Regulators Should Be Able to Move Quicker, Picker Says
By Hudson Sangree
CHEYENNE, Wyo. — Former Gov. Jerry Brown sent his energy aide Michael Picker from Sacramento to San Francisco five years ago, telling Picker he wanted him to serve on the California Public Utilities Commission to try to set things right at the beleaguered agency.
“‘I need you to go down there,’” Picker recalled Brown saying. “He voluntold me.”
In 2014, the commission was in disarray. Its then-president, Michael Peevey, was under fire for his allegedly cozy relationships with the investor-owned utilities it regulated. Accounting irregularities were being investigated. And the San Bruno gas pipeline explosion of 2010 had raised concerns about its ability to ensure public safety.
Picker, 67, became president in early 2015 after Peevey’s departure and led the commission through utility-sparked catastrophic wildfires, the huge gas leak at Aliso Canyon and other crises. He recently announced he would retire once Gov. Gavin Newsom appoints his successor, which he has yet to do.
Outspoken as usual, Picker talked about his accomplishments and the commission’s challenges during an interview Wednesday at the Little America Hotel and Resort, where he attended the annual meeting of the Western Conference of Public Service Commissioners.
“It’s a process of rebuilding an organization that’s stumbling over its own history,” Picker said of the commission while sitting outside on a sunny spring morning on the high plains.
The commission was established more than 100 years ago to make unhurried and often unpopular decisions, Picker said. It began in 1911 as the California Railroad Commission and was meant to stem the abuses of powerful railroads, especially the Southern Pacific Railroad, whose reach extended into the State Legislature, the governor’s mansion and even the state Supreme Court.
“Prior to the founding of the CPUC, the Southern Pacific Railroad dominated California politics,” according to a history of the CPUC posted on the commission’s website. The railroad “provided free train passes to politicians and their family members, donated generously to political campaigns and dominated state party conventions to ensure delegates were friendly to the company’s interests.”
“Gov. Leland Stanford, a Southern Pacific co-founder, went so far as to appoint Edwin Crocker to the California Supreme Court, where Crocker served while retaining his position as general counsel for Southern Pacific,” it says. “Public backlash to Southern Pacific gave rise to the Progressive movement, which succeeded in electing Gov. Hiram Johnson and eventually establishing the CPUC to rein in railroad power and influence.”
The commission was renamed and given oversight of electric and gas utilities, telecommunications and water companies. It’s had the somewhat thankless job of approving new utility infrastructure and getting ratepayers to cover costs.
Picker said the commission is still a product of its era and not set up to respond to fast-changing technologies and public-safety crises such as wildfires. But he said he’s done his best to change that within the limits prescribed by statute and the state constitution.
In particular, he said he’s instituted organizational and cultural changes among PUC staff and its five commissioners — and he’s put far more emphasis on public safety.
“When I got there, no one was talking about safety, even though San Bruno was just a few years before,” Picker said.
Shortly after taking office, Picker — whose expertise was in environmental issues and organizational reform, not utilities — decided to stand outside the PUC headquarters on Van Ness Avenue and hand out fliers to the commission’s hundreds of employees. The fliers invited workers to contact him on his cell phone with safety concerns they felt had been ignored.
“It was a way for me to have conversations with staff,” Picker said.
Some who read the message contacted Picker, saying it was the first time they’d spoken with a commissioner, he said. They said their safety concerns would travel up the staff chain of command but never be dealt with by commissioners, who were aloof and unresponsive.
“That taught me a lot about what needed be to be done at the PUC,” he said.
The situation was right up Picker’s alley. He’d spent years addressing vexing problems in unorthodox ways and bringing together people from different arenas. His work had included serving in Brown’s first administration in the early 1980s setting up toxic waste programs and as a state deputy treasurer in the late 1990s.
“I try to focus on developing solutions that don’t lead to the next round of failures,” Picker said.
As chief of staff to Sacramento Mayor Joe Serna Jr. in the 1990s, he set up neighborhood divisions within city government to give residents more say and to encourage officials to tackle local issues.
Gov. Arnold Schwarzenegger tapped him to help get renewable energy projects approved by FERC and other federal authorities. He set up a multiagency team consisting of representatives from the federal Bureau of Land Management, the U.S. Department of Agriculture and different state agencies to map out the process for 150 projects, each generating more than 100 MW. It was his first real work in the energy sector, he said.
Schwarzenegger, and later Brown, asked him to deal with the CPUC, which as a rate-setter is the “second largest taxing agency in the state,” he said. Some lawmakers distrusted the commission and, over time, created a system of checks and balances to slow down its decision-making and force it to operate transparently. For instance, it is only allowed to decide cases on the written record before it.
A slow, lengthy process is good if there’s a danger that utilities are trying to game the market, he said. But it’s not so good at responding to fast-moving changes that people care about, such as wildfires and cell phone service.
“The way we make decisions is very hard for people to understand and participate in,” Picker said.
When he became CPUC president, Picker said he decided not to act like his predecessors. Instead of using his prerogative to name an executive director, he made it a group project “designed to create consensus … [so] commissioners felt like they were part of the organization,” he said.
In August 2015, the commission began an investigation into Pacific Gas and Electric’s safety culture in response to the San Bruno gas explosion, which killed eight residents of a suburban San Francisco neighborhood. That was before the massive Butte Fire of 2015, the disastrous wine country fires of 2017 and last year’s Camp Fire, which leveled the town of Paradise and killed 85 people. PG&E equipment started nearly all the fires, state investigators concluded.
Picker said he and his fellow commissioners reinvigorated the CPUC’s Safety and Enforcement Division, which had languished under prior presidents. Deputy Executive Director Elizaveta Malashenko was selected to head the division.
“I’m proudest we brought back the safety division,” Picker said of his achievements.
A bill signed by Brown in 2018, SB 901, gave the CPUC oversight of IOUs’ wildfire mitigation plans. The commission recently approved the first plans under the bill, along with provisions governing power shutdowns for fire prevention. (PG&E took advantage of those provisions on Saturday and Sunday, when windy conditions caused fires near Sacramento and threatened foothill areas. PG&E told nearly 30,000 customers they could lose power.)
‘A Matter of Time’
Picker said it will be up to future commissions to continue improving wildfire safety.
Utilities need to use drones and other technology to increase line inspections, he said. The CPUC cannot inspect all the state’s power lines, as some have suggested, he said. It would take at least 1,300 new employees and $125 million a year to make that happen, Malashenko recently told a legislative committee. (See California Utilities Prepare as Fire Season Looms.)
“It flies in the face of what we were designed to do,” Picker said. The CPUC performs limited inspections of railroad lines, mainly at-grade crossings, while the railroads use specially equipped engines to inspect their tracks, he said.
The legislature could make changes to how the commission operates, or the state constitution could be amended, he said, “but it’s clearly not the right time to do all of that,” with wildfires and other issues taking precedence.
Picker said one notable change during his tenure has been the perception of California by other Western states. CAISO’s efforts to start a Western RTO have been largely rebuffed both inside and outside the state, he said. But the Western Energy Imbalance Market has been embraced as a no-strings-attached way to trade energy across state lines. Animosity toward California has decreased, he said, and one day the West may be organized into a formal wholesale market.
“Everyone knows where this is going,” he said. “It’s just a matter of time.”
As for retirement, Picker said he felt that after 10 years dealing with energy, and a new governor wanting to name a new president, it was time. “It seemed like a natural break,” he said. Newsom did not ask him to leave, he said.
Picker said he’ll keep pursuing new challenges and may return to his roots as a river guide. He’s been invited on a monthlong trip down the Blue Nile in Ethiopia and Sudan, but he hasn’t made up his mind to go.