Editorial: PUC culture change should start at the top

April 19, 2013 

Assembly members blasted Paul Clanon, executive director of the California Public Utilities Commission, on Wednesday for tolerating a cozy relationship with utilities while ignoring safety. Lawmakers' anger is clearly justified, but their aim this week was too narrow. Commission President Michael Peevey and the governor deserve to share in the shellacking, as does the Legislature itself.

Even now, more than two years after the deadly San Bruno natural gas pipeline explosion that killed eight people and leveled a Bay Area neighborhood, safety at the PUC is being given short shrift, as a new report documents in shocking detail. It remains an afterthought – lowest on the list of the regulatory agency's priorities. Safety comes after affordability, after energy reliability and after environmental concerns.

Those are the conclusions contained in the scathing report prepared by Folsom-based Business Advantage Consulting. Hired by the PUC itself, the firm was asked to identify the barriers to a much-needed cultural change at the agency. Relying on interviews with insiders, top PUC staff, middle managers, supervisors and front line workers, the report describes an agency controlled by the utilities it regulates and one with little regard for safety. The quotes from PUC staffers sprinkled throughout the report are as disturbing as they are revealing:

• "The regulated industries and lobbyists come to the PUC and see how casual the attitude and culture is here. As a result, they don't feel they have to comply – they are not worried. The message to them is that we are not paying attention."

• "There is a disincentive for staff to tackle safety. It would mean taking on more work by myself for no reason and without support."

• "Safety staff doesn't feel like they are a valued part of the agency. Commissioners don't talk to them."

Even when money is allocated directly for safety related purposes, no one at the PUC checks to see if the funds are spent for that purpose. Safety initiatives ordered by the agency are not followed up on. No one knows whether they were effective or even if they were implemented.

Fines for safety violations are rare and too low, regarded by the industry as just the cost of doing business, one PUC staffer confided.

The Safety Enforcement Division lacks resources and personnel trained to understand complicated safety needs. There are no consequences for mistakes and no regular evaluations of staff.

While Clanon's shortcomings are a fair target of criticism, the bulk of the blame for safety lapses lies with his boss, longtime PUC President Peevey. A former utility company executive who's been at the helm of the agency for a decade, Peevey has fostered a climate of accommodation toward utilities, with the resulting disregard for safety. Gov. Jerry Brown, who reappointed Peevey despite strong objections from consumer advocates, also shares some responsibility.

Reforming the PUC won't be easy. The 100-year-old agency is embedded in the state constitution. It operates largely independently with very little oversight from either the governor or the Legislature. Also, following energy deregulation and the breakup of the railroad industry, PUC's mission has become somewhat muddled. A clunky bureaucracy originally designed to regulate railroads is ill-equipped to address the rapidly changing technology in energy generation and telecommunications.

The Legislature might best reform this institution by creating a blue-ribbon commission to examine both the PUC's mission and its governance structure.

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