Utility Diversification Concerns Senate Panel

The state Senate Committee on Energy and Public Utilities on Friday introduced a four-bill package that would boost the state Public Utilities Commission’s power over utilities that diversify into non-regulated businesses.

The bills would give the PUC access to corporate planning and financial data so that commissioners could “better protect” consumers, shareholders and competitors of the non-regulated businesses.

Although the bills would not prevent diversification beyond a utility’s core businesses, they would “define what the relationship is to be between a utility and its sister companies,” said committee consultant Ann Gressani. “All of the utilities are embarking on diversification, and the senators recognize it’s in the process of happening.”

The bills would give commissioners the ability to review utility diversification proposals in order to insure that consumer rates would not be raised if the unregulated companies generated debt and liabilities.

Commissioners would also be given power to “insure that utility company managers are giving adequate attention to utility business” and are not transferring their best utility managers to non-utility businesses, Gressani said.

Would Require Notice

The bills would protect shareholders by requiring utilities to inform shareholders prior to diversifying beyond the utility industry. “People who invest in utilities are often retired people or conservative investors who invest in utilities because they are generally secure stocks,” Gressani said.

The four-bill package also provides added protection for companies that compete against unregulated businesses owned by communications and power utility companies. “We want to give the PUC access to (utility company) books to make sure that they aren’t using subsidies from the regulated businesses to fund other operations,” Gressani said.

The bills also would prevent utilities from disseminating “proprietary” information about consumers to unregulated subsidiaries unless competitors also share the information.

Although most utilities--including San Diego Gas & Electric, Pacific Telesis and Southern California Edison--have already ventured into unregulated businesses, Gressani said the four bills introduced on Friday “were carefully constructed to apply to all utilities . . . including San Diego Gas & Electric, which is seeking PUC approval to form a holding company to house its unregulated businesses.”

Although SDG&E;’s holding company request has appeared on the PUC agendas in January and February, the commission has twice delayed delivering a decision.

“The PUC would be well advised to hold off its SDG&E; holding company decision, if possible, to see what kind of reaction is generated by this legislation,” suggested Michael Shames, director of Utility Consumers Action Network, a San Diego-based consumer organization that has successfully lobbied the PUC to reduce SDG&E; rates. “The diversification issue is now one of the hotter issues in the utility industry and California could become the first state to introduce legislation governing diversification.”

A SDG&E; spokesman said the company would reserve comment on the proposed bills until its officials have had time to review them.