California attorney general’s agents wasted no time after this column in late January called for a criminal investigation of the former state Public Utilities Commission President Michael Peevey. Less than five days later, investigators executed a search warrant at Peevey’s primary home in La Canada Flintridge.
But the scope of the investigation might not be broad enough.
Egregious as his alleged acts have been, Peevey could not have acted alone in securing sweetheart deals for California’s largest regulated utilities, Pacific Gas & Electric Co., Southern California Edison Co. and the San Diego Gas & Electric Co. Utility executives discussed arrangements with him, and one of the state’s leading consumer advocacy groups often played along with whatever he did. Plus, fellow commissioners never voted him down.
It all stems from the long-standing PUC “kabuki dance,” an elaborate routine conducted by the commission, the utilities and the consumer advocate group TURN — The Utility Reform Network.
In this exercise, whenever each utility files for possible rate increases, it seeks far more than is justified. The commission cuts the request down, taking credit for “holding the line,” and TURN boasts of saving the public hundreds of millions.
Demonstrating the phony quality of all this, TURN’s former chief lawyer, Michael Florio, a PUC member since 2011, is currently under investigation for allegedly helping PG&E, his onetime “adversary,” find a sympathetic administrative law judge to hear a rate case.
In reality, everyone knows the general outlines of the outcome before any rate-case exercise begins. So this is performance art, not the prudent regulation called for by California law. It now sees Californians paying the third highest power rates in the lower 48 states, according to the U.S. Energy Information Administration (eia.gov/electricity/monthly).
Yes, extraordinary examples of apparent corruption became clear during the 12-year Peevey era, predictable the moment ex-Gov. Gray Davis named the former Edison president and husband of Democratic state Sen. Carol Liu commission president. This classic case of putting the fox in charge of the henhouse was reinforced when Peevey got a second six-year term from Davis’ successor, Arnold Schwarzenegger.
Just how connected Peevey has been was clear at an early February gala honoring him in San Francisco just after investigators searched his home. Sponsors of the $250-a-plate dinner included his successor Michael Picker, Energy Commission chairman Robert Weisenmiller, former Democratic gubernatorial candidate Kathleen Brown (sister of the current governor and a board member of SDG&E’s parent company), former Assembly Speaker Fabian Nunez and several ex-members of Congress.
Most egregious of Peevey’s actions may have been his manipulations to let PG&E off easy after its negligence (the term used by federal investigators) led to the 2010 San Bruno gas pipeline explosion that cost eight lives.
For one thing, Peevey and fellow commissioners who fell meekly in line behind him still have not tracked the billions of dollars paid by utility customers since the 1950s for gas pipeline maintenance that was done only on a spotty basis.
It has also emerged that Peevey personally signed off on an exemption allowing his old pals at Edison to replace steam generators in their San Onofre Nuclear Generating Station without a formal review of the $680 million cost, which consumers began paying long before the generators were installed and then failed, causing the plant to be retired. Other emails earlier showed Edison executives knew the generators were flawed before the installation.
Peevey couldn’t do much of this alone; almost all of it required cooperation or at least acceptance by other commissioners, the utilities and TURN, the consumer advocate group that helped “negotiate” last year’s settlement that will see customers pay more than $3.3 billion out of about $5 billion in San Onofre closure costs. Of course, the fault for that failure lies with Edison and its supplier; no one has yet explained why consumers should pay anything.
Because so many parties have been involved in so many shady dealings, along with the kabuki dance common to all rate cases handled by the PUC, it’s clear the long-term theft of billions of consumer dollars involves far more persons and companies than just Peevey. Attorney General Kamala Harris’ office won’t say whether its investigation might broaden to include a potential conspiracy.
But legislative hearings to be chaired in mid-March by Democratic Assemblyman Anthony Rendon of Lakewood just might explore this, Rendon said.
For sure all aspects of this investigation should consider whether a wide conspiracy went far beyond one man’s possible criminal actions.
Thomas D. Elias writes the syndicated California Focus column.