Panel advises California energy reorganization plan be rejected

Washington (Platts)--24Jun2005

A citizens' panel responsible for reviewing all plans to reorganize California
state government Thursday recommended that the Legislature reject Gov Arnold
Schwarzenegger's proposal to create a Dept of Energy, determining that parts
of the strategy "are legally flawed." While the state's Little Hoover
Commission applauded the governor's plan to create an energy department,
saying the "need for leadership on energy is essential and cannot be ignored,"
it cited legal rulings by the state's legislative counsel and attorney general
that found provisions of the proposal that would transfer regulatory
responsibility over the permitting of electricity transmission lines and
natural gas facilities from the Public Utilities Commission to the California
Energy Commission "cannot be done through the reorganization process." The
commission said that under state law a reorganization plan cannot be amended
and automatically goes into effect unless the Legislature rejects it.

Because the commission believes that the governor's plan as proposed would be
open to legal challenges if it became effective, it recommended that the
Legislature reject the proposal. The commission encouraged Schwarzenegger to
submit a revised plan that addresses the AG and legislative counsel's legal
concerns. The commission told the governor that "substantial progress has been
made since the electricity crisis, but analysts agree that more needs to be
done to increase supplies and manage demands. A compelling case can be made
that diffused regulatory authority contributed to the state's clumsy response
to the electricity crisis, and that a more centralized structure is needed to
forge and execute a cohesive strategy for ensuring an adequate supply of
energy." But in addition to concerns over the legality of transferring some
PUC duties to the CEC, the commission also said the governor's proposal "needs
additional planning and analysis to ensure that proposed changes will actually
improve decision-making."

The PUC and CEC, the commission said, "have different competencies,
decision-making procedures, and standards for judicial review. Given the
importance of these proceedings, the administration should carefully review
the regulatory procedures and present to the Legislature a comprehensive
proposal for streamlining, integrating and if necessary consolidating
authorities." In addition, the commission expressed concern over the language
in the plan that would make the secretary of energy chairman of the CEC,
saying that the proposal "would have given extraordinary authority to the
secretary--an at-will appointee of the governor--particularly over the staff
that would support the [CEC]. Modification of this scheme, including
provisions for an independent chairperson, could provide the desired
integration without jeopardizing the fact-based analysis and independent
decision-making that is necessary to preserve the integrity of often
controversial proceedings."

Copyright © 2005 - Platts

Please visit:  www.platts.com

Their coverage of energy matters is extensive!!.