Davis appoints former utility chief to head PUC

Tuesday December 31, 2002

By JENNIFER COLEMAN
Associated Press Writer

SACRAMENTO (AP) A former utility executive has been picked by Gov. Gray Davis to head the state's Public Utilities Commission, which regulates telecommunications and energy in California, while Davis named his Cabinet secretary to fill another opening.

Davis' elevation of former Southern California Edison executive Michael Peevey to the commission's top spot means current PUC President Loretta Lynch will be bumped down to a regular spot on the commission.

Peevey, 64, was named by Davis earlier this year as an interim commissioner after Commissioner Richard Bilas stepped down.

Consumer advocate Doug Heller of the Foundation for Taxpayer and Consumer Rights criticized the appointment, saying Peevey was too close to the energy industry to impartially regulate it.

``What you have here is an energy executive in charge of the power industry regulation in California,'' Heller said.

As PUC president, Peevey will earn a yearly salary of $117,818. He replaces Lynch, who was appointed PUC president by Davis in 2000. She will remain a commissioner until January 1, 2005.

Lynch said in a statement that she was proud of her accomplishments as PUC president, and ``will continue to fight for consumers and for California's families and businesses as a commissioner.''

Just after Lynch was appointed president in January 2000, wholesale energy prices soared, which caused the state's three investor-owned utilities to rack up billions in debt that a deregulation scheme prevented them from passing on to customers. The PUC approved higher electric rates to help the utilities repay the debts.

``This sure seems like it would have been the time to have an independent consumer voice on the Public Utilities Commission, after the scandals and the crises in the past two years,'' said Betsy Imholz, director of Consumers Union's West Coast office.

During the energy crisis, the state bought energy at high wholesale rates, then sold it to customers at lower capped rates. The difference, amounting to billions of dollars, will be repaid by consumers over the next decade.

Customers who turned to ``direct access'' arrangements will have to pay a surcharge to pay their share of that debt.

Peevey, as an interim commissioner, voted for a plan to charge direct access customers that Imholz said won't raise enough money and burdens remaining utility customers with too large a share of the debt.

The governor also appointed his former aide Susan Kennedy to replace Commissioner Henry Duque, whose term expires Wednesday. Kennedy, Davis' Cabinet secretary, will earn an annual salary of $114,191.

Kennedy's appointment means the governor is losing another top aide as he enters his second term. Finance Director Tim Gage stepped down in December.

Both Peevey and Kennedy will have to be confirmed by the Senate. The commissioners are appointed for six-year terms. The governor names the commission's president.

Sen. Debra Bowen, D-Marina del Rey, the chairwoman of the Senate Energy Committee, said there were a number of issues facing the PUC in 2003, which will have a long-lasting impact on utility ratepayers.

Those include setting electric rates for utility customers and whether to continue investigations into money transferred from utilities to their parent companies.

``The next PUC commissioner needs to be someone who looks after and protects the interests of ratepayers,'' Bowen said. ``I have a great deal of respect for Susan, but whether she fits that bill is something we'll find out during the Senate confirmation process.''

Kennedy, 42, was a key adviser to Davis during the state's energy crisis in 2000 and 2001 and helped create the governor's energy conservation programs and to streamline the application process for new power plants.

^ =

On the Net:

The Public Utilities Commission: http://www.cpuc.ca.gov

(Copyright 2002 by The Associated Press. All Rights Reserved.)