"In my working career, I was a union official for seven years. I used to appear before this commission as a consumer advocate. I was with Edison and then founded two for-profit companies that competed with Edison," Peevey said. "I've seen things from different perspectives and different walks of life."
Lynch points out that the PUC's charter mandates that commissioners protect the interests of consumers against the power of the monopoly utilities. Previous commissions under Republican governors, she contends, had run roughshod over consumers by caving in to utilities' demands.
"I believe that economic regulation is a fundamental underpinning of what it means to have a stable economy," Lynch said. "Otherwise, you get what we saw just a taste of in the energy crisis, which is: Companies that can, do hold you over a barrel for the price of a fundamental economic necessity, and they just don't care what the consequences are."
Utility consultant Mitchell G. Wilk, a PUC president under Republican Gov. George Deukmejian, says differences on the commission tend to be philosophical and can be "pretty case-specific."
Indeed, Peevey surprised some with recent votes in which he sided with Lynch and against Kennedy, who since joining the commission in January has written proposals more tolerable to the utilities. And in SBC's contentious effort to raise wholesale rates, he and Lynch, among others, have said they don't expect the rates to change much.
'Not Best Friends'
Even so, "they are not the best of friends," said Wood, 55.
That tension makes decision making more tortuous, staffers and PUC watchers say.
The disagreements, from petty procedural spats to profound pronouncements on the commission's role, have spilled over in public meetings and resulted in numerous split votes. The atmosphere is so hostile at times that Brown views one of his roles on the PUC as to act as a peacemaker.
"I want to reduce the level of acrimony," said Brown, 60, who was appointed in January 2001.
The internal rifts affect the "quality of the debate," said Michael Shames, executive director of advocacy group Utility Consumers' Action Network. "The greatest disappointment in the commission is the incivility and lack of respectful discourse among them."
The undercurrent stems from the energy crisis, when Lynch and the other commissioners were shell-shocked by soaring prices and power outages. Critics said the PUC and the Davis administration seemed paralyzed for a while, and the industry faulted both for delaying price increases and withholding authority for companies to enter into long-term contracts.
"All the answers were not good," Lynch said. "They were bad and ugly, and good wasn't in there."
Davis brought Peevey, then running an energy consulting firm, into the administration to help respond to the crisis. And the governor asked Kennedy, 43, then his Cabinet secretary, to handle several facets.
Relations between the Lynch-led PUC and Davis' inner circle of energy advisors worsened over rate increases, dealings with other agencies and other issues. Lynch, soon frozen out of policy decisions, began publicly criticizing the price of the long-term contracts that Davis signed to procure sufficient power.
Davis, who had said he wanted his appointees to think and act as he would, could not control Lynch. Under a 1999 law, Lynch had become the first PUC president to be appointed by a governor; previously, the commissioners voted in their own president. Last New Year's Eve, Lynch learned she would be the first to be replaced by a governor.
Davis never said publicly why he removed her from the post.
Former PUC commissioners Knight and Wilk say Peevey and Kennedy have brought needed balance.
"The part that Loretta doesn't get about regulation is the nature of balance," said Wilk, who also is helping the new administration formulate energy policy.
"Mike strikes a better balance," he said of Peevey. "Everything Loretta says and does is so predictable that she no longer can dispassionately look at these issues."
To Kennedy, who noted that "Peevey and I think a lot alike," the pendulum had swung so far in favor of consumers that the commission had become anti-business and its decisions were hurting the state's economy.
"We were lurching from one regulation to another. We were not being consistent," she said. "We were anti-investment and anti-business. We don't have to be anti-business to protect consumers."
But even some in industry say the PUC has an active role to play in finding that balance.
"I'm a free-market true believer," said John Sumpter, vice president at Pac-West Telecomm Inc. in Stockton, an SBC competitor.
"However, I also know that if the market is not free and openly competitive, then we have to have regulation. The whole purpose of regulation is to try to duplicate what would happen in an open market."