Panel Urges Rejection of Energy Plan

SACRAMENTO —  A bipartisan citizens’ panel Thursday recommended that the Legislature reject Gov. Arnold Schwarzenegger’s proposal to create a state Department of Energy, dealing a blow to his plan to reorganize the state’s tangled energy bureaucracy.

Members of the Little Hoover Commission, which analyzes all state government reorganization plans, said they favored the idea behind the governor’s proposal to centralize California’s energy policy under a cabinet-level energy czar.

The committee, however, voted 7 to 1 against the plan after lawyers from both the Legislature and the attorney general’s office questioned the constitutionality of provisions that would transfer some rate-making functions of the state Public Utilities Commission to the California Energy Commission.

“If the plan submitted to the commission in May were allowed to go into effect, it would be subject to legal challenge,” commission Chairman Michael Alpert, a Democrat from Coronado and a retired securities lawyer, wrote in a letter to lawmakers and the governor that was sent hours after the vote.

The commission’s recommendation is nonbinding, but makes it unlikely that Schwarzenegger’s plan can pass the Legislature.

The commission encouraged the Schwarzenegger administration to revamp its proposal and resubmit it.

Energy Commission Chairman Joseph Desmond, considered the architect of the governor’s reorganization plan, said the administration planned “to go back and consider thoughtfully these suggestions about how to fix this.”

Earlier in the day, Desmond accompanied Schwarzenegger to an event in Alhambra, where the governor urged residents to turn off appliances on hot afternoons this summer to conserve energy. Officials are concerned that California could face power outages this summer if temperatures are abnormally high.

Schwarzenegger submitted his reorganization plan May 12 as part of his California Performance Review, a massive study of the state bureaucracy completed last summer to fulfill the governor’s pledge to “blow up the boxes” on the state organization chart.

The energy reorganization would combine functions of the Energy Commission, the PUC, the Electricity Oversight Board and other agencies into a streamlined Department of Energy. According to the governor’s original proposal, creation of the agency would send “a clear message to the public, the business community, energy industries and the financial markets that a coherent energy policy direction is not only important, it is imperative.”

Critics, however, countered that the governor’s plan would give too much power to his appointed energy czar by also making that person head of the currently independent Energy Commission.

“Streamlining is just a code for eliminating checks and balances,” said Assemblyman Lloyd Levine (D-Van Nuys), chairman of the Utilities and Commerce Committee.

Levine said his committee and the Democrat-dominated Legislature plan to introduce their own energy reorganization plan sometime during the current two-year session.

Meanwhile, in its comments on the governor’s plan, the PUC questioned the need for shuffling bureaucrats with “interagency cooperation at an all-time high.”

The cold reception for the governor’s energy reorganization plan is the latest in a series of apparent missteps by the administration and its allies in drafting initiatives and reorganization plans to change the way the state operates. Legal questions and inconsistencies have dogged a pair of initiatives that Schwarzenegger proposed to limit public employee pensions and cap government spending.

“This administration has a problem vetting things before it takes a stand,” said Robert Fellmeth, a specialist in regulatory law at the University of San Diego.

The Little Hoover Commission is an independent panel that promotes efficiency and effectiveness in state government. It was created in 1962 by former Gov. Edmund G. “Pat” Brown and modeled after a federal body created in 1947 that was chaired by former President Herbert Hoover.