Kennedy a Driving Force on the PUC

Few who deal with the state Public Utilities Commission expect the agency to veer substantially from its recent pro-business course after the departure of hard-driving Susan Kennedy, named Wednesday as Gov. Arnold Schwarzenegger’s chief of staff.

But many figure the agency will become more collegial and, possibly, more effective as it tries to balance the interests of consumers against those of power and phone companies.

“She was such a polarizing factor,” said John Sumpter, regulatory affairs executive at phone company Pac-West Telecomm Inc. in Stockton. “Sometimes it only takes one personality to leave for the chemistry to change dramatically.”

Blunt-talking and strong-willed, Kennedy herself said last spring that she was suited less to the give-and-take of the five-member PUC than to the command and control of the executive suite, where she was once deputy chief of staff to Gov. Gray Davis.

Her aggressive approach pleased energy and telecom executives, who saw her as instrumental in pushing policies more friendly to business through the PUC. For example, she orchestrated the ongoing revision of the state’s telecommunications rules, largely to the liking of California’s two dominant phone companies.

“I don’t know of any consumers who are going to shed any tears over her departure,” said Mindy Spatt, spokeswoman for the Utility Reform Network.

Kennedy will have considerable sway over the appointment of her replacement.

“She’ll be our sixth commissioner,” said Commissioner Geoffrey F. Brown. “She’s going to be calling all the plays.”

Both business and consumer groups expect Schwarzenegger to appoint a candidate who, like Kennedy, believes in taking regulatory shackles off big businesses and letting the markets determine their fate.

Names emerging Wednesday as successors to Kennedy included Joseph Desmond, whose term as chairman of the state Energy Commission ends this year; Robert Lane, an aide to PUC member John Bohn, and former state Sen. Byron Sher, who has written several landmark environmental bills.

Kennedy accomplished much of what she set out to do when Davis appointed her nearly three years ago to swing PUC policy toward business. The commission historically was split more between consumer and business interests than along party lines.

Last year, there were five Democrats; this year four, including Kennedy, who describes herself as “a Democrat to the core.” The departures earlier this year of Loretta M. Lynch and Carl W. Wood -- both of whom generally favored consumers over industry -- shifted the balance on the PUC in Kennedy’s favor.

“Susan is very pragmatic and smart, and a person who can get things done,” said Jan Smutney-Jones, executive director of the Independent Energy Producers Assn. “She is looking at trying to get California in the 21st century from both a regulatory perspective and a technological perspective.”

But some inside the PUC complained that Kennedy ran roughshod over staff and colleagues.

She leaned on newly appointed Commissioner Dian M. Grueneich to vote for shelving the nation’s first consumer protection rules, which cellphone companies had been chafing under since the rules were passed in May 2004.

Last March, Grueneich, not yet confirmed, complained in an internal e-mail obtained by The Times that Kennedy was seeking the governor’s help in getting Grueneich to put on ice the so-called consumer bill of rights.

“My view is that things are getting worse,” Grueneich wrote.

Both she and Kennedy later said they had patched up their differences.

Ironically, Grueneich, whose confirmation was held up by state senators because of her vote on the bill of rights, has wanted to revive the issue. With Kennedy gone, she should have the backing of Brown and, perhaps, John Bohn, appointed in May.

Kennedy took such a “scorched earth” policy through phone regulations that “there’s not a lot of fertile area there for anyone to do much with,” said Michael Shames, executive director of the Utility Consumers’ Action Network in San Diego.

The phone giants don’t see it that way.

“Kennedy has had a real sense for business and what drives investment and job creation,” said Timothy J. McCallion, president of Verizon’s Pacific region. He said Kennedy’s support of Verizon’s effort to install high-speed fiber-optic cable to homes has led to 1,300 new jobs in California.

With new technologies keeping the telecommunications industry in turmoil, McCallion said, important issues remain at the PUC. Among those are regulations that would ease state oversight of large phone carriers to help them to compete against cable TV.

On energy matters, Kennedy has earned praise from consumer groups for championing energy efficiency programs. The commission is expected to push ahead with a multibillion-dollar program to promote energy efficiency and expand the use of renewable energy, particularly solar power.

Kennedy has been “very open to using market incentives to improve the electricity industry,” said Severin Borenstein, director of the UC Energy Institute in Berkeley.

“But she is not an ideologue who thinks that the markets are always perfect or always get things right or are always the way to go,” Borenstein said.