For many years, California’s powerful Public Utilities Commission has conducted Kabuki-style dances with the multibillion-dollar corporations it regulates. But the latest significant commission decision amounts to a descent into comic opera.
When the PUC deals with rate-increase requests from the likes of Pacific Gas & Electric Co., Southern California Edison and the San Diego Gas & Electric Co., the Kabuki routine has gone like this: The utility company proposes a rate hike far higher than it stands any chance of getting; the PUC gives it something less than was asked, but still guarantees the company large profits. The PUC then brags about how much money it has saved consumers. But their monthly bills rise, and Californians keep paying the highest power prices in the Lower 48 states.
This pattern has persisted for decades, just like Japanese Kabuki troupes, whose dances involve complex plots — but everyone involved knows just how they’ll turn out.
Now comes comic opera. This takes the form of a $16.7 million fine against Edison for not reporting to the PUC on secret meetings and communications between some of its executives and PUC members in 2013 and 2014. Get this straight: Edison is penalized for not reporting illicit meetings to the other participants in those meetings. As if they didn’t already know.
It is well documented that after the 2012 failure of the San Onofre Nuclear Power Station (SONGS), former PUC President Michael Peevey met secretly with Edison executives in March 2013 during a junket to Poland.
That violated commission rules and state law while producing the outline of a settlement announced by the PUC many months later. Unless changed, it will see customers of Edison and SDG&E pay about 70 percent of the $4.7 billion cost for decommissioning SONGS.
Yes, the PUC later held public hearings and negotiated with consumer groups, but the eventual settlement matched what Peevey jotted down on stationery and paper napkins in a Warsaw hotel. Classic Kabuki.
Now the PUC, which so far refuses to reopen the settlement proceedings despite the fact its terms were set in illegal meetings, unanimously (with Commissioner Mike Florio abstaining) fines Edison for not reporting secret meetings and other so-called ex-parte communications with Peevey and other PUC officials. Ex-parte communications occur when a judge or regulator meets one side in a proceeding outside the presence of the other side.
The fine, said Commissioner Catherine Sandoval, is intended as a “culture-changing remedy.” Whose culture? No one at the PUC is being penalized, yet its people participated in every meeting involved.
That’s one thing making this fine a farce. Another is that the amount is minuscule, a flyspeck compared with the total of $3.3 billion Edison and SDG&E stand to get in the settlement, which stems from Edison installing key parts it knew could wreck SONGS, as they did. Neither Edison, SDG&E nor the utilities commission has produced any reason why consumers should foot any of the bill for that blunder. No wonder Edison says it “disagrees” with the fine, but won’t appeal.
It’s also ludicrous to fine one party in an against-the-rules secret meeting for not reporting that meeting to the other people in the meeting. How can it change the PUC’s culture to act as if it were unaware of meetings and emails involving its own president?
Equally absurd is the fact that Melanie Darling, the PUC administrative law judge who proposed fining Edison, communicated privately with at least one Edison executive during the settlement process, asking at one point whether that agreement needed more work.
In accordance with the advice she got, the PUC so far refuses to reopen the case.
The bottom line is that by fining Edison, but not touching its own people or budget, the PUC is essentially asking Californians to believe it didn’t know about meetings in which its leadership participated.
The PUC, of course, has done laughably disgraceful things in other cases, too, as when it “fined” PG&E more than $1.6 billion over the multi-fatal 2010 San Bruno gas pipeline explosion – except that PG&E will actually lose less than half that amount.
All of which suggests it’s long past time for more than mere culture change at this rogue agency. What’s actually needed is a complete house-cleaning, or more inadvertent comedy will surely ensue.
Thomas D. Elias writes the syndicated California Focus column.