Less than a week had passed after Gov. Jerry Brown and several state legislators giddily announced their package of reforms for the scandal-ridden California Public Utilities Commission before an official audit revealed why that plan is simply not good enough.
The audit by the state’s Department of General Services marked the first time in 20 years that the PUC’s practices had been officially examined, and the commission was found severely wanting.
But there have been, and likely will be, no consequences for anyone involved.
Also, no one has explained why 20 years passed between audits, when General Services reviews are supposed to come every three years. Perhaps it was because California’s last three governors – Brown, Arnold Schwarzenegger and Gray Davis – were all sympathetic to the commission’s steadfast favoritism of the huge companies it regulates over their customers.
The audit found the commission did not maintain proper paperwork on contracts and other matters. It said PUC employees most likely misused gasoline credit cards. But the most egregious offense noted came when the commission secured lawyers in early 2015, just as federal and state agents began investigating some of its members for possible criminal wrongdoing.
Panic and fear ran rampant in the PUC’s San Francisco headquarters at the time, just after authorities searched the La Canada-Flintridge home of the recently-departed former commission President Michael Peevey. That raid founded evidence Peevey and executives of the Southern California Edison Co. secretly agreed to dun customers $3.3 billion, or about 70 percent of the costs to close the San Onofre Nuclear Generating Station, shuttered because of an Edison blunder. An almost identical agreement soon became official.
Commissioners voted to hire an outside criminal law firm to help them through the investigation, awarding a contract that has amounted to about $12 million for the law firm SheppardMullin.
The General Services audit did not question the commission’s authority to do anything it has done, including awarding that contract. But it said the contract was “not … signed by a party who had been delegated signature authority in writing…”
In short, there was never proper legal authority for the firm – which has been most visible in helping the commission stonewall requests for documents and other information – to get all that money.
There are other questions about the propriety of commissioners under criminal investigation using state money to hire defense attorneys. The only PUC response to those questions was to cite government code section 995.8, which says a public entity can hire criminal lawyers to defend present or former officials only if “The public entity determines that such defense would be in the best interest of the public entity…” The PUC would have to hold hearings to make such a circular determination, but it never even did that.
The audit, then, makes it clear the commission got lawyers illegally in two ways, both by failing to hold hearings on whether it should hire SheppardMullin and by letting an unauthorized person sign the contract.
Yet there are no consequences. Brown has said nothing about any of this. PUC President Michael Picker, who repeatedly says his agency’s “culture” needs big changes, steadfastly refused to answer questions about the dicey contract.
That means the PUC, whose members cannot be fired during their six-year terms, is almost completely unaccountable for its actions. It acts illegally with impunity and no one touches its top officials.
That won’t change under the reform package, which includes several positives including provisions calling for a new ethics ombudsman and a deputy director in charge of the safety of natural gas and electricity transmission lines.
Those are positive changes, negotiated largely between Brown and Democratic Assemblyman Mike Gatto of Los Angeles, whose bill to break up the PUC and divide its tasks among several other state agencies easily passed the Assembly before Brown paid it any heed. But their deal, if passed by the Legislature as expected, leaves commissioners as unaccountable as ever.
And that makes the reforms too little and far too late to help consumers very much.
Thomas D. Elias writes the syndicated California Focus column.