In the 19th century, California began experimenting with regulating the prices of vital services and commodities. Nearly 150 years later, Californians still don’t know if it’s working as we debate whether to expand the practice.

Years of bitter conflict between Central Valley farmers and the monopolistic Southern Pacific Railroad over freight rates led to creation of a railroad commissioner’s office in 1878. It later became a commission and in 1945 morphed into the California Public Utilities Commission with broad authority to set rates for transportation services, electric power, natural gas and water supplied by privately owned utilities.

The CPUC, whose members are appointed by the governor, has become a vast bureaucracy that oversees tens of billions of dollars in service charges affecting the budgets of virtually every California household and businesses large and small.

The immensely complicated applications that utilities file for rate changes involve not only what customers must pay but how the commodities they are selling are generated or acquired. Even marginal changes can have immense financial impacts, which lead to intense technical, legal and political conflicts – and occasional scandals.

About the Author

Dan Walters has been a journalist for nearly 60 years, spending all but a few of those years working for California newspapers. He began his professional career in 1960, at age 16, at the Humboldt Times. CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more columns by Dan Walters, go to calmatters.org/commentary.

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