One of California’s most complex and unusual financial/political/legal conflicts was settled last week, but the deal left a couple of mysteries.The two Southern California utilities that own the now-shuttered San Onofre nuclear power plant agreed to modify a 2014 Public Utilities Commission (PUC) decree that had saddled their customers with two-thirds of $4.7 billion in decommissioning costs.
Instead, the costs will be split about 50-50, saving the ratepayers $775 million under a negotiated agreement.
It’s a win for consumer groups and Michael Aguirre, the former San Diego city attorney whose law firm has been fighting the initial PUC decree for nearly four years and will receive $5.4 million for its efforts.
The PUC’s 2014 decision ratified a deal struck by its then-president, Michael Peevey and a Southern California Edison executive in a private 2013 meeting in a Warsaw, Poland, hotel room.
Edison is the majority owner of San Onofre, with San Diego Gas and Electric the minority owner, and Peevey is the former president of Edison. As part of the deal, Edison donated $25 million to a Peevey-sponsored UCLA climate-change research project.
After the meeting was disclosed, Aguirre filed a series of actions, including a federal lawsuit, challenging the secret agreement. He also demanded emails he alleged could show that Gov. Jerry Brown was a party to the deal.
Brown’s office has denied any role and the existence of any San Onofre-related emails, and the PUC has steadfastly rejected Aguirre’s demands. A Superior Court judge sided with Aguirre, saying, “Withholding records of allegedly ex parte secret deals resulting in a shifting of utility losses to ratepayers cannot possibly be a regulatory function of the PUC.” But the PUC prevailed on appeal.
Meanwhile, the state Department of Justice (DOJ) opened a criminal investigation. “There is probable cause to believe that Michael Peevey … used his position to influence SCE’s commitment of millions of dollars to UCLA to fund a research program,” a DOJ agent said in an affidavit for a search warrant.
Eventually, Peevey was forced to step down from the PUC, saying, “Twelve years is enough.”
The commission adopted a somewhat baffling attitude toward the scandal. It fined Edison $16.74 million for engaging in ex parte, or unofficial, negotiations, but in trying to quash Department of Justice search warrants, it defended such private dealings as a normal aspect of rate setting.
Moreover, until the revised deal, the PUC had refused to modify the original decree that let the utilities and their stockholders mostly off the hook.
The San Onofre scandal and other cases, such as private communications with Pacific Gas and Electric over a disastrous gas-pipeline explosion, indicate that the PUC has been too cozy with the utilities it is supposed to regulate in the public interest.
In response, Peevey’s successor, Michael Picker, has promised more transparency and accountability, and the Legislature has enacted some reforms.
With the new San Onofre settlement, the criminal investigation and the effort to open emails involving Brown — if they exist — could just fade away. The episode has been embarrassing to everyone involved except Aguirre, so there’s probably little appetite for continuing to air dirty linen.
However, the still-pending aspects of the San Onofre case should not be allowed to wither. The Department of Justice should tell us, one way or the other, whether it considers the Warsaw meeting a criminal act. And we should be told whether Brown, as Aguirre alleged for years, played a role in what happened.
Sunshine, after all, is the best antidote for official malfeasance.
CALmatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary.