Energy Commission chairman faces defeat in confirmation fight

Senate Democrats intend to block the confirmation of Joe Desmond as chairman
of the California Energy Commission, setting up a showdown between Senate
Leader Don Perata and the governor’s Democratic chief of staff, Susan
Kennedy. Perata told Gov. Schwarzenegger privately that Desmond’s
confirmation was doomed, and urged the governor not to reappoint Desmond, a
former energy executive, to the job as the state’s ranking energy regulator.

But the governor said privately this week that Desmond would be reappointed.
The task of shepherding Desmond’s confirmation through the balky Senate is
being personally handled by Kennedy. Capitol sources say Desmond’s
reappointment is a major policy task for Kennedy, a former member of the
Public Utilities Commision. It is also the first overt demonstration of
Kennedy’s willingness to buck Democratic leadership to push for the
governor’s appointees.

Even if Desmond is ultimately defeated, going through the confirmation
process could be a boost for Kennedy, who will have a chance to demonstrate
her loyalty to Schwarzenegger in the face of many skeptical Republicans,
both inside and outside the Capitol.

Publicly, the governor would not say whether he’ll reappoint Desmond and
declined to discuss Kennedy’s role. “Chairman Desmond has helped the
governor create a more reliable and affordable energy supply for the state,
but we haven’t made an announcement on any commission appointment,” said
Schwarzenegger spokesman Darrel Ng.

Desmond himself declined to comment for this story.

Desmond’s key Senate supporter is Sen. Jim Battin, R-La Quinta, the ranking
Republican on the Senate Rules Committee, who like Desmond believes that
healthy competition ultimately will lower prices for consumers.

“I don’t believe the governor could appoint anybody better. I agree with him
100 percent. It’s a shame that the Democrats are talking about holding this
nomination up. It doesn’t make sense to me at all,” Battin said.

But Desmond’s critics–and there are many among Democrats in both houses–said
Desmond’s sins include favoring a return to electricity market deregulation,
the increased use of coal-fired power, and surcharges on smaller electricity
consumers. He also authored at least a portion of the governor’s much-touted
reorganization plan that included the creation of an Energy Secretary who
would be exempt from an array of conflict-of-interest rules. That proposal
was summarily rejected by both the Little Hoover Commission and the Senate.

Among Desmond’s sharpest critics in the Senate are Sens. Joe Dunn, D-Santa
Ana, and Debra Bowen, D-Marina del Rey. Dunn headed the Senate’s probe into
energy market manipulation, while Bowen serves as a member of the Senate
Energy Committee. Both are seeking statewide office this year.

Dunn says Desmond favors big industrial users at the expense of smaller,
residential customers through a process known as “direct access,” in which
large customers bypass utilities and buy electricity directly from outside
suppliers, thus avoiding costs of paying for the state grid’s
infrastructure. Direct access became a critical issue during the state’s
electricity crisis. In one well-known case, the University of California’s
electricity supply was threatened after its direct access supplier, Enron,
went belly up.

“Joe Desmond’s philosophical view of our electricity future will guarantee a
second electricity crisis in California. This isn’t simply a disagreement
over philosophy, because I understand the long-standing position that a
governor has the right to pick his appointees,” Dunn said. “But when the
philosophical view is proven to lead to disaster, I do not believe the
Senate should confirm.”

Desmond is engaging, articulate and forthright, but that’s not enough to
overcome opposition to his policies, one critic said.

“Joe Desmond is perfectly reasonable and accessible, but the problem is we
disagree on virtually every aspect of his electricity policy. We think that
he is flat-out wrong on a number of issues, and is going back to the future.
He wants to overturn the small consumer protections that we won through the
electricity crisis,” said Lenny Goldberg, of The Utility Reform Network, a
consumer advocacy group that targets the Energy Commission and the state
Public Utilities Commission.

Several Capitol staffers familiar with the discussions said the governor and
Perata met shortly after the special election and agreed to cooperate with
each other on appointments and other issues. But Perata told Schwarzenegger
that one appointment he would not accept was Desmond. “He said directly that
Desmond would not be confirmed. He urged the governor not to reappoint him,”
one Capitol staffer said. Another said that “Perata told the governor to
send him appointments, but the one name he didn’t want to see submitted was

This week, Schwarzenegger’s staff told Democrats that the governor intends
to reappoint Desmond over Perata’s opposition–a move that surprised and
angered Perata. As Senate leader, Perata has a chokehold on the governor’s
top appointees: He heads the five-member, Democrat-controlled Rules
Committee, which can confirm–or reject–the governor’s appointments.

Schwarzenegger appointed Desmond, 41, to head the Energy Commission last May
to fill the unexpired term of the departing William Keese, who was first
appointed in 1997 by former Republican Gov. Pete Wilson and reappointed in
2001 by former Democratic Gov. Gray Davis. That term expired on Jan. 6.

Under the Warren-Alquist Act that created the Energy Commission,
Schwarzenegger formally has 30 days in which to fill the position, or the
Senate Rules Committee can step in and make the appointment. The deadlines
are elastic, however.

The bottom line for Desmond is that if he is reappointed by the governor, he
would have to be confirmed by the Senate by May, a year to the day after he
was appointed, or be forced to step down.

“The sense of the Democratic caucus is that Desmond should not be confirmed.
Perata gave the governor advance notice about this, so why is he
(Schwarzenegger) appointing him anyway? Perata isn’t going to back off now,”
one Democrat said.

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