Utility Regulators Creating A Banana Republic?
Posted Mar. 16, 2013, 6:00 am
Tom Elias / Mirror Columnist
Banana republics got their appellation during the 1920s, when dictators
ruling countries like Honduras and Guatemala made decisions on the say-so of
banana growing companies, strictly for the profit of those companies – and
usually at the expense of the local citizenry.
Now it is the California Public Utilities Commission that’s threatening to make a major area of state policy-making into a new variety of banana republic. For in decision after decision since former utility company chieftain Michael Peevey took over as its president in 2002, the commission has taken care of big utilities and power producers at the expense of ordinary citizens, called “ratepayers” in utility parlance.
One odious example is the PUC’s order forcing customers to pay most of the bill for fixing the pipelines of California’s biggest natural gas company, hopefully ensuring there are no replays of the 2010 explosion that killed eight persons in San Bruno – even though Pacific Gas & Electric Co. took “responsibility” for the blast.
Another was the decision to let a Spanish company build the 250-megawatt Mojave Solar power project near Barstow – far outside PG&E’s service area – to provide electricity for that company. At the hearing approving this project, strongly backed by Peevey, commissioners openly asserted that Mojave Solar electricity will cost at least double the price of kilowatts from gas-fired plants.
PG&E will also profit: Money from its customers will build transmission lines to carry that energy to existing lines in the San Joaquin Valley, with PG&E guaranteed profits of about 12 percent per year for 40 years on whatever those lines cost.
Now the commission is at it again, apparently about to make another decision detrimental to customers but a boon to power producers.
This time it’s a “peaker” electric generating plant in San Diego, not far from the Mexican border tenatively due for an approval vote on March 21. As always, the Peevey-led commission has a pretext for approving this 300-megawatt natural gas-fired plant, which would operate only when other power plants don’t provide enough juice for the region. (One megawatt supplies at least 750 homes.)
The pretext here is uncertainty over when – or if – the San Onofre Nuclear Generating Station will restart. The problem is that the PUC’s own administrative law judge found no need for this new plant after a lengthy proceeding.
“It is not reasonable…when there is no need for incremental local capacity until (at least) 2018…” said the administrative judge’s decision.
One reason the plant is unneeded: By late summer, even without San
Onofre, Southern California will have excess generating capacity of 30 percent,
and Northern California nearly 40 percent excess. Three new gas-fired generating
plants – all within 80 miles of San Onofre and with a total output close to San
Onofre’s maximum 2,350 megawatts – are due to come online this
On reading the ALJ’s proposed decision and a similar one from fellow PUC Commissioner Mark Ferron, who supervised the PUC’s work on the case, former Southern California Edison Co. President Peevey asked the head of the state Energy Commission to back his claim that there is a pressing need for the new plant, to be named Pio Pico and to cost ratepayers $80 million to $90 million yearly over 20 years (about $30 per residential customer yearly).
In a December email to a staffer, Energy Commission Chairman Robert
Weisenmiller said “Peevey wants a letter from me.”
Weisenmiller quickly sent one claiming Pio Pico is needed. The trouble is that during Energy Commission hearings in July in Chula Vista, that commission’s lawyer advised that “the (Energy) Commission doesn’t do a needs-based analysis in our – in our licensing process.” So there was no evidentiary basis for much of what Weisenmiller obligingly wrote to Peevey.
Also during the Energy Commission hearings on Pio Pico, then-Energy Commissioner Carla Peterman declared – with no evidence to back her – that approval was justified because “we need to keep the lights on (with Pio Pico).”
Former Rhodes Scholar Peterman is now a PUC commissioner, named to a six-year term by Gov. Jerry Brown in December. She at first recused herself from the PUC’s Pio Pico vote because she was involved with the plant’s environmental approval. But she now plans to vote.
In an email, Peevey stopped short of explaining why he’s trying to
overturn both Ferron and the administrative law judge on Pio Pico. “The PUC and
other state agencies…work together on energy policy and implementation…,” he
said. “The …Energy Commission some time ago approved…the Pio Pico facility…
Weisenmiller told me he thought the plant was needed in San Diego, given the
uncertainty surrounding…San Onofre… I told him to send the PUC a letter telling
us why he thinks it is needed…”
There is, thus, no evidence of any need, only conjecture, no facts. Which makes this look like another arbitrary PUC action benefiting big companies at the expense of customers, done in classic banana republic style.