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Assy Cte on Utilities and Commerce Hearing on CPUC

California State Assembly (2015-03-16)

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Letter sent by Cte Chair Rendon to CPUC President Picker after the meeting

COPS followup letter to the committee to point out points of contention.

Transcript of Key Testimony

Do you feel like the PUC made the wrong call, and can you illuminate a little bit, why?

I'll be honest. I did vote for the-- the eventual proposed decision, the eventual decision that came from the Administrative Law Judges. I sat through a couple of public workshops where and number of parties, including some of the folks here in the room here, and who advocated for something that I thought really wasn't as good as what we finally voted out.

I learned one thing that I've learned again since, that this process of settlements may move things along more quickly, but it does not always get to a result that I am thoroughly comfortable with. And so, I'm struggling then, to decide, what do you do when you have this process that moves things along more quickly, and provides some certainty of outcome but where you don't quite feel comfortable about what actually came out. Now, we got something better than what was originally proposed in the settlement, and eventually everyone came around to support the Commission's decision who participated in those settlement discussions, but, you know, I'm still not sure that we have always made the best decisions. I'm not sure how I would improve them. I will just confess that last Friday we announced the largest utility penalty that we've ever levied against a utility here in California and today the stock of that utility went up 4%.

So I don't have good answers to your questions because I'm still learning, struggling, trying to figure this out, trying to figure out, “How much do I really trust the process”

I sure that some people in the market were fearing that the penalty would be even larger. The question I have, or the input that I have is, we want you to fight harder for the ratepayer when cases like this come done, where if people mess up, there should be some consequences for that, they can't take all of the burden, but that we need you to stick up for us, and we need you to tell us what is going on, and frankly, one sentence in – here's your annual report, and it's nearly an inch thick. And there is only one sentence on the matter which is the loss of 10% of the energy in the state and a $3.3 billion hit to the ratepayers. I, you know. We want to hear more.

I can talk to you a little bit more about this. I'll tell you that I am trying to really take my role as a decision maker in a very legalistic process seriously. And part of that process is to ensure that we actually make decisions based on testimony and documentation that is actually in the written record. And unless it is in the written record, we can't rely on it for making our decisions. When I read the record, this was the best decision I thought I could make. I am troubled because I think that there are possibly things that are not in the record that were not brought forward by parties. Maybe they came up in the settlement discussions which were closed to us. Maybe they were voiced by people who were not parties to the proceeding and were not entered in the record. But like a judge in a law case, I can only make my decisions based on those things that are actually brought to us and presented to us in the record. And that's partly to ensure this even-handedness that we don't make decisions based on information that everbody else can't see. And so, I struggle with that. And I struggled with that decision. I think it was the best decision I could make based on what was before me at the time.

I don't want the electricity sector take out all the oxygen in the room, because there are many other areas (goes on to ask about 9-1-1 service). 1:35 – question on intervenor compensation and the queue.

I wanted to return to the issue of SONGS, the San Onofre Nuclear Generating [Station]. During the 1980s PUCs in Montana, Missouri, California, disallowed costs from being added to the ratebase because of mismanagement of construction projects. Yet here, at SONGS, the decision was that 2/3 of the costs related to SONGS would be passed on to ratepayers instead of shareholders. So I was curious as to the extent to which – and I think this points to the decision-making processes and the way that decisions are made at the PUC. Given that there was a precedent for disallowing construction – disallowing costs related to mismanagement, how did the PUC arrive at this decision relevant to SONGS?

As best I can restructure – reconstruct it from my reading of the record, essentially there was a long discussion within the commission as to how you actually figure out what really should be charged to the ratebase and what should not be charged to the ratebase, and so what the Commission did is hire some experts and did some research, and tried to assign the date at which it was most reasonable to assume that you couldn't make the nuclear generating station work. And so, some of the infrastructure that was in place before then was just assumed to be part of the ratebase. At the point it became very clear that you could not um make the system functional, everything beyond that when to the cost of the utility. So these are very big, costly infrastructure, and I don't know what the best way is to figure out how much that you disallow, and how much you allow. That is eventually the process that we settled on. And then it became just a matter of trying to do the accounting to figure out what fell after that date, and what came before that date.

Okay. Also relating to, and again this pertains to a lot of the issues we talked about with regard to transparency, but also with respect to your decision-making process. It's come to the surface that in late March [of 2013] your predecessor held detailed discussions with Southern California Edison's Chief Legal Counsel, in Warsaw, Poland, regarding the outline of a potential settlement on SONGS. This was during the period when the Commission had made an active investigation into the SONGS matter, and more than two months before the [secret] settlement process started with the Commission. Among the ethical concerns raised by these meetings was that Southern California Edison knew ahead of time what your predecessor wanted to see in the settlement. Then SCE could easily manipulate the record to achieve the terms they prenegotiated with the President. To what extent does this now infamous meeting in Warsaw potentially undermine, taint, or inappropriately predetermine the outcome of the SONGS settlement.

I don't think I can really answer that question in full, I think in part some of the issues that two different uh investigative agencies are looking at, the State AG and the Federal Dept of Justice, and I partly stood aside from trying to reconstruct that so that I might not know things that um, that other people can't read in the newspaper. I can't be accused of disclosing to anyone potential defendants things that might help them to avoid prosecution. So, I'm just going to have to depend on them to tell us whether there was mis-doing. I can't really form effective judgments on things that I read in the newspaper because I don't know exactly what the newspapers have and what they don't have. I'm going to leave that to the justice system.

I do know that as somebody who actually voted on that, the only thing that I had to make a decision on was the record. And so, it looked to me like it was built out of discussion and public testimony, everybody else had that same record, and duh, and that's about all I can really offer you.

'kay. With respect to these meetings, Southern California Edison has refused to release internal emails related to meetings with your predecessor. Will the PUC compel Southern California Edison to release those email, and when will the PUC be releasing its emails?

I don't think we've been asked to in a formal way. I will be honest with you that we will hit the same roadblock that we do under any document that we have to review for public disclosure, we will have to submit it to our P.U.C. 583 screening before we get to the public records act. There are specific things that relate to potential legal confidential documents that we can't disclose. There are also trade secrets and third-party information. Until we have a request and until our attorneys start to grind it through, I can't really give you an answer. I will say that if we do get the request, then that is probably going to be added to the list of 220 other Public Records Act requests. Generally, when you get a public records act request, my experience of having worked around it, frequently people will ask for everything in the world, you try to get them to be more specific, if they ask for everything in the world, it takes a long time to give it to them, and frankly they are unhappy because they get everything and they can't find things they actually want to see. So, in all fairness, people are probably going to have to be patient because we are all working very hard around the clock to grind through those other 220 public records act requests. We are not allows under the public records act request to set priorities. We just grind through them.

I believe you said earlier there are something like 220 public records act requests right now.

I think most of my colleagues are aware of the potential litigation between Southern California Edison and Mitsubishi. And the settlement negotiated or approved by the CPUC allowed Southern California Edison to keep 50% of any funds recovered from this litigation with Mitsubishi. Why should Edison be able to recover anything for its investments in SONGS relevant to the Replacement Steam Generators

I think it has to do with the question of whether they fairly and honestly procured equipment that they had good reason to believe would function in the way it was intended to function and whether being sold a bad technology whether they are required to take all the blame for that.


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Title Assy Cte on Utilities and Commerce Hearing on CPUC
Publisher California State Assembly
Pub Date 2015-03-16
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Keywords California Public Utilities Commission, Nuclear Energy, Shut San Onofre, Stop The Unfair Settlement
Media Type Video
Media Group News
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Topic attachments
I Attachment Action Size Date Who Comment
3_19_15_Letter_to_President_Picker_from_Asm_Rendon.pdfpdf 3_19_15_Letter_to_President_Picker_from_Asm_Rendon.pdf manage 91.5 K 2015-03-19 - 19:13 Raymond Lutz Letter to CPUC President Picker from Assembly Member Rendon, Chair of the Utilities & Commerce Committee
FollowupLetterToAssyUtilCte-Rendon.pdfpdf FollowupLetterToAssyUtilCte-Rendon.pdf manage 341.9 K 2015-03-20 - 23:45 Raymond Lutz COPS Followup letter to the committee on this hearing.
Topic revision: r3 - 2015-06-21, RaymondLutz

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