Newsom wants Energy Commission to drive gas profits cap

From: POLITICO California Playbook - Thursday Mar 16,2023 01:10 pm

Mar 16, 2023

By Jeremy B. White, Lara Korte, Ramon Castanos and Matthew Brown

THE BUZZ: Gov. Gavin Newsom has spent months pushing the Legislature to cap oil profits. Success may mean lawmakers kicking it back to the administration.

Newsom’s office unveiled a proposal Wednesday to put the California Energy Commission in the driver’s seat on controlling prices at the pump, as POLITICO’s Wes Venteicher scooped. The governor’s preferred legislation would empower the commission to investigate industry profits, launch a rulemaking process, issue subpoenas and ultimately impose penalties or refer matters to the attorney general’s office.

That’s a marked departure from the windfall tax Newsom proposed back in October. The governor has long since stopped uttering the T-word, converting his plan into a “penalty” that has the advantage of requiring majority votes rather than two-thirds margins. Yet even that collided with resistance from skeptical lawmakers who warned of scant details and unintended consumer consequences last month.

Now, Newsom is asking the Legislature to have the Energy Commission look into it. Regulators would choose what comes next: The framework revealed Wednesday would authorize but not require the commission to pursue penalties. Still to be determined: what levels of profits constitute a violation and how big the punishment would be. Companies could make their cases to regulators and dispute findings.

Information is power. Energy experts and lawmakers have assailed the opaque process that leads to soaring California gas prices. To the extent we heard a consensus in the last hearing, it was that policymakers need more data to determine what exactly is happening and make sure policies don’t exacerbate the problem. Newsom officials said lawmakers stressed the need for experts to run the process.

But it’s not guaranteed the measure will pass. Newsom officials were reluctant to deem the proposal a “deal” that has been blessed by leadership. They’ll still need 41 Assembly members and 21 senators to agree — and that will mean convincing a legislative branch that has at times chafed at expanding the authority of unelected regulators like the Air Resources Board.

In the end, we may not see many penalties imposed. Newsom chief of staff Dana Williamson said in a call with reporters that the proposal is chiefly meant as a deterrent to “dissuade the industry from gouging consumers.” That reflects Newsom’s assertion that the measure is preventative rather than punitive.

Williamson argued Newsom has already changed behavior from the bully pulpit: “The second the governor calls the special session, prices went down,” she said, reflecting a “change of behavior” on the part of rapacious oil companies. We’ll see if the new proposal influences legislative behavior enough that majorities hit that green button.

BUENOS DÍAS, good Thursday morning. Gov. Gavin Newsom is hitting the road today for a multi-part State of the State tour, eschewing the traditional speech at the Capitol for a series of events around the state. Here’s more on where Newsom’s going and why he’s setting out — including a dyslexia-driven abhorrence of teleprompters.

Got a tip or story idea for California Playbook? Hit us up at jwhite@politico.com and lkorte@politico.com or follow us on Twitter @JeremyBWhite and @Lara_Korte.

QUOTE OF THE DAY: “This was personal to him and certainly it was personal to me.” Former L.A. Mayor Eric Garcetti on President Joe Biden pushing for the Senate to confirm Garcetti — a top campaign surrogate — as ambassador to India, via The Wall Street Journal.

TWEET OF THE DAY:

Twitter

WHERE’S GAVIN? In Sacramento for the first phase of his State of the State tour.

PLAYBOOK MEET & GREET! Join California Playbook and POLITICO’s growing team in Sacramento at Smic’s Sip & Quip on Wednesday, March 22, 2023, for an evening of cocktails and conversation. As POLITICO expands in California, we want to more frequently convene our most influential readers in Sacramento and beyond. Swing by and have a cocktail on us—you never know who you might run into! Register here.

TOP TALKERS

— Garcetti confirmed to ambassadorship despite cloud of scandal, by POLITICO’s Marianne LeVine: “That unusual bipartisan tally reflected the controversy that nearly unraveled Garcetti’s nomination, stemming from allegations that he was aware of — and did not act on — sexual assault and harassment accusations against his former top aide, Rick Jacobs.”

CAMPAIGN MODE

— Democrats in 'frontline' districts put hopes of retaking the House in jeopardy, by POLITICO’s Brittany Gibson: Porter raised $26 million in 2022 and spent $18.5 million on advertising compared to about $1 million spent by her opponent, Scott Baugh, who raised just $3 million, according to the Federal Election Commission and AdImpact, a service that tracks political advertising.

— “Recount of Oakland mayor’s race is dead in the water,” by The Oaklandside’s Darwin BondGraham: “Rather than pursue any more recounts or reexaminations of the flawed November election, Dupuis said his priority right now is preparing for the upcoming 2024 elections.”

CALIFORNIA AND THE CAPITOL CORRIDOR

L.A. HOMELESSNESS UPDATE, via POLITICO's Alex Nieves: Los Angeles officials say they’re on track to house 1,000 people through the city’s Inside Safe program by next Wednesday, which will mark Mayor Karen Bass’ 100th day in office. The outreach effort — Bass’ major policy initiative — had moved 516 off the streets by Tuesday, officials told reporters. Mayor’s office staffers say they’ve identified around 160 people in emergency weather shelters who will accept vouchers for temporary housing, and they’re hoping a new operation in Skid Row can get them over the hump. But it hasn’t been painless. “Nothing drives us crazier than knowing there are vacancies and we have people ready, but because of the bureaucracy, we can’t,” said Bass, who is pushing city council and county officials to overhaul local homelessness programs.

— “Even 'affordable housing' in L.A. isn't affordable. Why a key program is falling short,” by LAist’s Ted Rohrlich: “Some economists argue that given the high cost of producing tax credit apartments, construction in the program should be refocused to accommodate people with special needs, such as those who chronically experience homelessness, who could be most efficiently served with intensive social services delivered in one place.”

— “Two counties square off with California over mental health duties,” by Kaiser Health News’ Angela Hart: “The Department of Health Care Services, which administers Medi-Cal, the state’s Medicaid program, says Sacramento and Solano counties must take over managing and providing specialty mental health care for thousands of Medi-Cal patients enrolled in Kaiser Permanente plans. It insists on shifting the responsibility because California’s remaining 56 counties already operate this way.”

— “California deals with surging rivers, sliding rocks, flooded towns as storm passes,” by the Los Angeles Times’ Ruben Vives, Susanne Rust, Terry Castleman and Hayley Smith: “A project to improve the Pajaro River levee system is anticipated to go to construction in 2024, and has so far received $67 million from President Biden’s $1.2-trillion infrastructure bill signed in 2021. That is the first in a series of federal investments.”

— “As emergency aid flows to flooded-out Californians, will thousands be left out?,” by CalMatters’ Lauren Hepler, Nicole Foy and Wendy Fry: “Long before the storm, the federal government and California had been planning a levy improvement project for the region. It is expected to take five to seven years, but Newsom said today he is urging the Army Corps of Engineers to speed up their timeline and to put higher priority on levy projects affecting vulnerable, low-income communities.”

— “Storms end Southern California water restrictions for 7M,” by The Associated Press’ John Antczack and Stefanie Dazio: “Remaining showers across Southern California were expected to decrease through Wednesday evening as the storm headed toward parts of the Great Basin.”

BIDEN, HARRIS AND THE HILL

— Bank failures revive bitter Senate Democratic infighting, by POLITICO’s Burgess Everett and Eleanor Mueller: “Several Democrats said they want to see either repeal of the 2018 legislation or other tougher laws. But at the moment there is no apparent solution that would get 51 Democratic votes, much less the 60 senators needed to vault a filibuster.”

— Silicon Valley Bank gets a spin on the anti-ESG turntable, by POLITICO’S Sam Sutton: Florida Gov. Ron DeSantis over the weekend battered Silicon Valley Bank leaders for being too focused on so-called “woke” initiatives to defuse the time bombs on its balance sheet.

SILICON VALLEYLAND

— “Shards of Silicon Valley Bank are for sale, but no one is buying yet,” by The New York Times’ Rob Copeland and Maureen Farrell: “The Federal Deposit Insurance Corporation has conducted the stop-and-start auction process, people briefed on the efforts said, and on Wednesday it had a significant way to go.”

MIXTAPE

— “Stunning viral video shows California farmers launching truck into levee to stop flooding,” by the San Francisco Chronicle’s Kurtis Alexander

— “Companies say they want diversity. So why are Latinos left off corporate boards?,” by the Los Angeles Times’ Margot Roosevelt

— “San Francisco supervisor calls for probe into affordable housing owner,” by the San Francisco Chronicle’s St. John Barned-Smith

— “Two Fresno County groundwater plans got rare approval from state. Here's how they did it.,” by SJV Water's Jesse Vad via Fresnoland

BIRTHDAYS

TechNet’s Carl Holshouser … Alexandra Stabler

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