Battle brewing over PUC nominee

The governor's effort to extend the tenure of Rachelle Chong is fought by
consumer groups.

By Jordan Rau
Times Staff Writer

December 21, 2006 - Los Angeles Times

SACRAMENTO ­ A long-standing dispute about the telecommunication industry's
influence over state regulation in Gov. Arnold Schwarzenegger's tenure has
erupted into a pitched fight for a pivotal seat on the Public Utilities
Commission.

Several consumer groups are trying to derail the confirmation of Rachelle
Chong, Schwarzenegger's latest nominee to the five-member commission. They
say Chong has been unwaveringly deferential to the industry and
inappropriately stands to benefit financially from decisions she makes.

The clash, which will come to a head when a state Senate committee
considers the nomination Jan. 3, is highlighting complaints that the
Republican administration has gone too far in paring back state oversight
of the phone and cable companies that still dominate their markets.

"I think the commission has been in the last two years routinely
deferential to the industry," said outgoing PUC Commissioner Geoffrey F.
Brown, an appointee of Democratic Gov. Gray Davis. "The industry wants an
absence of regulation and they've gotten that."

Schwarzenegger placed Chong on the commission last January to finish out
the term of Susan Kennedy, a Democrat whom he had hired as his chief of
staff. By several accounts, Kennedy ­ who was also faulted for being too
accommodating to industry ­ played a crucial role in the selection of
Chong, a lawyer for telecommunications companies who had served in a
Republican seat on the Federal Communications Commission during President
Clinton's administration.

Chong will be forced off the commission if the Democrat-led Senate does not
confirm her nomination by Jan. 12, the one-year anniversary of her appointment.

Opposition to her nomination has centered on Chong's role in writing the
PUC plan that will allow California's major phone carriers to raise rates
at will rather than first having to apply for commission approval. In
August, just a few days before the commission was to adopt the final
version of the 264-page plan, Chong added a paragraph requested by AT&T,
according to a written dissent filed by Brown and another PUC member.

The addition appeared intended only to further one of the chief goals of
the plan, ensuring that no individual phone company would be burdened with
responsibilities that others did not share.

But in September, AT&T informed the commission that the new language freed
it from consumer disclosure rules imposed after regulators determined in
2001 that AT&T's predecessor company, Pacific Bell, had been misleading
customers to sell them more expensive plans than they might want. The
company was fined more than $15 million for deceptive marketing practices.

Chong's chief of staff, Lynn Carew, said Chong had no idea that would be
one of the effects of the language, though she acknowledged that in
hindsight "things could have been done differently."

"We were as surprised as anyone else," she said. "We take strong exception
to the suggestion that we pulled the wool over anyone's eyes."

AT&T officials did not respond to a request for comment. Carew said Chong
and the commission will review the effects of the provision, but Brown said
that when he learned about the implications and complained to Chong, she
"seemed nonplused."

Michael Shames, executive director of the Utility Consumers' Action
Network, a San Diego advocacy group, said Chong's action was in line with
her general pro-industry approach.

"She comes to every proceeding with her decision in advance seemingly
established," Shames said, calling Chong "the worst commissioner" he has
seen in more than two decades of advocacy.

"There's no open mind," he added. "She is a loyal and consistent proponent
of everything the phone industry asks for."

Chong declined requests for an interview Wednesday. After her chief of
staff was asked for examples where she opposed industry, Chong relayed two
events, both during her tenure on the Federal Communications Commission.
Chong said she supported permitting customers to assign their existing
phone numbers to a new cellphone when they switched carriers, and voted in
favor of a rule placing new requirements on companies' E-911 technology,
which allows rescuers to pinpoint the location of a cellular call.

Chong's chief of staff also disputed accusations from Utility Consumers'
Action Network that the commissioner improperly stands to benefit from
helping industry because she owns 8,684 shares of Lightbridge Inc., which
provides services to phone companies.

Carew said Chong had asked the PUC's lawyers to examine her holdings, and
they concluded they violated no conflict-of-interest rules.

That amount of stock was worth $120,100 at market closing Wednesday.

Julie Soderlund, a Schwarzenegger spokeswoman, declined to address any of
the complaints raised about Chong. She said the governor stands by Chong
and his other PUC commissioners, who "have decades of experience in the
environmental, financial and telecommunication and regulatory fields."

Chong's prospects for confirmation are unclear. She needs three votes from
the five-member Senate Rules Committee for her nomination to reach the
Senate floor, meaning that at least one Democrat will have to support her.
Senate President Pro Tem Don Perata (D-Oakland), who chairs the committee,
declined to discuss the nomination.

Chong's nomination is backed by the Natural Resources Defense Council, a
prominent environmental group. In a letter of support, the group's leaders
said they "are particularly impressed by her intellect and willingness to
listen to all sides." The group also praised her support of "California's
leadership agenda on critical issues such as energy efficiency, renewable
energy and other global warming solutions."

But another consumer group, The Utility Reform Network, said in its
opposition letter that Chong opposed legislation that would require phone
companies to inform consumers of their rights to dispute charges, and has
sided with industry over rules for video service providers to raise rates.

Lenny Goldberg, a Sacramento consumer advocate, said Chong's actions in the
AT&T incident should disqualify her. "She abused the process on behalf of a
special interest," he said.