What’s Happening In California: Governor Schwarzenegger Makes CPUC Commissioner Kennedy Chief of Staff
[December 2005]

On December 1, California Governor Arnold Schwarzenegger named Commissioner Susan Kennedy of the California Public Utilities Commission (CPUC) as his Chief of Staff, effective Jan. 1, 2006. Kennedy is a long-time Democratic Party operative and served as Cabinet Secretary to former Democratic Governor Gray Davis. The appointment of Kennedy to perhaps the most powerful administrative position in state government by Republican Schwarzenegger has been criticized by many Republicans and some Democrats, but also praised by some. Governor Davis appointed Kennedy to the CPUC in 2003. California voters recalled Davis later that year in part due to dissatisfaction with his response to the 2000-2001 Energy Crisis.

The political controversy over her appointment notwithstanding, Kennedy’s selection to be the Governor’s Chief of Staff should strengthen the CPUC’s relationship with the Governor. Kennedy provides the CPUC a likely ally running the Governor’s office. She is knowledgeable about the issues the CPUC faces, understands how it operates, and has personal and positive working relationships with the Commissioners.

As the Governor’s Chief of Staff, Kennedy will play a key role in shaping Schwarzenegger’s revised Energy Reorganization Plan. The Legislature rejected the Governor’s original Energy Reorganization Plan last August. DWT discussed that development in July 1, 2005 and Aug. 30, 2005 Advisory Bulletins. Schwarzenegger will submit a revised plan to the Legislature next year.

Kennedy’s relationship with the CPUC could be instrumental in protecting the CPUC’s jurisdiction over the permitting and siting of electric transmission projects. The original Energy Reorganization Plan would have transferred the CPUC’s transmission siting authority to the Energy Commission. The CPUC, including Kennedy, unanimously opposed it. As the Governor’s Chief of Staff, Kennedy will likely advocate that the transfer of siting authority proposal be deleted. In contrast Joe Desmond, now the Chairman of the Energy Commission, has been Schwarzenegger’s primary energy advisor, was the architect of the Energy Reorganization Plan, and advocates the Energy Commission assuming the CPUC’s transmission siting authority.

Kennedy will remain on the CPUC until the end of the year. The need to fill Kennedy’s position gives Schwarzenegger his third appointment to the CPUC. The new appointee is likely to be pro-business like Kennedy, particularly since Kennedy will play a strong role in the selection of her successor on the CPUC.

If you have questions about this development, please contact:

Chris Hilen, San Francisco, (415) 276-6573, chrishilen@dwt.com

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