Power Crunch Puts Spotlight on PUC Chief

Loretta Lynch narrowed her eyes, obviously displeased.

At Wednesday’s public hearing, in which state regulators gauged whether to approve higher electricity rates, the Public Utilities Commission president got some annoying news: Even before her panel had reached its decision, a lawyer for a Southern California utility announced that his company had already spent more than $500,000 to begin sending notices to millions of customers that higher prices could soon follow.

“In the future you will comply with our rules and procedures and get approval before you begin to notify 4 million Californians of whatever the heck you want to say to them,” Lynch snapped.

As the room fell silent, she ordered the lawyer to “suspend all efforts to willy-nilly mail whatever it is you want to mail.”

The pointed rebuke speaks volumes, and not only about the tensions surrounding efforts by state utilities to raise rates and recoup billions of dollars lost in a deregulated electricity market.

It also says something about the 38-year-old Lynch. Barely nine months on the job, the former attorney and Democratic political campaign manager has emerged from relative obscurity, forced onto center stage in California’s electricity crisis.

With the board besieged by utility lawyers, lobbyists and public interest groups, and with a suspicious public impatiently awaiting their decision, Lynch has found herself in a political hot seat.

But throughout the public hearings here, she has stubbornly stuck to what she considers her mission: to defend consumer protection mandates while providing a fair and competitive environment for state businesses.

Headquartered in San Francisco, California’s Public Utilities Commission wields substantial control over energy, telecommunications, transportation and water matters statewide. The commissioners’ work is usually tedious and obscure--until they do something that hits ratepayers in the pocket.

Spurred by a public fury over the proliferation of telephone area codes, for example, the PUC last year embarked on a statewide numbering study after halting industry plans for new “overlay” numbers.

“The choice this commission makes could be monumental on everybody’s bills,” Lynch said. “And if that’s not enough, the utilities have sued us and threatened bankruptcy. That has a way of focusing your attention.”

But the career political insider--a former advisor to Gov. Gray Davis who has worked on the election campaigns of President Clinton, Sen. Dianne Feinstein and former state Atty. Gen. John K. Van de Kamp--has more on her agenda than just helping to set a fair standard for California’s electricity rates.

Lynch, the panel’s only female member, wants to enact some not-so-subtle changes in the way the commission does business.

“This commission is no longer an old boys network where you just have to get cozy with its members and everything will work out,” she said. “I come to the job as a lawyer with a different set of standards.”

Commissioner Carl W. Wood agreed.

“I think that’s a very accurate description--there are lobbyists who have always tried to curry favor,” said the 53-year-old, appointed last year by Davis.

“It was very much a clubby atmosphere. But President Lynch has brought a challenge to that. She’s tried to be proper in terms of her relationships with the parties who come before us.”

Advocates on both sides say she has quickly gotten up to speed on complicated issues.

“She’s extremely bright and very hard-working--that’s universally recognized,” said Marc Joseph, a lawyer for the Coalition of California Utility Employees.

Robert Kinosian, an analyst with the state Office of Ratepayer Advocates, said Lynch isn’t afraid to ask tough questions: “When she questions utility lawyers, I say to myself, ‘I’m glad you asked that. It’s a tough question, and I would have asked the same thing.’ ”

Wood is impressed by Lynch’s work ethic.

“When I leave at night I always poke my head into her office, and she’s there working late,” he said of Lynch. “She’s always the last to leave.”

Named to her post in March, Lynch was the first commission president to be appointed directly by the governor. Traditionally, commission members elected one of their peers as president, but the Legislature handed that power to the governor last year.

Lynch, a Davis campaign worker who previously ran the governor’s office of planning and research and advised him on utility issues, immediately sought to make her mark as commission president, former PUC workers say.

She publicly criticized some of her staff of 900 state employees for what she considered lenient enforcement-related settlements with utility companies and demoted the commission’s longtime director of consumer services.

Lynch will not discuss either matter, but former PUC workers say the moves were meant to send a signal to the state’s utilities.

“The message: Enforcement is going to get tougher from now on,” said Patrick Power, a former PUC employee.

Others worry that Lynch’s close connections to the governor will cloud her impartiality. “It’s Davis’ style to appoint people who will do the job,” said former PUC lawyer Edward O’Neill. “He doesn’t tell her what to do, but I wouldn’t expect her to go against his will.”

Lynch says she makes her own decisions.

“Every member of this commission has been appointed by a governor,” she said. “Obviously Gov. Davis is going to pick folks who reflect or are in sync with his viewpoint. And I don’t consider it inappropriate to build a bridge to the governor’s office. But I also stand by the role of this board as an independent body.”

Under the bright lights of the commission hearings, Lynch uses the dispassionate voice of the courtroom litigator. Yet in private, there is still much of the down-to-earth woman who grew up in Independence, Mo., and then attended USC and Yale Law School.

On Thursday, when an aide was unable to find documents she needed for that day’s hearings, she responded: “Oh, well, bummer.”

The ongoing power debate has changed Lynch’s view of her $113,000-a-year post: “The perception was that the PUC was a relatively sleepy little agency over in the corner of San Francisco.”

Nobody’s sleeping now. Especially during Lynch’s recent sparring with the utility lawyer over the company’s sending out what she considered to be premature rate-hike notices.

“What I saw that day was a regulated agency doing whatever the heck it wanted,” she said. “I have a responsibility to remind people, ‘Hey, this isn’t your father’s PUC. You’re going to follow the rules.’ ”

But Lynch has not always been the public crusader. In the early 1990s she worked for a San Francisco litigation firm representing companies such as Intel, Oracle and Johnson & Johnson in class-action and securities cases.

“So far it’s been even-steven,” she says. “I’ve done public interest stuff, and I’ve also represented some large companies.”

Her career has played out more in the political than thelegal arena.

Since receiving her law degree in 1987, Lynch has worked on behalf of the homeless for the Legal Aid Foundation of Los Angeles. She also served as assistant campaign manager for Van de Kamp’s 1990 gubernatorial bid.

Two years later, she became deputy campaign manager for Feinstein and worked on Clinton’s first presidential bid.

This spring she joined Wood on the PUC panel, forming a two-member Democratic minority that was usually outvoted by Republicans Henry M. Duque, Josiah Neeper and Richard A. Bilas.

But Davis is soon expected to replace the retiring Neeper with a Democratic appointee, shifting the commission’s political balance.

Lynch says the personal toll of the electrical crisis hit home in August when small-business owners testified about their hardships.

“One woman wasn’t going to buy back-to-school clothes for her kids because she had to pay her light bill--that just evoked memories of my own childhood,” she said.

Lynch, who grew up as one of an insurance salesman’s six daughters, said her father’s income was often irregular, forcing some difficult family choices.

“I remember that it was often which bill to pay first--do you have meat for dinner or pay the electric bill?” she said.

Lynch hopes she’ll make the right decisions to help lead California out of its electricity-rate nightmare.

And she hopes state legislators will give her time on the job before judging her performance.

At home, the crisis has forced her to become her own energy-efficiency expert. Recalling her late father’s constant warnings about turning off lights, Lynch has cut back.

“Even here at the PUC offices, I find myself walking around and turning off all the lights,” she says. “And every time I do, I think about my father. I know he’s just laughing about that one.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

The Public Utilities Commission

Established in 1911 to oversee railroads in California, the commission now also regulates telecommunications, electricity, natural gas, water and passenger transportation companies. The governor appoints the five commissioners, who must be confirmed by the state Senate, to six-year terms. The president is paid $113,287 annually; other members are each paid $109,799.

COMMISSIONERS AT A GLANCE

Loretta Lynch, president

Age: 38

First appointed: 2000

Party: Democratic

Education: B.A. in political science from USC; law degree from Yale University.

Career: Former director of the Office of Planning and Research for Gov. Gray Davis. Previously a Democratic campaign manager and partner in the San Francisco law firm of Keker & Van Nest, representing businesses and their employees in class-action suits, white-collar criminal cases and intellectual property disputes.

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Richard A. Bilas

Age: 65

First appointed: 1997

Party: Republican

Education: A.B. in mathematics from Duke University; PhD in economics from the University of Virginia.

Career: Former professor of energy economics and policy at the University of Oklahoma. Former California Energy Commission member.

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Henry M. Duque

Age: 68

First appointed: 1995

Party: Republican

Education: B.A. in political science, Stanford University; graduate study at UC Berkeley, Indiana University and Oxford University.

Career: Former executive with Trust Services of America, California Federal Bank and other financial institutions.

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Josiah L. Neeper

Age: 69

First appointed: 1995

Party: Republican

Education: B.A. in economics from San Diego State; law degree from UCLA.

Career: Former lawyer with Gray, Cary, Ware & Friedenrich in San Diego and Palo Alto. In 35 years with the firm he advised business clients on labor relations and antitrust law and served as general counsel to the University of San Diego and the Zoological Society of San Diego.

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Carl Wood

Age: 52

First appointed: 1999

Party: Democratic

Education: Attended UC Riverside.

Profession: Career: Former electrician at Southern California Edison Co.’s San Onofre Nuclear Generating Station and executive with Utility Workers Union of America.

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Source: California Public Utilities Commission

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LYNN MEERSMAN / Los Angeles Times