UPDATED 2/9/11 11:19 a.m.

UPDATED Gov. Neil Abercrombie will submit Public Utilities Commission commissioner Michael Champley’s name to the Senate for confirmation early next week, Donalyn Dela Cruz, a spokeswoman for the governor, told Civil Beat Thursday.

The governor’s office decided to publicly announce that he would move ahead with Champley’s appointment a day after Civil Beat published its story (below) and a couple days after news reports had said he was considering finding someone else for the position.

“Just wanted to clarify things,” Dela Cruz said in a voicemail.

Gov. Neil Abercrombie may cut short the term of his latest appointment to the Hawaii Public Utilities Commission, raising serious questions about the quasi-judicial body’s ability to act independently of gubernatorial influence.

Uncertainty about the fate of Michael Champley is also angering key players in the energy sector who strongy support him, setting the governor up for a potential backlash.

The PUC regulates hundreds of companies, including Hawaiian Electric Co., telecommunications carriers and transportation companies. The PUC is increasingly guiding state energy policy through rulings on renewable energy contracts and electric rate cases.

Abercrombie nominated Champley, a respected veteran of the utility industry, to the position in August. He replaced a commissioner who resigned and whose term expires in April 2015.

But the commissioner may not get to carry out his full term.

Abercrombie has yet to submit Champley’s name to the Senate for confirmation and it’s unclear if he will do so. The governor’s spokeswoman, Donalyn Dela Cruz, said that a decision should be made by the end of the week.

She said the governor is waiting to see if Champley is “in line” with his energy policy but declined to elaborate further.

If Abercrombie decides not to submit Champley’s name, the PUC commissioner would be out when the legislative session ends in May.

Champley told Civil Beat earlier this week that “I support the governor’s energy plan and look forward to discussions with him and his team about serious energy issues.” Beyond that, he wouldn’t comment.

Some the PUC’s rulings have created tension between the commission and the governor. Commission chair Hermina Morita has operated with an independence that has surprised the administration. Abercrombie appointed Morita, a former lawmaker, to the PUC last year to fill out a term that ends in June 2014.

His hesitancy to move ahead with Champley is seen as a move by the governor to exert greater control over the agency.

Henry Curtis, executive director of Life of the Land, an environmental group, said removing Champley would give the governor a chance to appoint someone who is more in lockstep with Abercrombie’s views.

Shortly after Champley joined the PUC in August, the commission unanimously rejected a contract between start-up Aina Koa Pono and Hawaiian Electric Co. to produce biofuel on the Big Island.

One of Abercrombie’s top advisers, William Kaneko, is a former lobbyist for Aina Koa Pono. And Melvin Chiogioji, one of the founder’s of AKP, is considered politically influential. He couldn’t be reached for comment for this story.

The commissioners ruled that the contract was “excessive, not cost-effective, and thus, is unreasonable and inconsistent with the public interest.”

The ruling angered Aina Koa Pono which wrote a harsh rebuttal.

Kenton Eldridge, co-founder of AKP, wouldn’t comment this week on whether his company is behind the move to get rid of Champley. Asked whether he personally had any conversations with the administration about the PUC ruling, he said “absolutely not.”

Dela Cruz said that she wasn’t familiar with the AKP ruling. She wouldn’t say whether there were specific decisions that Abercrombie was unhappy with.

But if the governor does backtrack on Champley’s nomination based on commission rulings it raises concerns about the separation of powers between the governor and PUC.

Isaac Moriwake, an attorney with the Honolulu office of Earthjustice, said that commissioners play dual roles. When they are setting general policy guidelines, then its the governor’s prerogative to push them to implement his agenda. But when it comes to ruling on individual cases, he said it was critical that commissioners act independently.

“On quasi-judicial matters where the agency’s commissioners act as a judge, the law is very clear that there is supposed to be no outside influence from the executive or Legislature,” said Moriwake. “Any appearance of impropriety really shakes the foundation of our legal system.”

Robert Thormeyer, director of communications for the National Association of Regulatory Utility Commissioners, likened the PUC to a court, where commissioners hear and decide on evidence. In that regard they are different from cabinet appointees.

“By and large, the idea of having the commissioners as an independent agency is so that it can make decisions without the Legislature or governor’s office pushing it in certain directions,” he said.

It’s difficult to get rid of a commissioner once they are confirmed by the Senate. Moriwake said the governor could only remove a commissioner “for cause,” a strict standard that suggests a fundamental lack of judgment or character, and that would entail hearings.1

However, Champley’s case is different. Because he hasn’t been confirmed, the governor can find someone else to replace him.

Past Pressure on the PUC

This is not the first time that Abercrombie has tried to stack the PUC with people who will go along with his political policies.

In June, he asked for the resignations of two of the commissioners, Carl Caliboso and John Cole, both appointees under former Gov. Linda Lingle. Both resisted, though Caliboso resigned a couple of months later and the governor nominated Champley in his place. Cole’s term ends in June and Dela Cruz said that the governor is currently looking for a replacement.

The move to replace the PUC commissioners came as part of Abercrombie’s push to replace a couple dozen other members of boards and commissions who were left over from the Lingle administration.

At the time, Abercrombie argued that it made sense for any governor coming into office to have his own people in place and that it was part of his desire to implement his “New Day” plan for the state.

But asking for the resignations was an unprecedented move by a Hawaii governor and sparked heated controversy.

The terms of PUC commissioners are purposely staggered between administrations to ensure that they act independently of executive politics, according to Thormeyer.

Champley’s Popularity in Energy Sector Unwavering

The idea that Champley might not be confirmed as a commissioner is shocking to members of the energy sector.

“It would be a colossal mistake not to submit his name for confirmation,” said Mark Duda, president of the Hawaii Solar Energy Association who has been heavily involved in regulatory affairs. “He’s supremely qualified for the position. I haven’t met a person in this state that knows more about utility regulation than Mike Champley.”

Champley is seen as a rare commodity in the islands for his breadth of knowledge about energy, utility regulation, engineering and business. And he’s viewed as a major asset in helping the state navigate its way through the complex process and technical details of switching to renewable energy sources — an issue that Abercrombie has trumpeted as one of his top priorities as governor.

Past commissioners are typically lawyers. But with the PUC taking on a much heavier load when it comes to energy, the commission has been viewed as sorely lacking the expertise that Champley provides.

He has more than 40 years in the electric utility business and was a senior executive at DTE Energy in Detroit. Since moving to Hawaii several years ago he’s advised renewable energy companies and worked as a consultant for Blue Planet Foundation, a nonprofit that seeks to eliminate fossil fuel use.

He also holds a degree in electrical engineering from the University of Dayton and a master’s in business administration from Indiana University, specializing in finance and public utility economics and regulation.

“Mike is phenomenally competent and knowledgeable with tons of experience in the utility business,” said Doug McLeod, Maui County’s energy commissioner. “I can’t imagine this has anything to do with his skills. It has to do with politics.”

“Personally, I think this is a terrible idea by the governor,” he added.

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