so it holds greater fiscal and political autonomy than other state agencies.

The head of the consumer group TURN (The Utility Reform Network) based in San Francisco, Robert Finkelstein, said he did not think the governor needed to reorganize in order for him to articulate what he called a “clear energy policy” for California, according to the Times. He said that Schwarzenegger needs to go beyond what he characterized as a statement of broad support for conservation and building new power plants into a more detailed policy on energy.

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