Travel back in time to the mid-1980s, when California’s insurance rates for both cars and property were nearly the highest in America and climbing fast. In that era, state insurance commissioners, who held the power to stop much of that acceleration, were appointed by the governor.
Then came 1988, when a consumer group called the Foundation for Taxpayer and Consumer Rights (now known as Consumer Watchdog) and its leader decided to change all that. The group ran a ballot initiative known as Proposition 103, which made the insurance commissioner an elected official. Since then, California insurance rates have risen slower than those in any other state, saving customers over $100 billion. Coverage here remained as good as anywhere.
It’s now high time to regulate utility companies as firmly as insurance companies and to make utility regulators responsible to the public and the voters just like the elected insurance commissioner.
No industry has been cozier with those who regulate it than electric and gas utilities, which regularly get large rate increases, deserved or not. Debacles like the blunders that caused the closure of the San Onofre Nuclear Generating Station and the 2010 San Bruno gas pipeline explosion never dented the ever-rising rates and steady profits of companies like Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric.
Lax regulation also may have contributed to several of the huge wildfires that have plagued California over the last two years.
Into this scene now steps new Gov. Gavin Newsom, who vowed in an interview during his campaign to fight corruption that was allowed to fester in some parts of state government under predecessor Jerry Brown.
“I will not be timid about this or anything else,” he said. “Jerry Brown said reform is overrated. I say it’s underrated.”
The obvious way for Newsom to reform the state Public Utilities Commission would be to appoint some new members to the five-person panel. But the state Constitution doesn’t allow that to happen fast.
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PUC members serve staggered six-year terms, so no governor can name the entire complement unless he or she gets two terms, like Brown did. Brown filled the group with former aides, including current PUC President Michael Picker, who voted, as just one example, for a San Onofre settlement plan originating in an illegal meeting between former PUC boss Michael Peevey and Edison executives. It had customers paying 70 percent of the cost of Edison’s shutdown error, until public outcries caused the arrangement to be changed four years later.
Barring sudden resignations or the death of a member, Newsom is to get only three PUC appointees, one already named this year, and two more at the beginning of 2021. In January, he appointed Genevieve Shiroma, a farmer’s daughter and longtime member of the state Agricultural Labor Relations Board and elected board member for the Sacramento Municipal Utility District. Quick change is unlikely at the current pace.
The obvious way to create faster, orderly reform is to make PUC commissioners elected officials. This could be done via a 2020 ballot proposition, with an election to follow.
Even this would be slow and frustrating, with the current PUC majority continuing policies that favor utilities and cost consumers billions of dollars they probably should not be paying. Simultaneously, the PUC tries to delay and hamstring creating and expanding municipally-controlled Community Choice Aggregations, which often supply greener energy than the utilities at lower prices.
Newsom wasn’t specific about how he’ll combat corruption, except to say he will try to alter state contracting practices to make sure they always involve competitive bidding.
All this leads to the reality that it’s high time to take the PUC down a peg or three from its current exalted position, where members cannot be fired even by the governor who appointed them and their decisions are not subject to lawsuits in ordinary courts.
It will take time to make this 104-year-old agency answer to the voters. But that would be time well spent, even though the commission can be counted on to do whatever it can to maintain its status quo and quash any attempt to reduce its privileged status.