State audit rips California utilities commission for fund errors

01/17/2013 12:00 AM

01/17/2013 7:41 AM

In a scathing new review of the California Public Utilities Commission, the Department of Finance found widespread budget errors and inaccurate fiscal predictions of various fees that state consumers pay each month.

State lawmakers and the governor rely on PUC budget data each year to make policy decisions, and the report said bad forecasts "prevent stakeholders from knowing the actual performance of PUC's funds and programs."

The PUC situation appears to be the opposite of what occurred with the state Department of Parks and Recreation. The utilities commission spent more money than reported to state officials. In the parks case, executives hid $54 million in two special funds, some of which was inappropriately used to buy out vacation time.

In June 2011, the utilities commission mistakenly told state lawmakers and the Department of Finance that $422 million existed that was not actually available in seven fee-supported funds, according to the report.

Finance auditors believe that inexperience and understaffing were to blame, observing "general confusion and lack of knowledge" within the PUC budget office. In one case, a PUC worker committed an $81 million typographical error.

"Significant weaknesses exist within PUC's budget operations which compromise its ability to prepare and present reliable and accurate budget information," the Department of Finance audit states.

In its formal response, the PUC agreed with nearly every finding and told auditors that it was working on correcting problems. Gov. Jerry Brown has proposed spending an additional $210,000 in ratepayer money to fund three new budget positions.

While the PUC spent more than was being reported, the commission still had enough funds to avoid going into the red in most cases, according to the Department of Finance. The PUC has since corrected its books through June 2012.

The Department of Finance launched its audit of the PUC after finding major discrepancies between what the commission reported to Finance and the state controller's office. That finding came as part of an overall review of special funds after The Bee reported on the parks budgeting mishap.

Elsewhere, the audit found that PUC officials had used poor forecasting techniques, as was the case in 2007-08 when the commission collected $189 million (46 percent) less than projected for a fund that subsidizes telephone service in rural areas.

The PUC oversees 14 special funds, which collect surcharges that exist on gas, electric and telephone bills. The money pays for everything from subsidies for low-income natural gas customers to telephone services for deaf and disabled individuals.

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