Governor Picks Two to Replace PUC Members

Gov. Arnold Schwarzenegger made his first appointments to the California Public Utilities Commission on Thursday as the panel -- over the objections of its two departing members -- rejected a regulatory judge’s finding that Southern California Gas Co. contributed to natural gas price spikes during the energy crisis.

Schwarzenegger nominated Silicon Valley businessman and fellow Republican Steve Poizner and San Francisco attorney Dian Grueneich, a Democrat, to the five-member PUC.

The nominees must be confirmed by the state Senate by the end of 2005. In the meantime, the two will take their seats in January, replacing Loretta M. Lynch and Carl Wood, who are seen as the commission’s chief advocates for consumer and environmental causes.

With the departure of Wood and Lynch, who acrimoniously broke with the majority on most substantive issues, Schwarzenegger can expect a more friendly reception from the commission, a powerful entity that regulates companies that provide electricity, natural gas, telephone service and water to homes and businesses across the state.

The three other commissioners, though appointed by former Gov. Gray Davis, a Democrat, have generally backed Schwarzenegger’s energy initiatives.

“The new members share my commitment to establishing a business climate that will attract investment and jobs to California,” the governor said in a statement.

The nominations were endorsed by business, consumer and environmental groups. Justin Bradley of the Silicon Valley Manufacturing Group, a high-tech trade association, called the two “a very balanced pair.”

V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies, a Sacramento advocacy group, praised Grueneich, 52, as a “good and smart lawyer who knows the institution well.”

Poizner, 47, founded SnapTrack Inc., a cellphone technology company that he sold to Qualcomm Inc. in 2000. Poizner ran unsuccessfully for the state Assembly in November in a heavily Democratic district.

Poizner is both “environmentally strong” and supportive of at least a limited move toward a free market for electricity, said James L. Sweeney, an energy expert at Stanford University and member of Schwarzenegger’s Council of Economic Advisors.

That free-market leaning worries some consumer activists.

“He apparently worships at the church of deregulation,” said Mindy Spatt, spokeswoman for the Utility Reform Network.

PUC watchers expect the new commission to be more cohesive than the last.

Such harmony wasn’t evident Thursday in the debate over whether to uphold an administrative law judge’s proposed decision to blame Southern California Gas, a unit of San Diego-based Sempra Energy, for helping cause record prices in December 2000.

The draft of the decision, which was supervised by Lynch, recommended that the company refund $28.8 million in profit, plus interest.

Though an earlier draft of the decision accused Southern California Gas of outright manipulation of the market, Thursday’s final version noted that there was “no convincing evidence of intent” by the company to keep supplies tight.

Instead, the proposed decision charged Southern California Gas with failing to store sufficient gas and anticipate winter demand.

“Just because Southern California could have done it doesn’t mean it did so,” said Commissioner Geoffrey F. Brown, one of three members voting to shelve the judge’s recommendation. Brown, however, said he would back further inquiries into Southern California Gas’ conduct.

The Los Angeles-based gas utility said it was “vindicated” by the commission’s decision.

“The gas company is proud of its success in keeping its customers’ costs significantly lower than other utilities’ during the energy crisis,” said William L. Reed, senior vice president of regulatory and strategic planning. “During that time, we provided reliable service with no interruptions in supply and saved more than $200 million in gas costs for our customers.”

Atty. Gen. Bill Lockyer is conducting his own probe of possible market manipulation by Sempra and its affiliated companies.

Also Thursday, the commission voted 3 to 2 to approve a plan to have investor-owned utilities line up enough power at competitive prices, and from a variety of sources, to avoid electricity shortages from this summer until 2014.