YOU ARE HERE: LAT HomeCollections

Fractious PUC to Test Leadership

Both the commission's president and new Gov. Schwarzenegger may find it hard to influence policy decisions.

November 16, 2003|James S. Granelli | Times Staff Writer

On the campaign trail, Arnold Schwarzenegger vowed to make California friendlier to business.

But when Schwarzenegger takes office this week, the new governor is likely to discover how little control he wields over essential elements of the state's economy, in particular the power grid that keeps industries running and the telecommunications network that connects them.

Oversight of those crucial areas falls mainly to the state's Public Utilities Commission, a fractious agency so riven by personal animosities and ideological splits that industry and consumer groups alike complain about it.

"Dysfunctional" is how the five-member panel is described by state Sen. Debra Bowen (D-Marina Del Rey), who chairs the Senate Energy, Utilities and Commerce Committee.

"There's a lot of discord among the commissioners," she said.

Schwarzenegger transition team member and former PUC Commissioner Jesse J. Knight Jr. agreed. "They are a disparate group for sure," Knight said last week. He added, however, that Schwarzenegger was committed to working with the commission.

He doesn't have much choice. Barring any resignations, the earliest Schwarzenegger could reshape the PUC is in early 2005, when two of the commissioners' six-year terms end.

Although all five commissioners are Democrats appointed by Gov. Gray Davis, they differ sharply on the role of an agency that regulates companies with a combined workforce of more than 125,000 Californians and annual revenues of $40 billion.

At one end of the spectrum is President Michael R. Peevey, 65. The former president of Edison International's Southern California Edison Co. strikes a more conciliatory tone with corporate giants such as SBC Communications Inc. and PG&E Corp. than previous President Loretta M. Lynch.

Lynch, 41, firmly holds down the other end. The former defense attorney's aggressive consumer advocacy alienates many of the industries under the commission's purview.

Divisions within the commission split along those lines, with former Davis aide Susan P. Kennedy frequently siding with Peevey and former electrical worker Carl W. Wood aligning with Lynch. Former San Francisco public defender Geoffrey F. Brown is typically the swing vote.

Accompanying the ideological differences are often icy personal relationships.

"There are personal frictions," Wood acknowledged.

They manifest themselves in slights that only a bureaucrat could appreciate. Earlier this year, for instance, Peevey said Lynch had "hogged" several important telecommunications projects and reassigned them to Kennedy. And at a public meeting, Peevey chastised Lynch for trying to assign herself to other telecom cases.

Trying to Ease Rancor

Since he became president in January, Peevey said, he has been trying to improve the commission's dealings with the companies it regulates and, lately, trying to ease the rancor among commissioners.

"It seemed before that the PUC was at war with everybody," said Peevey, who was appointed to the commission in March 2001. "I just felt it was necessary to take a different tack and work more cooperatively with people."

Many in industry welcome Peevey's approach.

"At least now there's a willingness to listen to the regulated industries," said Fassil Fenikile, who left the commission's senior staff in February to manage regulatory efforts for SBC. "They look at issues in a more balanced way than before."

Peevey's leadership will be tested in the next year as the PUC grapples with key policy decisions in the regulation of the telecommunications and energy industries. The bottom lines of both businesses and ordinary households will be affected.

First, the PUC is setting the permanent wholesale rates that SBC and Verizon Communications Inc., the state's two dominant local phone companies, can charge competitors to use their lines. The decisions will shape the future of telecommunications competition and innovation in the state.

The commission also faces tough energy issues in the aftermath of the shortages and rolling blackouts that crippled the state in 2000 and 2001.

One is the bankruptcy reorganization of PG&E utility unit Pacific Gas & Electric Co., which will increase electricity rates for the next 10 years. Also on the agenda are a ruling on Southern California Edison's request to build a big power plant in San Bernardino County and a decision on how to ensure future power supplies -- by building more plants or contracting with existing operations.

Despite the welcome mat that Peevey and Kennedy have rolled out for business, few who follow the agency say it is discarding altogether the tradition of consumer advocacy cemented by Lynch.

Peevey is focused on creating competition where he can and on balancing consumers' interests with those of regulated industries, which he says must remain healthy to boost the state's economy. He says he also looks for ways to protect the environment. For Peevey, what's good for competition, whether or not it helps old monopolies like SBC, is good for consumers.

Los Angeles Times Articles