Senate blocks confirmation of PUC member Rachelle Chong

The confirmation of Public Utilities Commission member Rachelle Chong was derailed this week by the Senate leader, following a fierce lobbying fight between the telecommunications companies who backed her and the consumer activists, who fought against her.

Senate Leader Darrell Steinberg, a Democrat, declined to schedule a confirmation hearing for Chong before the Senate Rules Committee – a move that effectively removes her from the panel. Chong, a Republican attorney, originally was appointed to the PUC in 2006 to fill out the term of Susan Kennedy, who left the commission to become Schwarzenegger’s chief of staff. Chong was reappointed last year.

Also up for confirmation is PUC President Michael Peevey, who, like Chong, is close to Kennedy. A decision on his coinfirmation has not yet been made. Peevey, a former president of  Edison International, was first appointed to the commission in 2002 by then-Gov. Gray Davis.

PUC commissioners serve staggered, six-year terms. The powerful agency regulates telecommunications, electric and natural gas utilities, railways and other entities.
Both must be confirmed by the end of the month in order to remain on the commission.

The Utility Reform Network, or TURN, a San Francisco-based consumer group, has opposed Chong for taking the lead role for what they described as industry-friendly regulations deregulation, including rules to boost basic rates by $3.25 last January, $3.25 next month and a removal of the rate cap in January 2011. Telecommunications companies have supported her.

“In spite of strong evidence to the contrary. Chong has doggedly insisted that the telecommunications market in California is robust and that such competition will protect consumers’ interests,” TURN wrote Senate Leader Darrell Steinberg.

“What does it tell you when the top priority of the regulated company is to support the confirmation of a regulator who helps them so completely?” said TURN lobbyist Lenny Goldberg.
Capitol sources said Chong’s confirmation is a top political priority of telecommunications companies, who have been aggressively lobbying the Senate about her confirmation. Kennedy, too, has aggressively been pushing her confirmation.

Chong has been instrumental in “facilitating fair competition, and encouraging investment,” Verizon told Senate Leader Darrell Steinberg, D-Sacramento, in a Nov. 23 letter. Chong “has the knowledge, experience, and judgment to navigate the complex and changing landscape of the intermodal marketplace for the benefit of California consumers.” Verizon also urged support for Peevey.

“We believe both Commissioner Chong and President Peevey have been doing a good job for the state of California and for Californians and as a result we are supportive of their confirmations,” said AT&T spokesman H. Gordon Diamond.

Chong drew fire at her first confirmation hearing in 2006 for inserting last-minute language into a complex, 282-page proposal dealing with telephone-company deregulation.

That language was later interpreted by AT&T as a green light to alter some of its marketing practices, according to published reports. Those practices had come under scrutiny five years earlier when the company — then PacBell — faced a $40 million-plus fine and had been sanctioned by the PUC for abuse-marketing conduct. The sanctions, still in effect, were aimed at halting practices that included targeting customers who inquire about routine service or billing issues with full-blown marketing pitches.

But the PUC, its members unaware of the obscure language, approved the plan in August 2006 by a 5-0 vote.

“At the last minute, and at the last day, this particular paragraph was inserted that let AT&T out from under. The way this was slipped into the decision was not acceptable,” said Commissioner Geoffrey Brown, who later co-authored an impassioned, scathing dissent. He voted in favor, he said, “but I didn’t know what was in there. Nobody knew what was there.”

At the time, Chong’s staff said the language had been prepared well in advance and that it included a memo to the commissioners that said, in effect that there were major changes in the document. In private meetings in the Capitol, however, she was questioned closely about the paragraph insertion and said the language came from her staff and that its insertion was inadvertent, sources said.

Chong, a Republican lawyer from Stockton, is the first Asian-American member of the PUC and a former member of the Federal Communications Commission. She specializes in regulatory law, and describes herself as a “strong advocate of competition in all communications markets.”

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Editor’s Note: This updated version corrects the rate increase to $3.25 and the category to basic instead of lifeline.