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Power Struggle Takes Shape Within CPUC
While California regulators drew more attention for what they didn’t do at Thursday’s twice-a-month business meeting, the increasingly split five-member panel did approve a multi-billion-dollar set of energy efficiency programs for local government and community groups statewide as well as a crucial service agreement between Pacific Gas and Electric Co. and the state power-buying agency. However, the verbal jabs commanded more attention.
Michael Peevey, the newest of four appointees by Gov. Gray Davis, repeatedly lashed out at Loretta Lynch, president of the California Public Utilities Commission (CPUC) for the past two years, and named to the position by Davis. Peevey is increasingly critical of the continued delays and postponements of agenda items, and he thinks the CPUC needs to aggressively address its internal processes.
A case in point was an item for launching a statewide effort to expand the use of real-time meters, demand-response programs and time-of-use rates for larger groups of customers. Peevey wanted to move the item; Lynch postponed it (again) at the eleventh-hour with little or no warning to the other commissioners.
“Unfortunately, this is another example of where we have to clearly improve our internal processes,” Peevey said Thursday in San Francisco. “It is my personal initiative to get into demand-response issues as matters that will be discussed jointly with the (California) power authority and the energy commission. Internally, the agreement we had among staff was that any changes would be presented by last Friday, and then at the very last second for the second time, the item is delayed. It is an example of why we need to tighten up and have much clearer procedures for holding items and offering why they are held.”
Peevey sarcastically noted at one point when routine (consent agenda) items were being collectively okayed that one of the items that took three months involved reducing the vertical clearance for a railroad crossing in Fresno, CA, by six inches. “I think that is commendable that it only took us three months to do that,” he said. (In addition to energy, the CPUC regulates public transportation, trucking, telecommunications and water.)
The difference in style between the current CPUC head and Peevey, who some observers think will be named head of the commission next year if Davis wins re-election to another four-year term this November, was clear in regard to the verbal debate they got into before approving most of the new energy efficiency programs for nonutilities.
Lynch made some last-minute changes in the energy efficiency programs to withhold approval on seven contracts totaling about $15 million because they involved energy firms located outside of California, including an “affiliate of an affiliate” of bankrupt Enron Corp. The CPUC staff preliminarily had funded a subsidiary of Enron in California, and Lynch said she felt certain she could “find a California company that could do this work better and instead of applicants outside of the area.”
Peevey criticized the move as being unfair and changing the rules at the end of the game. Lynch explained that she wanted to check on the affiliations of the out-of-state contract awardees, and Peevey questioned the timing for doing so at the time the winning bidders had been selected and the regulators were moving ahead with the funding.
“My concern is one of due process,” Peevey said. “We set up a process, and all of the 90-plus bids met that process, including the seven we are now holding.”
After all the squabbling over process, the item was approved on a 5-0 vote, one of the few issues to get a unanimous vote at this meeting.
One of two major steps still needed to be taken to facilitate the state’s proposed $11.1 billion electricity bond sale was also approved, but on a 4-0 vote (Peevey abstaining) and only after more caustic comments from Peevey about the process for handling the matter with last-minute changes for which he was not prepared to vote. Since PG&E’s Chapter 11 bankruptcy-bound utility has not voluntarily agreed to sign a servicing agreement with the state Department of Water Resources (DWR), the state power-buyers asked the regulators to order the utility to provide the needed billing services to DWR.
“The other two major (investor-owned) utilities already have signed similar agreements with DWR, PG&E remains unwilling to comply without more formal data,” said Lynch, noting that is why DWR asked for the CPUC order in lieu of a written agreement. “I believe DWR made its best efforts to come to an agreement with PG&E short of this other method.”
A PG&E utility spokesperson said the utility is concerned about an added $80 million its customers will have to pay the state transmission grid operator, Cal-ISO as a result of the DWR servicing. PG&E is still reviewing its options and may petition the CPUC for rehearing of Thursday’s order. “(The order, or agreement) doesn’t create a clear separation of what is owed to us and what is owed to DWR,” the spokesperson said.
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