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Governor taps lame duck to conduct gas price investigation

Governor Arnold Schwarzenegger this week called on California Energy Commission Chairman Joe Desmond to investigate possible price gouging by big oil companies, as gasoline prices across much of the state topped $3 a gallon. But Desmond has only two weeks left on the job–and likely won’t be there to see the investigation through.

Desmond’s nomination must be confirmed by both the Senate Rules Committee and the full Senate before May 10 in order for him to keep his post. But the Senate, led by President Pro Tem Don Perata, D-Oakland, has refused to even schedule a confirmation hearing. Without such a confirmation, Desmond will be forced to leave the post by May 11th.

Perata opposes electricity market deregulation, expansion of coal-fired power and new fees on power customers–all of which Desmond has previously advocated.

“Joe Desmond’s performance as chair of the California Energy Commission is the chief argument against his appointment to the post,” said Perata spokeswoman Alicia Dlugosh. “If Desmond were as pro-consumer as he is pro-coal and as interested in protecting ratepayers from high prices as he is in protecting himself from open meeting and conflict of interest laws, there might have been a different story.”

At a Tuesday press conference Desmond announced that the energy commission’s investigation would include potential gasoline market manipulation at both the wholesale and retail level. In a letter to Schwarzenegger, Desmond said an initial report would be delivered to the administration by June 15–more than a month after he leaves the commission.

Regarding Desmond’s departure mid-investigation, energy commission spokeswoman Claudia Chandler said that, “The governor has asked the energy commission to move with this and we will,” referring all other questions to the governor’s office.

Schwarzenegger spokeswoman Margita Thompson said the governor continues to support Desmond, 41, in his post as chairman.

“The governor supports Joe Desmond. Joe Desmond is his nominee and the governor hopes that Senator Perata will bring Joe Desmond up for a vote,” said Thompson.

But in a January meeting with the governor, Perata made clear that the Senate would not confirm Desmond as chair of the energy commission. At the end of that month, Schwarzenegger still reappointed Desmond, who had originally been selected last May to finish the unexpired term of William Keese.

Perata responded by not scheduling a confirmation hearing.

“Mr. Desmond’s actions and inaction in office provide more than sufficient grounds for senators to oppose his nomination,” said Dlugosh.

Chief among the Democrats’ complaints is that Desmond favors a return to electricity market deregulation, the increased use of coal-fired power, and surcharges on smaller electricity customers.

Prior to his appointment to the commission, Desmond was the president and CEO of Infotility, Inc., an energy consulting and software development firm. Before that he served as an executive in several energy firms, and worked as the marketing and demand planning administrator for a publicly owned utility.

It is uncommon for the Senate to simply let a gubernatorial appointee’s term lapse without a confirmation hearing. In 2004, Schwarzenegger appointed Nancy Drinkard to the Board of Forestry and Fire Protection, which is tasked with overseeing the state’s parks, forests, and other wilderness resources not under federal authority. Drinkard’s nomination was strongly opposed by the Sierra Club and other environmental groups, and she never received a hearing.

As gas prices have topped $3 a gallon, Schwarzenegger turned to Desmond, and the energy commission, to investigate any “market manipulation, price gouging or unfair business practices employed by oil companies.”

The energy commission completed a similar investigation last fall that found no foul play, but that study was limited “solely on retail gasoline prices,” Desmond wrote to the governor this week. This year, Desmond wrote, “We will extend our analysis to the wholesale market.”

Beyond the preliminary June 15 report, the energy commission also promised an “updated report” by the end of September that includes an analysis of the summer’s gas prices. That report would come a full four months after Desmond’s departure.


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