Political bantering in informational hearings and the final session before a Senate Rules Committee confirmed the California Public Utilities Commission president has left the strong impression that state lawmakers may get serious about some reform measures for the state’s myriad of energy agencies.

Energy bills are expected to emerge from committees by the end of this month, focused on the powers and the operations of the CPUC among other state agencies.

When Michael Peevey’s confirmation was being voted out by the state Senate Rules Committee, the CPUC president was put on notice that if his regulatory commission didn’t satisfy the lawmakers, they would consider “zeroing-out” the self-funded agency’s budget and imposing some reforms, according to one industry observer who attended the legislative session last week. (Peevey was confirmed by the full Senate 32-3 on Monday.)

“There are a lot of questions on natural gas and what the CPUC is doing about it among legislators,” said another Sacramento energy representative in the capital. “They have questions about what is going on with Sempra Energy’s utilities and then on the general high price of natural gas right now.”

The other issue that Peevey was asked about was the rules for governing holding companies and their subsidiaries, particularly the relationship between a given utility and its non-utility affiliates and parent company. Sen. Bill Morrow, from north San Diego County, has introduced legislation to look at this issue (SB 429).

Peevey was asked by senators if the CPUC has statutory authority to address the issue, and he told the lawmakers he thought the regulatory commission does have enough authority to revise its existing rules.

Another legislator in the lower house Assembly has proposed an audit of the CPUC by the state auditor as a means of building a base for reforms, if the legislature decides to move in that direction. Another Assembly bill (AB 882) calls for an “energy task force,” a revival of a bill that failed to pass last year.

Sen. Debra Bowen, chair of the Senate Energy Committee, has proposed two so-called “spot bills” to act as vehicles for moving energy legislation later in the session. One spot bill is on the California Consumer Power and Conservation Financing Authority (power authority) as SB 943, and she also has a proposal to eliminate the California Electricity Oversight Board and revamp the state electricity transmission grid operator, CAISO, which is a federally regulated body and a non-profit public benefits corporation (SB 920).

On the Assembly side, a more comprehensive reorganization of the state energy agencies is proposed by Assemblyman Keith Richman. It is AB 808, which would create a state energy department by collapsing the energy portion of the CPUC, the energy commission and the CAISO all under it. “It is the only one with a broad energy foundation to it,” the Sacramento legislative observer said.

Capital veterans said the record budget deficit and the ongoing political fights surrounding it don’t really affect the energy agency issues because the CPUC, energy commission, and power authority are all “special funded”agencies, meaning they are not dependent on general revenues from the state treasury.

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