Consumer Federation of California

Senator Jerry Hill, D-San Mateo, was joined by Richard Holober, Consumer Federation of California, and Mark Toney, The Utility Reform Network (TURN), at a press conference today to unveil legislation that would prohibit the California Public Utilities Commission (CPUC) from giving away millions of dollars in ratepayer money to third parties without oversight and transparency.

The CPUC is scheduled to vote this week to award a $150 million, non-competitive grant to the Lawrence Livermore National Laboratory, using money paid by customers of California’s three investor-owned electric companies, including Pacific Gas & Electric Co.

Since he was appointed CPUC president in 2002, Michael Peevey has been involved in the creation of foundations and for-profit entities funded with utility ratepayer money. They range from the $60 million California Emerging Technologies Fund developed by Peevey in a telecommunications merger, to his $30 million California Clean Energy Fund, which has spun off two nonprofit and two for-profit entities, and has given money to three venture capital funds.

Emails between Peevey, his chief of staff, and officials and consultants representing the utilities and Lawrence Livermore ‘ obtained by TURN through the Public Records Act ‘ reveal that Peevey developed the idea of giving $150 million to Lawrence Livermore National Lab, and then assigned himself as the commissioner. No projects have been proposed that would justify the amount of funding.  As there are no project proposals, no merit review has been performed, and the review process does not meet accepted standards of reviewer independence and conflicts of interest. Peevey described the Livermore plan as ‘our overall grand project.’

Peevey is bringing the $150 million grant proposal to the CPUC to vote on Thursday.

Under Senator Hill’s proposed legislation, foundations and research projects funded by the CPUC would be reviewed by an objective third-party selected by the California Energy Commission to ensure ratepayer money is properly used. The commission would be required to publish an annual report to the Legislature listing all ratepayer-funded research projects, including published and public reports detailing their accomplishments.

The legislation would also prohibit the CPUC from creating ratepayer-funded foundations without approval of the Legislature and would prevent commissioners from conflicts of interest by sitting on boards of foundations created by the commission.

In 2007, Peevey was unsuccessful in his attempt to have California utility customers foot the bill for a $600-million global-warming think tank, the California Institute for Climate Solutions (CICS). Peevey assigned himself as commissioner to CICS, which would collaborate with the University of California to study climate change. The co-chairs for the venture would have been Peevey and the president of the University. The CICS was approved in a CPUC ratesetting proceeding, and the CPUC could have unilaterally increased utility bills to finance the program.

However, the Consumer Federation of California and other consumer groups opposed and helped defeat CICS funding because it would have been a costly and questionable departure from the agency’s mission to make sure ratepayers get affordable and reliable power. A Legislative Counsel opinion found the CICS was an illegal allocation of ratepayer funds.

‘The Consumer Federation of California supports Senator Hill’s legislation to bring more oversight and transparency to the CPUC. We’ve questioned the legality of using utility bills as a way of raising taxes in the past and still do. By increasing the role of the legislature in approving funding, we will have the necessary checks and balances,’ said Richard Holober at the press conference. ‘This legislation will move us in the right direction.’