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California State Auditor Report Number : 2016-104

California Public Utilities Commission
It Should Reform Its Rules to Increase Transparency and Accountability, and Its Contracting Practices Do Not Align With Requirements or Best Practices


The California Public Utilities Commission (CPUC) is a state entity that is subject to the contracting requirements in state law and the State Contracting Manual. In addition to entering into its own contracts, it has the authority to direct the utility companies it regulates to enter into contracts, and it also approves or denies contracts these utilities propose. For this audit, we reviewed the CPUC’s actions related to both its own contracting and the energy utility contracting that it oversaw from 2010 through 2015. This report draws the following conclusions:

In addition, we reviewed the CPUC’s approval of sole-source contracts that energy utilities proposed, its response to California Public Records Act requests related to contracts, and potential conflicts of interest related to the CPUC’s and utilities’ contracts. In some of these areas, we found that the CPUC could improve its processes, and we have made recommendations that are discussed in the Other Areas We Reviewed section of this report.

Summary of Recommendations


The Legislature should amend state law to require the CPUC to adopt a new standard for commissioners to recuse themselves from proceedings when their impartiality is reasonably questioned and to adopt new rules that require commissioners to publicly report private communications with any parties to its proceedings.


To ensure that the choice of a vendor is sufficiently justified, the CPUC should explain how a particular vendor was chosen in any case for which it does not competitively select the vendor with which it directs utilities to contract.

To address several deficiencies in its contracting practices, the CPUC should update its contracting manual, conduct a supervisory review of contracts, and require regular training for contract staff.

Agency Comments

The CPUC agreed with most of the recommendations we made. It disagreed with a recommendation to explicitly require parties to disclose their interest in CPUC proceedings because it believes such a requirement is redundant.

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