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Legislators critical of utility commission budget mess

10:54 PM, Mar 6, 2013   |    comments
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It was one of those rare Capitol moments at a Wednesday morning hearing, a moment where a complicated, and confusing, controversy is all summed up in one simple -- and brutally honest -- exchange.

"Are you fully complying with the law?" asked Assemblyman Steven Bradford, D-Los Angeles, of the top staffer at the California Public Utilities Commission.

"No," replied CPUC executive director Paul Clanon.

The answer was in regards to one small, but symbolic, part of an audit into the quasi-independent state agency's budget protocols, an audit that legislators say is only the beginning of a deeper examination into a system accused of being over its head in keeping track of billions of dollars.

"I think the full story has yet to be told," said Assemblyman Richard Bloom, D-Santa Monica, who chaired the Assembly budget subcommittee hearing called to ask the utility commission's leaders some tough questions.

The criticism dates back to last summer, after Gov. Jerry Brown used the state parks hidden money saga to order his budget staff to review the account balances in hundreds of designated special funds in state government.

Budget analysts flagged many of the funds overseen by the Public Utilities Commission as problematic.  In the audit finalized in January (PDF), the state Department of Finance laid out "significant weaknesses" in the CPUC's budget practices.

The examples were pretty hard to dispute.  Gaps in oversight for 10 of the 14 special funds under CPUC's jurisdiction; one "unrecorded" transaction in a surplus money fund of $275 million; and reports on consumer-funded utility funds that haven't been filed with state officials since 1977.

It was that last one that was the focus of Assemblyman Bradford's pointed question.

"Look, today was a bad day for the PUC," said agency executive director Clanon in a post-committee hearing interview.  "These are some uncomfortable results. When you get these kinds of audit results, that's how you get better."

Legislators seemed skeptical of claims by the agency's staffers that the failures in budget practices have led to actual spending errors of money collected from ratepayers... or those same customers of utilities paying too much to fund services ranging from renewable energy projects to fees earmarked for telephone services for the blind.

The closest CPUC staff would come to allowing such theories was that lax oversight could have led to poorly timed consumer fee increases.

"Mistakes could have meant increases rolled out fast, not gently over time," said CPUC executive director Clanon in his testimony before the committee.

Notably absent from the hearing was the one utility agency official who's been around for many of the years the budget practices seem to have been most in question: CPUC president Michael Peevey, who's served as a commissioner since 2002.  The rest of the commission, all gubernatorial appointments, were tapped by Brown since he took office in 2011.

Even so, Peevey's job appears to be secure.

"We're confident the PUC is committed to addressing the issues identified in the Department of Finance's audit," said Brown spokesman Evan Westrup in an email reply to a question directly about the governor's faith in the agency's top man.

Legislators voted to ask Brown's budget department to do a deeper dive in to the utility commission's budget practices.  CPUC staff are already under a mandate to submit a detailed "corrective action plan" no later than April 10.

"The public has a right to know, with a great deal of precision," said Assembly subcommittee chairman Bloom.  "Without proper oversight, you end up spending, mismanaging and misspending public money."

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