Governor Calls for Overhaul of Energy Panel : Regulation: Wilson urges less government intervention and more market competition.

Gov. Pete Wilson on Thursday proposed to overhaul the way California regulates the energy industry, calling for a shift away from government intervention and toward more reliance on the competition of the marketplace.

Wilson’s proposal grows out of his earlier call for eliminating the California Energy Commission, a 1970s creation that the governor says has outlived its usefulness.

Wilson, in a letter to legislative leaders released Thursday, said the commission functions that are worthwhile could be merged with the existing Conservation Department. He also suggested transforming the Public Utilities Commission from a court-like decision maker into more of an informal arbitrator among opposing factions.

“The common theme which animates all of my proposals is the desire to advance the use of competition and market forces and to substitute them for the prior function of government which was wedded to an era in which monopolies dominated the energy scene,” Wilson wrote.

It was not clear from Wilson’s letter how much of the Energy Commission’s $80-million state and federal budget might be eliminated. He did say that four of the panel’s five $90,000-a-year commissioners would lose their jobs, with one position retained as the director of the merged department. The commission is responsible for forecasting the state’s electricity needs, licensing power plants, promoting conservation, developing energy resources, and planning for and directing the state response to energy emergencies.

The governor’s proposal comes as he and state lawmakers prepare for what is expected to be another bruising round of budget negotiations. And the Energy Commission, a perennial target of budget-cutters, happens to be the cherished creation of the state Senate’s chief budget-writer, Democratic Sen. Alfred Alquist of San Jose.

Early indications are that Alquist will oppose Wilson’s plan. Alquist and Sen. Herschel Rosenthal (D-Los Angeles) in September wrote Wilson a letter proposing that he expand the Energy Commission’s duties rather than eliminate the panel.

Alquist’s top budget aide, Steve Larson, said Wilson’s proposal was “politically motivated.”

Alquist’s ability to protect the commission was acknowledged by Republican lawmakers Wednesday, who said the senior senator’s power was one reason they left the panel alone as they compiled a hit list of $4 billion in potential budget cuts.

The Republicans, 13 of the Assembly’s most conservative members, suggested 86 different budget reductions, with the bulk of the savings coming from cuts in health and welfare programs for the poor.

The proposal called for wiping out state funding for 16 separate functions, including the Coastal Commission, the state Fire Marshal and the Agricultural Labor Relations Board, but not the Energy Commission. Assemblyman Dean Andal, the Stockton Republican who headed the GOP budget task force, said he doubted elimination of the Energy Commission is feasible.

“We’re trying to focus on the ideas that have the best chance of selling among a bipartisan group of budget-cutters,” Andal said.

Wilson first suggested eliminating the Energy Commission as part of the 1993-94 state budget he proposed last January. But, with Alquist leading the way, the Legislature blocked the proposal and instead called on Wilson to propose a plan to reorganize the Energy Commission and the Public Utilities Commission.

Only two weeks ago, the governor shifted Jananne Sharpless, chairwoman of the smog-fighting Air Resources Board, to a seat on the Energy Commission and said he expected her to help plan for “the long-range energy needs of this state.”

But in his letter to lawmakers, Wilson said the Energy Commission was a relic from the 1970s, when the distribution of natural gas and electricity was controlled by monopolies.

“But that era is passing, if not already past,” Wilson wrote.

No longer is it necessary to have both the Energy and the Public Utilities Commission regulate the siting of power plants, he said, suggesting that this role be centralized in a single, appointed board.

In addition, Wilson said, the government in the 1990s need not plan for the development of sources of energy and options for its distribution. That role can be best performed by the private market, he said.

Wilson suggested creation of an Energy and Conservation Department that would assume some of the duties of the Energy Commission and some functions now performed by the State Lands Commission and the governor’s Office of Planning and Research.

He also said the PUC’s five commissioners should be given more power over their staffs and the agency should focus on resolving disputes through negotiation rather than at trial-like hearings.