CRIMINAL INVESTIGATION FOR UTILITY REGULATORS?

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, FEBRUARY 3, 2015, OR THEREAFTER

BY THOMAS D. ELIAS
    “CRIMINAL INVESTIGATION FOR UTILITY REGULATORS?”

          Memo to United States Attorneys in Los Angeles, San Francisco and San Diego: It’s high time you investigate the former president and some current members and officials of the California Public Utilities Commission for things like conspiracy to commit mail fraud and wire fraud.

          Evidence against current commissioners and former commission President Michael Peevey has mounted steadily over the last six months, but there has been no action against anyone.

          State rules forbid utility regulators from communicating individually with executives of the companies they regulate. Any letters, texts or emails must go to all five commissioners, as a means of preventing secret deals favoring the companies over their business and residential customers.

          Yet, emails have shown that Peevey for years communicated privately and had understandings with executives of both Pacific Gas & Electric Co. and the Southern California Edison Co., of which he was formerly president. He even hosted at least one high PG&E official at his country home in Sea Ranch, north of San Francisco.

          He also communicated privately with Edison execs, setting up a dinner in London with one, and in one case reported by the U-T San Diego newspaper agreeing to delay a PUC action that would limit the percentage of Edison’s executive bonuses it could bill to ratepayers until after that year’s bonuses had been paid under old rules.

          Current Commissioner Mike Florio has recused himself from some votes affecting PG&E because of his role in a “judge-shopping” attempt. Emails showed Florio helped the utility choose a sympathetic commission administrative law judge to preside over a key case.

          And there was the recently-disclosed 2012  phone call between Edison’s external relations director and the administrative law judge presiding over a case to determine how Edison and its customers would split the cost of retiring the disabled San Onofre Nuclear Generating Station. Edison says that call covered only technicalities.

          All this led Michael Picker, the new commission president, in a public meeting, to call the emails “troubling and very painful to read.” Yet, in the year he served on the commission with Peevey, Picker never voted against him in any major case.

          One bottom line in all this is that customers of California’s big regulated utilities – PG&E, Edison and San Diego Gas & Electric – pay power rates averaging almost twice as much as consumers served by the municipal utilities in Los Angeles, Anaheim, Riverside and Sacramento. Power rates have consistently risen, while consumption has remained steady. Details are contained in this report about San Onofre generated by former San Diego City Attorney Mike Aguirre: http://www.amslawyers.com/Breaking-News/Storm-Warning-CPUC-1-7-14.pdf.

          No, utility profits are not supposed to lead to doubly high energy bills. That, in fact, is what the PUC was set up to prevent.

          This column has frequently documented PUC favoritism of the big companies over their rate payers, labeling Peevey a “fox guarding the chicken house” as early as 2005. But the emails released in recent months provide a smoking gun pointing toward possible criminal conspiracy. If so, it could be charged as mail fraud and/or wire fraud because excessively high rates set via conspiracy would have been billed by mail or email.

          Aguirre suggests the U.S. attorneys convene special grand juries like the one that indicted PG&E for its conduct surrounding the fatal 2010 San Bruno gas pipeline explosion.

          “We need to investigate how utility rates got so high,” Aguirre said. “It’s been a swamp of dishonesty.”

          Aguirre suggests investigating, for example, what happened to money collected by the big companies to ensure utility safety. “Edison was paid money for defective San Onofre steam generators. PG&E was paid money (since the 1950s) to fix (gas lines), but failed to do so,” his report said. Similarly, he said, defective SDG&E equipment caused a huge 2007 San Diego County fire.

          “In each case, the PUC blocked its (staff’s) investigations into utility executive wrongdoing,” Aguirre charges. No one knows what happened to billions of maintenance dollars paid by customers.

          Efforts to ask Picker about these charges and any plans to improve PUC practices were rebuffed.

          The bottom line: The pattern of utility regulators’ favoritism of the companies they oversee, even possible collusion with them, has been plain for decades. But the email and telephone call evidence emerged only lately.

          That evidence is so strong it would be dereliction of duty for prosecutors to ignore it.

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     Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net