An economic development unit, or “economic conscience” has been added to the California Public Utilities Commission, pushed by anxious state officials who are wrestling with a $35 billion budget deficit and a stagnated economy. Regulation in the energy, water and telecommunications sectors is viewed as a key to economic recovery by both California’s governor and the former utility executive/economist he picked to head the CPUC this year.

Other than the New York state regulatory commission, which has a similar office that actively testifies in utility proceedings, California’s new unit is considered to be only the second formal one established. It is envisioned as a change agent for an interim period to inject economic impact considerations into the CPUC’s ongoing processes and procedures for handling major regulatory oversight proceedings.

“I see this as being proactive to help California, as a state, get things done,” said Tim Sullivan, a CPUC administrative law judge and a Ph.D.-educated (Harvard Kennedy School) former university professor who was named interim Director of the CPUC’s new five-person Office of Economic Development. “I don’t see creating another regulatory step as a way to get things done. You want to avoid doing stupid things and do the right things quickly.”

Sullivan does not favor creating a new bureaucracy within the CPUC that would effectively require “economic impact reports” on every major case. Since the state’s budget woes prohibit any new positions in state government. Sullivan’s and the other jobs in his new unit have to come from existing positions at the regulatory panel, and hence, he is designated as the “interim” director.

“When you are coming up with new regulations that place burdens on companies, you want to make sure the cost of those regulations are justified,” said Sullivan, adding that in his new position he wants to make sure he does “a lot of small things right.” He noted that the CPUC unit will avoid duplicating various economic development programs in the state commerce department and in each of the private-sector utilities.

“I have already talked with the people doing business development in the different utilities, and I hope we keep those types of connections in place,” Sullivan said. His mandate comes from Gov. Gray Davis’s state-of-the-state address last January where he asked the CPUC to examine the impact of its operations on economy, infrastructure and jobs.

State law mandates that California’s regulators examine “the larger public interest,” which includes “not only the reasonableness of rates, but also the impact on the economy as a whole,” Sullivan said in an interview Wednesday with Intelligence Press. “If you look at the Public Utilities Code there are lots of public interest recommendations, and there are infrastructure roles-from transportation, telecommunications and water. It is not used in conjunction with energy, but it is pretty clear we are supposed to have an adequate supply of the things the state needs. So there is that role; the question is how do we do it?”

Sullivan is forthright and realistic about how much and for how long he can provide an “economic conscience” at the CPUC. He jokingly said that he expects to retire from state service as an administrative law judge. He gives his personal views at the outset, which may or may not be shared by the five-member governor-appointed CPUC commissioners.

“My view is that a real successful vision (for this function) would be to get this incorporated in routine decision-making and have it change the culture of the organization in a way that would make the office unnecessary,” Sullivan said. “Then, we could just close up shop. The functions could be incorporated into the operating divisions. My personal view-which I haven’t discussed with anyone — is that this is something that the commission could have and should have done earlier.”

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.