Eight months after the head of the California Public Utilities Commission suggested it was time for a radical shake-up of Pacific Gas & Electric, the state’s largest power utility appears to be at much less risk of a hostile takeover or being broken up into smaller utilities.

While Gov. Gavin Newsom has been sharply critical of PG&E for years for fires and disasters blamed on its lax practices, the former San Francisco mayor has offered no encouragement to London Breed, the city’s current mayor, who is interested in taking over some PG&E assets and using them in a municipal power utility.

The bill passed by the state Legislature this month at Newsom’s behest to create a $21 billion account jointly funded by utilities and ratepayers to help deal with the high cost of wildfires included provisions that gave the CPUC more power to control the fate of PG&E assets. It also specified that any new owner of a utility cannot reduce the number of employees for three years, which analysts saw as an attempt to discourage a takeover.

Mayors blast part of wildfire legislation

Breed, San Jose Mayor Sam Liccardo, and Oakland Mayor Libby Schaaf sharply criticized these provisions in a letter to Newsom and legislative leaders. They “set a dangerous precedent by limiting local government autonomy over its own employee relationships,” the mayors wrote.

Newsom also effectively sided with PG&E in opposing the attempt by utility bondholders to force the utility to change its present plan to emerge from the Chapter 11 bankruptcy it filed for in January because of $30 billion in expected claims over wildfires blamed on the utility’s equipment. PG&E wants to use a portion of its earnings and cost savings to issue tax-exempt bonds to pay for wildfire costs. Bondholders back a complex alternative plan that would sharply reduce the equity of shareholders.

PG&E, which has 16 million customers, must finalize and file its reorganization plan with federal bankruptcy court by Sept. 29. To qualify for assistance from the $21 billion state wildfire relief fund, it must be out of bankruptcy by June 30, 2020.

Meanwhile, the CPUC president who blasted PG&E in December is likely in his final weeks on the job. Michael Picker announced in May that he would retire this summer but would stay on until Newsom chose his replacement.

Picker has long faced criticism for the perception that the utilities commission was too protective of the state’s three giant investor-owned utilities – PG&E, Southern California Edison and San Diego Gas & Electric.

New scandal was last straw for CPUC chief

But a turning point came in December when the CPUC staff presented evidence that PG&E knowingly followed unsafe practices in maintaining and inspecting natural gas lines for five years after a natural gas explosion killed eight people in San Bruno in 2010.

“This process will be like repairing a jetliner while it’s in flight,” he said. “The keystone question is would, compared to PG&E and PG&E Corp. as presently constituted, any of the proposals provide Northern Californians with safer natural gas and electric service at just and reasonable rates.”

Picker subsequently said the CPUC and state leaders should consider a state takeover or having the utility broken up into smaller components. 

The new scandal and Picker’s remarks helped drop PG&E’s stock price from over $23 a share in mid-December to under $7 a month later. The share price had rebounded to $18.70 as of the close of the market on Friday, reflecting analysts’ confidence that PG&E will survive Chapter 11. 

Proponents say government control will lead to cheaper utility rates and faster adoption of renewable energy.

This month, more than 950,000 homes and businesses in Los Angeles and Ventura will shift to a community-choice program – the Clean Power Alliance. It will be the state’s 20th and largest community-choice provider, which will then provide power to nearly 3.6 million customers in the Golden State.

Those numbers could drastically grow in coming years. Both San Diego Mayor Kevin Faulconer and Dianne Jacob, chair of the San Diego County Board of Supervisors, have endorsed community-choice programs. Many other local governments are watching how the programs work in places that have already adopted them.

SDG&E says it welcomes infrastructure-only role

To the surprise of many industry watchers, one of the state’s three giant investor-owned utilities isn’t fighting this development.

After San Diego began taking steps toward a community-choice program last year, San Diego Gas & Electric made clear its interest in getting out of energy procurement. Earlier this month, Kendall Helm, SDG&E’s vice president of energy supply, told the Los Angeles Times that the decision was straightforward.

“We don’t think we should be signing big, long-term contracts for customers that have made a conscious choice to be served by a different” provider, Helm said. “We think our primary role and our primary value is in the safe and reliable delivery of that power.”

Pacific Gas & Electric and Southern California Edison continue to defend the status quo and to work with the California Public Utilities Commission and SDG&E on “exit fees” assessed to departing customers to make sure they help pay for maintaining energy infrastructure. But PG&E, now in bankruptcy and facing possible dissolution by the CPUC because of repeated scandals, has dropped its once-aggressive opposition to the very idea of community-choice energy, including sponsoring a failed state ballot measure on the issue in 2010.

CPUC president fears programs could fail, cause havoc

But California’s most prominent regulator worries that adoption of community-choice’s programs could have huge unintended consequences.

CPUC President Michael Picker told the San Francisco Chronicle last spring that he worries about things going haywire.

“You’re going to have some failures,” Picker said. “Electric markets can be brutal. So what happens to the customers, midyear, if the company or the program goes away? Where do those customers go?”

In a May op-ed in the Sacramento Bee, Picker urged local officials pursuing community-choice to act with care.

“The last time California deregulated electricity, it did so with a plan, however flawed. Now, electricity is being deregulated de facto, through dozens of decisions and legislative actions, without a clear or coordinated plan,” he wrote. “If California policymakers are not careful, we could drift slowly back into another predicament like the energy crisis of 2001.”

Picker warns that managing California’s power grid requires expertise and will become increasingly difficult as new clean-energy mandates kick in and as new technologies come to the fore.

But these warnings so far don’t seem to resonate with the statewide business community, which so far has not taken a strong, consistent stand on community-choice.

Some local groups have, however. The San Diego Regional Chamber of Commerce, for example, questions the assumptions that community-choice will lead to cheaper utility rates and increased use of clean energy.

A California Public Utilities Commission report that Pacific Gas & Electric failed to fulfill its responsibilities to properly maintain

On Dec. 21, the CPUC released a dramatic statement saying it would consider drastic steps to address the “serious safety problems” it says the utility has long condoned. The commission said a break-up of the agency into smaller regional utilities or a state takeover would be among the possible changes it examined.

“This process will be like repairing a jetliner while it’s in flight. Crashing a plane to make it safer isn’t good for the passengers,” said CPUC President Michael Picker. “This is not a punitive exercise. The keystone question is would, compared to PG&E and PG&E Corp. as presently constituted, any of the proposals provide Northern Californians with safer natural gas and electric service at just and reasonable rates.”

CPUC looking at seven possible major changes

The CPUC statement said seven possible changes would be considered.

– Having “some or all of PG&E be reconstituted as a publicly owned utility or utilities.”

– Replacing some members of PG&E’s Board of Directors with members “with a stronger background and focus on safety.” 

– The replacement of existing corporate management.

– Adoption of a new corporate management structure with regional leaders overseeing regional subsidiaries.

– Linking PG&E’s “return on equity” – the profits it shares with its investor-owners – to its safety performance.

– Breaking the utility’s natural gas operations and its electric transmission operations into separate companies.

– Ending the arrangement in which PG&E is controlled by a holding company so it becomes “exclusively a regulated utility.”

Picker’s statement was a remarkable turnaround from his comments on Nov. 15, when his upbeat remarks about the ability of PG&E to survive its fourth consecutive year of devastating wildfires in Northern California led the utility’s stock price to spike.

It reflected the anger among CPUC officials over a staff report released Dec. 14 that found the utility had systematically neglected natural gas infrastructure despite being fined $1.6 billion and convicted of six felonies in federal court over the 2010 disaster in San Bruno, a suburb of San Francisco.

Utility facing 500 lawsuits relating to fires it may have caused

Even if PG&E survives in something like its present form after the CPUC’s review, its future is still very cloudy.

Because of claims that PG&E was responsible for the devastating Camp Fire that killed 85 people in Butte County in November, U.S. District Judge William Alsup announced he was reviewing whether PG&E had violated terms of its federal probation in the San Bruno case.

PG&E also disclosed to the U.S. Securities and Exchange Commission that it is facing roughly 500 lawsuits with more than 3,100 plaintiffs over claims the utility was responsible for many of the dozens of wildfires in Northern California since 2016.

It is also facing wildfire-related lawsuits from the state Office of Emergency Services, Cal Fire, Calaveras County and other government agencies.

But while the CPUC is apparently ready for major changes at the utility, it’s not clear yet how state lawmakers feel.

On Nov. 19 – even as criticism of PG&E swelled as confirmed deaths grew in the Camp Fire – Assemblyman Chris Holden, D-Pasadena, was reported to be considering introducing legislation to help the utility deal with wildfire costs.

Holden helped pass a law earlier this year that allowed PG&E to spread out the costs from the liabilities it faced from 17 wildfires in 2017.

Pacific Gas & Electric – the giant investor-owned utility that serves 16 million Californians – appears to be facing its gravest crisis since its founding in 1905.

The initial indications that PG&E’s equipment may have sparked the Camp Fire that killed at least 88 people in Butte County – the deadliest blaze in state history – initially led at least some state lawmakers to consider new legislation to try to insulate PG&E from potentially devastating liabilities. Earlier this year, the Legislature passed and Gov. Jerry Brown signed into law a measure that lets PG&E spread out the costs from 17 Northern California wildfires in 2017 and have its customers pay some of its bills.

The Bloomberg news service reported that Assemblyman Chris Holden, D-Pasadena, may introduce legislation to help PG&E in coming days.

But a federal judge and the president of the California Public Utilities Commission have shaken PG&E’s hopes that it can avoid crushing new blows.

Judge demands answers on PG&E, Camp Fire

U.S. District Judge William Alsup has ordered PG&E to provide evidence proving its negligence didn’t cause the Camp Fire – raising the prospect that the utility could be found guilty of violating the terms of its five-year criminal probation that began in January 2017.

The probation was imposed then by U.S. District Judge Thelton Henderson – along with the maximum possible fine of $3 million – after PG&E was convicted of six felonies related to the 2010 San Bruno disaster (pictured above). A PG&E natural gas pipeline that was found to have been poorly maintained exploded, killing eight, injuring more than 50 and wiping out 38 homes. The utility was convicted of five felonies for failing to keep the pipeline safe and a sixth felony for impeding investigators.

Judge Alsup was assigned to monitor PG&E’s probation. In a statement, Alsup said his goal was determining what “federal, state or local crimes might be implicated were any wildfire started by reckless operation or abandonment of PG&E power lines” or “inaccurate, slow or failed reporting of information about any wildfire.” If Alsup concludes that PG&E violated its probation, the utility could face unprecedented punishment from the judge.

Two days after Alsup’s announcement, CPUC President Michael Picker said he had concerns about whether PG&E’s “culture” had enough of a commitment to public safety. At a CPUC board meeting in San Francisco, the utility was ordered to implement 60 safety recommendations from a commission consultant.

Picker’s critique came less than two weeks after he stuck up for PG&E, challenging the idea that the Camp fire could or should put the utility into bankruptcy. “It’s just not good policy,” Picker told the San Francisco Chronicle. “It doesn’t work out.” This stabilized PG&E’s stock price.

The new tone from Picker was a departure from the normally close relationship between the CPUC and PG&E.

Those who have called for the CPUC to be reformed and to be much tougher with the utilities it oversees often cite the $1.6 billion “fine” the utility commission levied in 2016 on PG&E for the San Bruno disaster. More than half of the fine – $850 million – was actually a requirement that the utility upgrade its natural gas pipeline system.

Critics said this amounted to likening the improvements that PG&E had to make to a penalty.

Picker joined in the 4-0 CPUC board vote for the “fine.”

How much of wildfire costs not covered by insurance should be paid by California’s giant investor-owner utilities has been a significant issue since at least 2007. That’s when wildfires ravaged northern and eastern San Diego County, killing two people and destroying more than 1,300 homes.

San Diego Gas & Electric argued that it should be allowed to pass on $379 million in related costs. But the California Public Utilities Commission and state courts – noting the evidence that poorly maintained equipment had been blamed for much of the damage in two state investigations – have rebuffed SDG&E. The utility’s most recent setback came just last week when the state 4th District Court of Appeal in San Diego rejected a call to overturn previous rulings.

But during SDG&E’s long fight for a utility-favorable interpretation of liability laws, the debate has become far more high-profile. With six of California’s all-time 10 worst wildfires occurring since September 2015 in areas served by Pacific Gas & Electric and Southern California Edison, the question of what to do to keep the state’s two largest investor-owned utilities in business has emerged as one of the thorniest, most contentious issues in Sacramento.

Now, with Northern California reeling from its deadliest fire ever in Butte County, and with a large area of Ventura County and northwest Los Angeles County ravaged in the past two weeks, PG&E and Edison are confronted with a perverse twist on their successful efforts to get the Legislature to give them relief from huge wildfire costs.

Law protecting utilities doesn’t take effect until Jan. 1

Senate Bill 901 – the main measure passed in late summer to insulate utilities from the extreme costs of fires – doesn’t take effect until Jan. 1. That means its provisions to limit utilities’ liabilities if it could be shown they properly maintained their equipment in fire-prone wilderness areas won’t help PG&E or Edison with this fall’s blazes.

Instead, the old standard that led to negative rulings against SDG&E will be used in assessing damages. Given that utilities’ equipment is blamed for helping start the latest round of wildfires, that could be apocalyptic for the finances of PG&E. As of Monday afternoon, the Camp Fire had killed 77, with nearly 1,000 people unaccounted for, and torched 151,000 acres and nearly 13,000 structures.

In the Woolsey fire northeast of Los Angeles, three people have died, while more than 96,000 acres and 1,400-plus structures have burned.

In coming days, the focus is likely to be on how many of the missing in the Camp Fire are dead. It could end up as one of the five deadliest natural disasters in the United States in this century – nearly as lethal as Hurricane Katrina.

But eventually the focus will return to whether PG&E can survive the latest conflagrations even as it deals with potential losses in the billions from previous fires – and how much more state lawmakers and Gov.-elect Gavin Newsom should do to help the utility survive in its present condition.

Its company valuation plunged by more than one-third after the severity of the Camp fire became evident, only to jump somewhat late last week after the president of the state Public Utilities Commission offered supportive comments.

“It’s not good policy to have utilities unable to finance the services and infrastructure the state of California needs,” Michael Picker told Bloomberg News. “They have to have stability and economic support to get the dollars they need right now.”

PG&E has filed for Chapter 11 bankruptcy before, in April 2001, when the utility was squeezed by sky-high energy costs after the blackouts of winter 2000-2001. It emerged from bankruptcy three years later.

Lawmakers have little goodwill for ‘criminal’ PG&E

But a huge scandal since then has left Northern California lawmakers with less goodwill toward the 113-year-old utility, whatever Picker’s views and whatever their willingness to pass SB901.

In 2010, a PG&E transmission line exploded in the San Francisco suburb of San Bruno, leaving eight dead and destroying 38 homes. In 2017, a federal judge found the utility guilty of five felonies for its failings to safely maintain the gas line, and a sixth felony for obstructing the National Transportation Safety Board’s investigation into the disaster.

Sen. Jerry Hill, D-San Mateo, routinely refers to PG&E as a “criminal” institution. Last week, he renewed his call to break up the utility, saying it could no longer be trusted to act in the interest of public safety.

PG&E shares closed at $23.26 in Monday trading. That was down 58 percent from its 52-week high of $55.66.

Now there’s one more story that places the PUC in very unflattering light. KQED has details:

In 2011, Steven and Sharon Vego, along with their 21-year-old son, Jonathan Cole, were killed after a power line went down in their backyard in San Bernardino. …

 

[The Vegos] left behind two kids — one of whom watched from inside the family house as her father, then mother and brother, all died in January 2011.

 

Within a few months, the surviving children filed a lawsuit and asked the CPUC for its investigation report. The CPUC voted in May 2011 to allow the release of that report. It was issued Dec. 17, 2012, and found that the incident was not only Southern California Edison’s fault, but that it could have been prevented if the utility had responded to previous issues on the same electricity circuit.

 

But public records released by the CPUC show the agency didn’t give the report to the Vego family until March 19, 2014 — more than two years after the family settled its lawsuit with Southern California Edison. And the CPUC waited until five days after it had entered into a settlement agreement in which Southern California Edison admitted that it violated state regulations, that there had been similar incidents previously and agreed to a $16.5 million fine.

PUC sides with utility over ‘grieving family’

In a Feb. 16 letter to CPUC President Michael Picker, Sen. Jerry Hill, D-San Mateo, decried how the “commission — which was the only public entity to perform an investigation — effectively took the side of the utility against the grieving family in a civil matter.”

“You know everyone seems to characterize the relationship between the PUC and the utilities as cozy. Well, I think some of this, what we are finding out, shows not just a coziness but a collusion, and that’s the part that I think is most troubling. Collusion gets into what I look at as corruption, what I look at as something that could be dishonest,” Hill told KQED.

The former San Mateo mayor says this is not the only recent example of Edison dealing unfairly with victims of its defective maintenance. He cited the case of Brandon Orozco, an apprentice working for an Edison contractor who was shocked to death at an underground Edison facility in Huntington Harbour in 2013.

Hill said the Public Utilities Commission, especially given that it had formally concluded Edison was responsible for Orozco’s death, should have taken on the utility when it refused to release its internal investigation into the accident. The utility cited attorney-client privilege — even though state law “clearly states that the commission, and each commissioner, and anyone employed by the commission, can at any time inspect the account, book or documents of any public utility,” Hill told KQED.

At last week’s PUC meeting and in recent interviews, Mike Florio depicted the proposal developed by PUC staff, endorsed by PUC President Michael Picker and praised by the state’s electrical utilities as a scheme with hidden motives. Instead of being about fairness for heavy users in hotter inland areas, Florio says its real intent is to discourage homeowners from installing solar panels, which help keep them in the cheapest tier of energy pricing. The PUC will again consider Picker’s plan and Florio’s alternative at a meeting later this summer.

CalWatchdog has covered the maze of politics related to solar power’s growth in the Golden State and reported on utilities’ efforts in some states to actively discourage solar installation.

But Florio’s history of secretly working with Pacific Gas & Electric is sure to hang over any attempt to depict himself as an outside force for change on the state’s utility regulator. A lawyer from Oakland, who once was a senior attorney at The Utility Reform Network, said Florio was deeply embarrassed earlier this year by the release of emails showing his chummy, surreptitious relationship with the giant Northern California electricity supplier.

A “$130 million Christmas gift” to PG&E

Here are key details from the San Francisco Chronicle’s analysis of 65,000 emails involving Florio and PG&E, with some relating to the fallout from a 2010 pipeline explosion that killed eight and wiped out a San Bruno neighborhood. When the PUC deliberated on what punishment to assess over the San Bruno disaster …

… Florio proposed last-minute language that dropped the idea of slashing PG&E’s 2012 profit, arguing that a profit cut would “send the wrong signal that somehow investing in safety is less important than investments in other aspects of the utility’s business.”

 

The commission approved the measure, which critics called a “$130 million Christmas gift” to PG&E. …

 

By January 2014, Florio saw another opportunity to help the company. With a key decision on [a] $1.3 billion rate case looming, [PG&E Vice President Brian] Cherry asked for Florio’s help in getting a particular administrative law judge assigned to hear the case.

 

Florio called the judge who had been named to the matter “horrible,” and told Cherry in an email, “I’ll do what I can on this end.”

 

A judge PG&E wanted was ultimately assigned, but when the emails were released, the utilities commission gave the case to a third judge. It has not been resolved.

 

Florio apologized when his promise became public, saying he had made “some very serious mistakes … in the content and the excessive candor of my email exchanges with PG&E.” He recused himself from voting both on the $1.3 billion rate case and the larger cases related to the San Bruno blast.

PG&E penalty still in the news, still under fire

But the $1.6 billion fine that was ultimately ordered by the PUC in April over the San Bruno tragedy remains controversial. Some of the penalty apparently can be deducted from state taxes that PG&E must pay, prompting attempts at a legislative fix in recent days by two Bay Area state lawmakers.

That’s not the only concern. The $1.6 billion fine is calculated by depicting the $850 million cost of forthcoming PG&E upgrades to its natural gas transmission system as a penalty. Yet the utility had previously acknowledged it was planning to improve the system. This has prompted grumbling in activists’ circles that the PUC was once again coming to PG&E’s aid while portraying itself as coming down hard on the utility.

“How we achieve these goals and at what pace will take great thought and imagination mixed with pragmatic caution,” Brown said in Monday’s Inaugural Address for his fourth term as governor. “And we will need active collaboration at every stage with our scientists, engineers, entrepreneurs, businesses and officials at all levels.”

Yet, as state leaders take up Brown’s ambitious renewable energy agenda, two of California’s most opinionated energy experts will be missing from the debate.

For more than a decade the Capitol’s two most forceful energy voices have been State Sen. Rod Wright, D-Los Angeles, an influential member of key energy committees, and Public Utilities Commission President Michael Peevey, who spent 12 years as the state’s top energy regulator. Last fall, both were brought down by scandal.

Wright objected to current renewable energy mandate

Wright’s departure, in particular, eliminates a major legislative roadblock for Brown. A former chairman of the Assembly Committee on Utilities and Commerce and influential member of the Senate Committee on Energy, Utilities and Communications, Wright had been the Legislature’s biggest critic of renewable-energy mandates. That was until last September when he resigned his position after being convicted of multiple felonies for lying about his residence.

In 2011, California lawmakers approved Senate Bill 2X1, the state’s first major renewable energy mandate. The bill required that a third of the state’s energy come from renewable sources by 2020. This requirement, known as a Renewable Portfolio Standard, or RPS, was criticized for legislating by popular slogan — rather than setting out a clear plan for achieving its goal.

“Legislation to increase the RPS goals to 33 percent has been attempted in each of the last two sessions,” a Senate bill analysis of SB2X1 stated. “There has been little or no debate about the goal, but there has been great controversy over how to get there and from where the generation should be secured.”

When the bill reached the Senate Floor, Wright expressed concerns about the cost to consumers and taxpayers.

“Today we are about to vote on a bill that could result in a 15 percent to 20 percent rate increase,” Wright, the most passionate critic of the bill, said in his floor speech. “SB2X could very well result in a $1.5 billion hit to the general fund without any demonstrable benefits.”

“Thirty-three percent by 2020 is a great slogan,” Wright complained, “but what are we trying to achieve?”

Brown’s renewable energy adviser set to lead PUC

Brown defended the move as the first step in the state’s long-term renewable energy effort.

“While reaching a 33 percent renewables portfolio standard will be an important milestone,” Brown said in his signing message, “it is really just a starting point — a floor, not a ceiling.”

Brown had help in crafting the mandate from his then-renewable-energy adviser, Michael Picker, who was appointed last month to take over as president of the PUC. If confirmed by the state Senate, Picker can be expected to push Brown’s renewable energy agenda at the PUC. After all, according to Smart Voter, it was Picker’s job in the governor’s office, to coordinate “the statewide effort to help reduce California’s reliance on polluting coal and fossil fuels and bring us closer to our goal of providing at least 33 percent of electricity from renewable generation sources.”

For all his faults, and there are many well-documented by NBC Bay Area’s Tony Kovaleski, Peevey pushed back against elected officials. Throughout his controversial tenure, Peevey seemed impervious to public criticism. He also sought “more flexibility in implementing California’s RPS law,” according to an Restructuring Today, an energy industry newsletter.

Lawmakers unlikely to challenge Brown

It’s unlikely that state lawmaker will fill the energy vacuum left by Wright. In the Assembly, the Utilities and Commerce Committee will be chaired by Assemblyman Anthony Rendon, D-Lakewood. A well-liked lawmaker with two years’ experience on energy, Rendon isn’t expected to rock the boat. In December, Rendon said his top priority as chair of the utilities committee will be transparency.

“Transparency in deciding how California’s businesses and families invest in energy will play a critical role in assuring our state’s vibrant, smart and safe renewable energy future,” he said in a press release announcing his appointment.

Similarly, State Sen. Ben Hueso, D-San Diego, who took over as chairman of the Senate Committee on Energy, Utilities and Communications, won’t thwart Brown’s renewable energy agenda. Last session, he introduced legislation to “force the state’s three investor-owned utilities — SDG&E, PG&E and Southern California Edison — to buy 500 megawatts of geothermal power annually from the Imperial Valley by 2024.” The bill died in the Assembly.

According to Hueso’s web site, his district “incorporates all of Imperial County,” which includes Imperial Valley.

Rate hikes: Wright’s prediction proving true

And what does this all mean for consumers?

Wright’s prediction that RPS would increase energy rates is proving true. School districts throughout the state have been hit with higher electricity bills, due in part to the state’s renewable energy mandate. According to the UT San Diego, the San Marcos Unified School District has seen its energy bill increase by $700,000 over a five-month span compared to the same period in 2013.

“We are stuck,” said Assistant Superintendent Gary Hamels. “It’s a big, big shock.”

A spokeswoman for San Diego Gas & Electric Co. identified “higher costs for the electricity the utility provides customers — due mainly to the growing percentage of more expensive renewable power” as one of three reasons for the rate hike.

On Tuesday, Gov. Jerry Brown promoted Commissioner Michael Picker, a longtime Democratic political consultant and Brown’s former energy adviser, to serve as president of the scandal-plagued agency. Picker fills the vacancy created with the departure of President Michael Peevey, whose 12th year at the state’s energy regulator ended in controversy over his close relationship with and political favors for the energy companies under his jurisdiction.

“I’m honored by the Governor’s trust and confidence, and take his charge to heart – reduce greenhouse gas emissions, strengthen safety programs and modernize the agency,” Picker said in a press release. “I look forward to continuing this important work with my fellow commissioners.”

Picker, who has served on the commission since January, will be replaced by Liane Randolph, a deputy secretary and general counsel of the California Natural Resources Agency. Randolph also is a Democrat.

“Michael Picker’s deep experience and sound judgment make him uniquely qualified to take on this role,” Brown said in a statement. “Liane Randolph has handled very difficult issues with insight and balance and will be a real asset to the commission.”

Peevey’s term ends in controversy

With its new leadership, the PUC hopes to turn over a new leaf in 2015, after facing serious questions about its ethics under Peevey. As far back as 2005, Peevey, a former president of Southern California Edison, has been questioned about his close ties to energy companies. In 2011, he “jetted off on an all-expenses-paid study trip to Sweden” that was partially funded by energy companies, according to the San Francisco Chronicle.

The Peevey-led PUC faced renewed scrutiny this year, when emails revealed the agency’s assistance to energy giant PG&E. According to the San Francisco Chronicle:

“In one case, highlighted in an email PG&E was forced to disclose by a judge’s order, a commission official offered to write a favorable opinion on a $1.3 billion gas-rate case if the utility ‘did not like’ one from another commissioner.

“Additional emails showed Carol Brown, then chief of staff to Peevey, had promised to help PG&E executives who were trying to get a specific judge of their liking in a key gas-rate case arising from the San Bruno explosion, which killed eight people and injured nearly 60. In another internal email between the executives, Peevey appeared to broker a deal to swap favorable treatment in a regulatory case for PG&E’s help fighting a ballot measure that would undo California’s law capping greenhouse emissions.”

PUC’s new power to promote renewable energy

Brown said “both appointees share a commitment to seeing California achieve its ambitious renewable energy goals.”

An expert on renewable energy, Picker has played a crucial role in shaping California’s energy policy. He served as a senior adviser to both Brown and his predecessor, Gov. Arnold Schwarzenegger, as the state shifts towards more and newer renewable energy requirements.

“During the last four years Michael has been involved in the authorization of 150 clean energy projects, totaling nearly $25 billion in in-state investment and 16,000 megawatts of electricity and creating almost 25,000 highly skilled construction jobs,” Picker wrote in his 2012 biography as a candidate for the Sacramento Municipal Utility District. “He coordinates the statewide effort to help reduce California’s reliance on polluting coal and fossil fuels and bring us closer to our goal of providing at least 33 percent of electricity from renewable generation sources.”

In 2011, while Picker was advising the governor’s office on renewable energy, Brown signed into law SBX1 2, which adopted a new requirement that a third of the state’s energy must come from renewable sources by 2020. Known as RPS or Renewable Portfolio Standard, the legislation was criticized for legislating by popular slogan rather than by sound public policy.

State Senate confirmation expected

Although both Picker and Randolph take over on Jan. 1, they must be confirmed by the state Senate. However, it doesn’t appear either will face an uphill confirmation battle.

One state lawmaker critical of the PUC in recent months offered praise for Brown’s appointees.

“We will see some good things from President Picker,” state Sen. Jerry Hill, D-San Mateo, told the San Jose Mercury News. “He encourages open dialogue, and he has emphasized public safety as a culture.”

“Liane Randolph sounds like an excellent choice at first blush,” he said. “She looks like she would be an excellent independent commissioner. She has no ties to the utilities industry.”