How a bid to overhaul California’s energy regulator fell apart on the Legislature’s last day of session

Reporting from Sacramento —  A major effort to overhaul the state’s energy regulator surprisingly collapsed after late legislative maneuverings led to the unraveling of the broad coalition that had pushed for changes at the scandal-ridden agency.

The measure would have boosted transparency, strengthened safety rules and shrunk the responsibilities of the California Public Utilities Commission, the agency in charge of regulating the state’s electric and gas utilities as well as telecommunications and other major industries.

The PUC has been under scrutiny since an investigation of the 2010 natural gas pipeline explosion in San Bruno revealed dinner dates, shared talking points and other signs of a close relationship between regulators and utility executives. The furor grew after the 2013 closure of the San Onofre nuclear power plant in Southern California and the recent four-month-long Aliso Canyon gas leak encouraged further criticism of regulators’ oversight of utilities and safety standards.

In June, Gov. Jerry Brown and a trio of lawmakers announced they had agreed on a plan to overhaul the agency, what was supposed to be the culmination of years of bipartisan effort. Brown and the legislators released bullet points detailing the changes and the resulting legislation was expected to pass easily.

While two bills in the package made it to Brown’s desk, the legislation that included the majority of the changes from Assemblyman Mike Gatto (D-Glendale) and a companion measure from Sen. Jerry Hill (D-San Mateo) never came up for a vote before the Legislature adjourned for the year early Thursday morning.

“We ran out of time and we ran out of consensus,” Hill said.

Under the two measures that failed, the PUC would have been required to increase internal auditing and whistleblowing procedures and spin off control of transportation services such as Uber and Lyft to other agencies — a decision based on concerns the PUC was spread too thin. Similarly, the public would have gained easier access to agency records.

But as the Legislature’s final hours dwindled, details had yet to be nailed down, and the bills remained stuck in policy committees.

One major problem emerged last weekend when PUC President Michael Picker objected to a part of the bill that would have made it a misdemeanor for agency employees to knowingly release confidential information, arguing it would have opened up employees to criminal prosecution when responding to public records requests.

“Frankly the PUC wouldn’t support it, and would ask for a veto of the bill if it had that language in it,” Hill said.

But Hill worried that if he took out that provision, telecommunication and cable companies would have tried to kill the measure.

PUC spokeswoman Terri Prosper confirmed Picker’s stance, but said that the agency had worked diligently with lawmakers on the bills and was “stunned at the collapse of the reform legislation.”

Negotiations were still continuing through Wednesday morning with cable company representatives meeting in Hill’s office. By that point, the legislation had long missed key deadlines for the end of the session and could only advance if it received a waiver from normal Senate rules through a bipartisan supermajority vote.

As the clock ticked toward a midnight Thursday deadline, that support wasn’t there.

Around 11 p.m., state Senate GOP leader Jean Fuller (R-Bakersfield) wouldn’t allow Gatto’s bill to come to the floor. Gatto gave up at midnight, blaming Fuller in an interview immediately afterwards.

“It just seems like one of those things when somebody got tired and grouchy and they decided to kill the biggest utility reform bill of the year — arguably the decade,” said Gatto, who is leaving office due to term limits.

Fuller declined to comment. But Assembly GOP leader Chad Mayes of Yucca Valley, who rebuffed last-second maneuvering to have the bill go through his chamber, said the measure was too rushed.

“We recognize the need for changes at the PUC,” Mayes said in a statement. “However, those changes should be crafted in the light of day, not 15 minutes before the end of a two-year legislative session.”

A spokesman for the governor said Brown was disappointed that Gatto and Hill’s measures didn’t pass, but said Brown still intends to sign the two bills that did reach his desk. Those measures will increase public access to PUC proceedings and boost disclosure of private meetings between utility executives and regulators.

The failure of the largest bill frustrated those who have long advocated for changes at the agency, some of whom already believed the package didn’t go far enough to break up the coziness between the PUC and industry.

Former San Diego City Attorney Mike Aguirre, who sued the PUC in the aftermath of the San Onofre case and had praised the overhaul when it was announced in June, said it wasn’t fair to blame Republicans for its demise. Brown and Gatto didn’t make the deal enough of a priority to push it through the Democrat-controlled Legislature, he said.

“It was a tremendous charade put on the public of California for them to stand up and say they had a deal and then not even have Gatto’s bill pass,” Aguirre said.

Aguirre lost a state appellate court case on Wednesday asking for the release of any emails between Brown and the PUC over the San Onofre shutdown. The bill that failed the same day in Sacramento would have allowed a Superior Court, not an appeals court, to make such decisions. (The substance of Aguirre’s case has yet to be decided.)

Wednesday’s court ruling emphasized the need for further PUC changes, Hill said. But he believed it might be more difficult in the future.

The June agreement between the governor and lawmakers on the PUC overhaul came after Gatto had secured a bipartisan vote in the Assembly on a constitutional amendment that would have given voters the opportunity to break up the PUC and allow the Legislature to then assign all of its responsibilities to other agencies.

That vote provided the kind of leverage for changes at the PUC, Hill said, that’s unlikely to be there next year.

“I hope we’ll still see the potential for reform,” he said.

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