Maybe the five members of the state Public Utilities Commission have too much job security for the public good. Maybe they just don’t care about the law.
But these commissioners, who serve five-year terms and can’t be removed by the governor who appointed them or almost anyone else, have lately become the closest thing to a rogue agency that California has seen in the modern era.
It’s not just that the PUC takes actions defying all logic except that of corporate welfare. It’s not just that it does things that make little sense. Now the commission is systematically investigating how it can actually break an important California law.
Back in 2002, in the wake of an energy crunch that saw rolling blackouts afflict the state while electricity and natural gas prices rose to new heights via criminal manipulations by commodities traders working for generating companies, state legislators decided they did not soon want to see another deregulation scheme remotely like the one that led to that crisis.
So they passed a law banning competition between the state’s major utility companies and independent power generators until 2017, when the last of the power contracts signed by the state under duress in 2001 is due to expire.
It’s that simple: The law says there can be no deregulation for at least the next nine years. That means no “direct access,” where electric generators sell directly to business or residential consumers and bypass the utilities, as Enron and other disgraced companies tried to do in the late 1990s.
But the PUC apparently doesn’t care. This lawless agency, which in 1996 pushed for the previous deregulation scheme that proved so disastrous, now wants to revive “direct access.”
So the commissioners voted this spring to examine ways in which they might reinstate direct access. Under this system, even though residential consumers might technically be able to buy power directly from generators, the real world would see almost all such deals involve electricity customers that use very large quantities of power. Megawatts, not kilowatts.
This means oil refineries, factories, large office complexes. But not many homeowners or apartment dwellers.
Under such deals, large users negotiate long-term price guarantees, meaning that in times of shortage they would continue paying the same price, while smaller users must pay higher prices for power produced by small generating plants that generally come on-line only in times of high consumption.
It’s a system of corporate welfare favoring big companies over the little guy. Which is precisely what the PUC has also done over the last decade and a half in the fields of cellphones and natural gas.
The classic in its record of illogical decisions was the 2004 ruling that allowed California utilities to give up as much as one-fourth of their reserved space on the pipelines that bring natural gas here from Texas and Oklahoma. The commission’s rationale was that a gas shortage looms and therefore the state must bring in liquefied natural gas (LNG) from foreign sources. This conclusion runs counter to federal supply estimates and agrees only with the predictions of Sempra Energy, parent of the Southern California Gas Co. and San Diego Gas & Electric Co., which has just opened – guess what? – an LNG plant in Baja California that will send at least half its output to California.
The decision defied all logic: Solve a pending shortage (if one really impends) by giving up a large part of existing supplies. How does giving up current supplies solve any future shortage?
This made sense only for Sempra, which needed an assurance of massive LNG sales in California to justify building its Baja plant. The PUC was happy to comply and guarantee high gas prices well into the future, despite its stated mission of holding utility prices at the lowest level that also can assure “reasonable” profits to utilities.
Despite its own rules, which require sworn testimony with cross-examination of witnesses during major proceedings, the PUC heard no such testimony before the LNG decision.
This ruling made about as much sense as the commission’s cellphone actions, which have consistently denied consumers grace periods in which to cancel service contracts without penalty.
Now the PUC seeks loopholes to somehow let it repeat the deregulation disaster. Maybe, it says in a statement, the current electric generator contracts with the state could be re-assigned to the big utility companies. Then, it speculates, it might evade the ban on deregulation until existing contracts with the state expire.
That’s criminal reasoning which seeks to sanction a shell game that changes no existing contracts, but merely changes the name of one party to them.
It’s the kind of thing only a rogue agency would do. All the evidence suggests that’s exactly what the PUC has now become.
Elias is author of the current book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It,” now available in an updated second edition. His email address is [email protected]