News

CEC Chairman Joe Desmond says he will keep his share of software company, despite critics from consumer advocates

California Energy Commission Chairman Joe Desmond said Tuesday he is keeping
his financial interest in a software company he founded that makes products
for the energy industry.

While Desmond’s continued ownership stake in Infotility has come under
criticism, it is legal. Desmond said there is no conflict between his public
role in California and his passive ownership of the private, Boulder,
Colo.,-based company.

“There have been no decisions that have come before the Energy Commission
that have had any conflict,” Desmond told the Capitol Weekly.

Desmond and his business partner, Infotility co-owner David Cohen, said they
had taken a number of steps to ensure such conflicts do not arise. These
began in May, 2004, when Desmond left the day-to-day operations to become
deputy secretary for energy at the California Resources Agency. Cohen, who
formerly served as vice president and chief technical officer, took over as
CEO.

The company also stopped taking California contracts–it has previously done
work with the California Energy Commission, Lawrence Berkeley Labs and the
Stanford Linear Accelerator, according to Cohen–and closed its California
offices, formerly located in San Ramon.

Cohen released a statement seeking to dispel any rumors that Desmond was
divesting his interest in the six-employee company.

“Like many companies, from time to time, Infotility is approached by outside
parties who express an interest in the business. In all instances, any
serious inquiry is evaluated subject to a non-disclosure and confidentiality
agreement to protect the interests of all parties. This is standard business
practice.”

According to the Statement of Economic Interest forms Desmond filed with the
Fair Political Practices Commission in June of this year, he listed an
interest in Infotility “above 10 percent,” valued between $100,000 and $1
million. Under his relationship to the company, he wrote “advisor.”

The form went on to list three sources of income to Infotility higher than
$10,000 each: the Electrical Power Research Institute, the U.S. Department
of Energy, and the Commonwealth Scientific Research Organisation (CSIRO), a
large scientific research organization based in Australia. Desmond also
listed an unspecified interest in another company that was not named.

Desmond’s ongoing interest in Infotility has been a target for critics such
as Lenny Goldberg, executive director of Americans for Tax Reform. Goldberg
said that Infotility has a business model based on a deregulated market that
does away with policies such as baseline projections for low-income
customers.

“He favors the marketers and the individual power generators,” Goldberg
said.

Desmond’s industry ties also came under scrutiny earlier this year when
governor Arnold Schwarzenegger proposed creating a cabinet level Department
of Energy to be run by the Energy Commission chairman. The proposal would
also have shifted licensing powers from the California Public Utilities
Commission (PUC) to the Energy Commission. Legislative Democrats shot down
the proposal.

Infotility’s main product is Info Now 2.0, “a powerful toolset for building
solutions that monitor and report on energy position and related business
activities in real time,” according to the company’s Web site.
Other critics have argued that Infotility’s software could be used in
systems to manage “advanced metering” systems. Under such a system, power
customers would use two-way meters can be placed in homes that allow
metering in small time increments and variable pricing based on time and day
and demand.

Marcel Hawiger, staff attorney with the utility reform group TURN, noted
that there is a great deal of activity going on in the state around the
advanced metering right now. Last year, Utilities Commission board president
Michael Peavey–who himself is a former CEO of another energy technology
company, TruePricing–put out a call to utilities to write business cases for
advanced metering, Hawiger said. He added that Desmond has spoken publicly
in favor of advanced metering.

“I don’t know enough about the current business plans of either Infotility
or TruePricing to know if they will benefit, but they certainly have ex
business partners who could,” Hawinger said.

“Infotility is not in the business of advanced metering,” Desmond responded.
“The governor’s policy is to encourage the use of advanced metering
technology in conjunction with dynamic pricing in order to encourage energy
efficiency.”

Desmond said his top three priorities as Commission chairman would be to
create mechanisms to prevent future blackouts, create a truly competitive
wholesale energy procurement market, and to encourage energy efficiency.

Schwarzenegger appointed Desmond in May to finish the unexpired term of
former CEC chairman William Keese. According to his CEC biography, Desmond,
41, has held numerous industry positions, including serving as CEO of
Electronic Lighting, a maker of controlled lighting systems, from 1997
through 2000. He has also worked from 1987 to 1991 for the Taunton Municipal
Lighting Plant, a publicly-owner utility in Massachusetts.


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