California utility regulator talks renewable energy, safety and more

After coping with the June shutdown of the San Onofre nuclear power plant near San Clemente, the fallout from a fatal 2010 explosion of a natural gas pipeline in the Bay Area and a batch of consumer protection issues, the state’s Public Utilities Commission faces more challenges in the year ahead.

And on the spot will be PUC President Michael R. Peevey, 75, who has served as California’s chief utility regulator under three governors. He will have been the longest-serving head of the agency by the time his term expires at the end of next year.

One of the thorniest issues on the 2014 agenda stems from this year’s shutdown and path to decommissioning of the San Onofre nuclear plant, operated by Southern California Edison and San Diego Gas & Electric Co. For the commission, it will raise big questions about who will pay the enormous costs involved — now and in the future.

“We’re just now starting the first wave of decisions,” Peevey said. Among the issues, he said, are whether to let utilities charge ratepayers for money spent in the last days of San Onofre and the question of replacement power, “which is a large issue, both creating it and paying for it.”

There’s a proposed decision expected to come before the commission in January, he said, dealing with who should pay “for about $90 million of operations and maintenance, hitting Edison and San Diego Gas & Electric Co. Was this money imprudently spent? Should there have been layoffs of employees?”

“A more urgent, immediate question in 2014” is whether Edison will be allowed to recoup from ratepayers all or some of the money “it invested in steam generators” that turned out to be defective and uneconomical to repair.

And how will the state replace the massive energy output once provided by San Onofre? “In the fall of this year,” Peevey said, “we came up with a plan to replace power at San Onofre. Fifty percent would come from preferred resources, such as rooftop solar, conservation, efficiency” and the rest from new natural-gas-fired power plants.

Peevey has been in the energy business for most of his professional life. Before he became leader of the five-member commission, with a staff of 1,000, he was president of an electricity wholesaler from 1995 to 2000, and before that, he was president of Southern California Edison. He earned bachelor’s and master’s degrees in economics from UC Berkeley.

He lives in La Cañada Flintridge and is half of a well-connected Sacramento power couple: He is married to Democratic state Sen. Carol Liu.

In a wide-ranging interview, Peevey talked about the sweeping powers of the commission to regulate investor-owned, electric and natural gas utilities as well as telecommunications services, private water companies, intrastate passenger rail and bus transportation and intrastate moving companies.

He also touted the commission’s decision to go ahead with state regulation of ride sharing — the commercial use of smartphones by customers to seek rides for hire from private cars through transportation network firms like Lyft and Sidecar. He also talked about whether to regulate cellphone privacy or leave it to other agencies such as the Federal Communications Commission.

Here are excerpts from Peevey’s interview:

What was one of your most significant decisions in 2013?

Ride sharing was a very interesting, somewhat controversial topic pitting youth and new techniques and a “sharing economy” against more established entities like the existing taxicab companies.

I was the author and the principal spokesperson to open up to allow new transportation network companies. This was a very big decision. It set a pattern and I think it’s precedential for developing them elsewhere, such as Seattle, New York, anywhere big.

How do you feel about an investigation of the need for new smartphone privacy rules?

There seems to be very strong telecom company opposition across the board. The question is: Who is the right body to act, the PUC or someone else? We’ve never gotten into this area in the past. I have not taken a public position on that.

What’s been done to improve the safety of natural gas pipelines like the one that exploded in San Bruno, killing 8 people and destroying 38 homes?

We brought in some new people to head up and revitalize the [PUC] safety division. It’s not that we were not doing our job, but, like all government agencies, we started doing things by rote. [The explosion] wasn’t a normal event. It was a very jarring thing. I appointed a panel that reported some critical things about the PUC and PG&E. We’re implementing those recommendations, and we’ve made safety a much, much bigger part of the daily culture at the PUC.

What kind of penalty is proposed for pipeline owner Pacific Gas & Electric Co.?

The PUC Safety and Enforcement Division is proposing a $2.2-billion penalty. What is going on right now is we’re in the process of drafting ... a decision. It will go out for public examination in February. All the parties comment, and then it goes to the five commissioners.

What are the future benefits and pitfalls of relying more heavily on renewable energy resources?

I think we can get to a 40% renewable goal, 33% by the end of the decade. We’ll probably hit it by 2018-19. We can go to 50% without any real problem.

We know how to do all these things. There’s no question about it, there will be a cost. We have to examine smarter ways to do it. I see this as a strategy for reducing greenhouse gases, the greatest challenge to this state and the world.

marc.lifsher@latimes.com

Twitter: @MarcLifsher