PUC Votes for Probe of Sempra

SAN FRANCISCO —  A sharply divided state Public Utilities Commission on Thursday ordered a broad investigation into whether two major Southern California utilities put the interests of their parent company ahead of their customers.

The commission voted 3 to 2 to examine whether Southern California Gas Co. and San Diego Gas & Electric Co. sought to maximize the profit of their parent company, Sempra Energy, at the expense of ratepayers.

Commissioner Loretta M. Lynch urged the probe, saying Sempra’s extensive business interests in the service territories of its two utilities pose potential conflicts. Those activities include wholesale trading of natural gas and electricity and the development of power plants and pipelines.

Michael Peevey, who recently replaced Lynch as PUC president, said an investigation was unwarranted.

He contended that there was no evidence Sempra and its affiliates had violated PUC rules. And he questioned whether the PUC could spare the staff and expense to pursue an inquiry without specific allegations of wrongdoing.

Commissioner Susan Kennedy echoed Peevey’s objections. “I believe an agency as powerful as this should have higher standards,” she said.

The PUC’s investigative order, which was supported by Lynch and Commissioners Carl Wood and Jeff Brown, alluded to some issues that had surfaced in earlier PUC proceedings but had been deferred for future consideration.

“It is really a put-up or shut-up time,” said Lynch. “It’s an opportunity to evaluate all the evidence.”

The timetable for the probe was left open-ended. The result could be a toughening of PUC rules if commissioners find that ratepayers were harmed.

Critics have claimed that Sempra’s operations create situations in which actions that benefit shareholders could cost consumers more money.

For example, homeowners have expressed concerns that SDG&E; customers would pay for an electricity transmission line in Riverside County’s Temecula Valley that would help Sempra affiliates generating power in the Southwest and Mexico.

The PUC probe also would expand an existing investigation of whether SoCalGas’ trading practices inflated prices along the California border during the 2000-01 energy crisis.

Sempra executives dismissed the investigation as a politically motivated fishing expedition to gain leverage in renegotiating a $6.6-billion electricity contract that the company had signed with the state.

They said their utilities and other business units have worked hard to avoid conflicts of interest and improper sharing of information.

“It’s clear the commission is split on the need” for an inquiry, said spokesman Doug Kline. “There was no new evidence a proceeding like this was merited.”