Utility Regulators Creating A Banana Republic?

Saturday, 16 Mar 2013, 6:00:00 AM

Tom Elias

Thomas B. Elias, Columnist
Santa Monica Mirror Archives
Thomas B. Elias, 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


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


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


“It is not reasonable…when there is no need for incremental local

capacity until (at least) 2018…” said the administrative judge’s


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


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


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


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