Utilities Panel Has Too Much on its Plate

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Author: Kish Rajan

Assemblyman Mike Gatto is taking a bold step with his proposed constitutional amendment to obliterate the California Public Utilities Commission. Such a drastic action may not pass into law, but it kick-starts a critical conversation about the agency’s future.

Gatto cites concerns about the PUC’s handling of a string of problems related to energy utilities, including the San Onofre nuclear plant shutdown and the San Bruno gas line explosion. The commission is also deeply engaged in overseeing California’s massive shift away from fossil fuels to renewable energy.

If regulating the energy industry wasn’t enough of a chore, utilities are not the only sector under the PUC’s purview. The commission has divisions overseeing railroads, light rail and transit; taxis and ride-share services; and water and sewer systems.

And its jurisdiction over telecommunications is largely overlooked. As the center of the innovation economy, California relies heavily upon strong telecommunications infrastructure. But the commission is failing to keep pace with the fast-changing industry, holding back critical investments to providing more and better technology to more Californians, particularly low-income citizens on the other side of the digital divide.

According to the Milken Institute, San Jose and San Francisco are the best-performing cities in the nation for job growth, wage gains and technological advancement. While that is laudable, what is the PUC’s plan to extend that prosperity beyond the Bay Area and into every region across California?

The pathway to greater prosperity is through innovation and investment. That is driven by consumer demand supported by forward-looking thinking, rather than outdated regulatory mandates.

For example, four years ago the Legislature concluded that the PUC was inhibiting the growth of the phone services over the Internet. It passed a bill that put oversight of this emerging industry in the Legislature. Since, the VoIP market has multiplied to the benefit of consumers and business alike. But that’s not the end of the story.

Recently, the PUC launched a review of land-line telephone service, even though the vast majority of consumers prefer mobile phones. The seemingly well-intentioned review, however, includes collecting data from VoIP providers even though they are now overseen by legislators.

For the PUC to remain as the state’s utility overseer at such a politically sensitive moment, extending its regulatory reach into markets it doesn’t regulate any longer puzzles many of us.

The consumer benefits and entrepreneurial opportunities of the rapidly expanding digital economy should extend to every Californian. It must be a top priority for the PUC to create a strategy toward this goal and execute it. Given the tremendous demands already on it, whether the PUC can do this remains an open, but vital question.