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PUC creating banana republic?

California focus

Banana republics got their appellation during the 1920s, when dictators ruling countries such as Honduras and Guatemala made decisions on the say-so of banana growing companies, strictly for the profit of those companies – and usually at the expense of the local citizenry.

Now it is the California Public Utilities Commission that’s threatening to turn a major area of state policy-making into a new variety of banana republic. In decision after decision since former utility company chief Michael Peevey took over as president in 2002, the commission has taken care of big utilities and power producers at the expense of ordinary ratepayers.

One odious example is the PUC’s order forcing customers to pay most of the bill for fixing PG&E’s pipelines, hopefully ensuring there are no replays of the 2010 San Bruno explosion that killed eight people.

Another was the decision to let a Spanish company build the 250-megawatt Mojave Solar power project near Barstow – far outside PG&E’s service area – to provide electricity for that 
utility.

At the hearing approving this project, strongly backed by Peevey, commissioners openly asserted that Mojave Solar electricity will cost at least double the price of kilowatts from gas-fired plants. PG&E will be guaranteed profits of about 12 percent for 40 years on the cost of transmission lines to carry that energy to the San Joaquin Valley. 

Now the commission is apparently about to make another banana republic decision, this time a “peaker” electric generating plant in San Diego, tentatively due for an approval vote March 21. The 300-megawatt natural gas-fired plant would operate only when other power plants don’t provide enough juice for the region.

The Peevey-led commission’s pretext for approving the plant is uncertainty over when – or if – the San Onofre Nuclear Generating Station will restart. But the PUC’s own administrative law judge found no need for this new plant.

“It is not reasonable … when there is no need for incremental local capacity until (at least) 2018 …” said the judge’s decision.

That’s partly because, by late summer, even without San Onofre, Southern California will have excess generating capacity of 30 percent, and Northern California will have nearly 40 percent excess.

Three new gas-fired generating plants – all within 80 miles of San Onofre and with a total output close to San Onofre’s maximum 2,350 megawatts – are due to come online this summer.

Peevey, on reading the ALJ’s proposed decision, asked the head of the state Energy Commission to back his claim that there is a pressing need for the new plant, that would annually cost ratepayers $80 million to $90 million over 20 years (about $30 per residential customer yearly).

Energy Commission chair Robert Weisenmiller quickly sent a letter claiming the plant is needed, but during hearings in July, the Commission’s lawyer advised that “the  Commission doesn’t do a needs-based analysis in our … licensing process.” So there was no evidentiary basis for much of what Weisenmiller wrote to Peevey, and thus, no evidence of need, which makes this look like another banana republic PUC action benefiting big companies at the expense of customers.