Bombshell or Business As Usual? PG&E TRIES TO SWEEP NEW BACK DOOR DEALS UNDER THE RUG

Newly public emails show that back door channels between PG&E and the CPUC ran deeper than previously known. And involved a broader cast of characters than previously known, including controversial former Schwarznegger aide Susan Kennedy, who apparently leveraged her connections to both win lucrative contracts with utility companies and lobby on their behalf.

Corruption at PG&E is hardly news, especially when it comes to PG&E’s cozy relationship with the California Public Utilities Commission. E-Mails between PG&E’s top brass and CPUC disgusted the public and everyone here at TURN, since they joked about muzzling our executive director Mark Toney, and compared him to the Boston Strangler. A meeting in which former CPUC President Peevey traded away rate hikes with a PG&E lobbyist “over a few good bottles of pinot” was especially shocking.

Those emails were not only reprehensible but also violated the CPUC’s rules that required “ex parte” meetings with Commissioners to be publicly disclosed. The CPUC was forced to investigate these violations, and PG&E ultimately agreed to pay $86 million to settle accusations of unreported back door communications with public officials.  The settlement, negotiated by TURN and our allies at the City of San Bruno and the Office of Ratepayer Advocates, must be approved by a vote of the full Commission before taking effect.

The seriousness of the ex parte violations covered in the settlement is reflected in the amount of the proposed penalties, which would be by far the largest ever paid by a utility for violating rules designed to prevent undue influence over crucial CPUC decisions.  The bulk of the money to be paid by PG&E will go to reduce gas rates, consistent with TURN’s previous advocacy that directed the penalties paid by PG&E for the San Bruno explosion to benefit gas customers.

But at the last minute, PG&E revealed an additional set of emails that likewise violate ex parte rules, hoping to sweep them under the rug.  The latest revelations include unreported contacts between Kennedy, a former CPUC Commissioner and apparent PG&E lobbyist, and top CPUC officials.  They detail numerous meetings and conversations in which Kennedy and other PG&E apologists tried to influence not only the CPUC’s decisions, but also its comments to the media, with Kennedy taking advantage of her personal contacts to press PG&E’s case.

PG&E proposed a novel method approach to how it should be penalized for the additional ex parte violations. In a legal filing, PG&E described these emails as raising “similar issues” to the ones previously revealed, and suggested that the new emails retroactively “become the basis” for the settlement. In other words, pretend these new violations were the basis for the already agreed upon settlement penalties of $86 million. But of course they weren’t.

This latest round of emails sparked an investigation into Kennedy by the Fair Political Practices Commission. Kennedy served as Chief of Staff for the first celebrity groper to be elected to office, Arnold Schwarzenegger, before he appointed her to the CPUC. After leaving the Commission Kennedy formed an energy storage company that was awarded several contracts with Southern California Edison to the tune of almost $100 million.

Kennedy has previously come under fire for hosting a party for disgraced former CPUC President Mike Peevey, a $250/plate “tribute dinner” that reportedly brought in tens of thousands of dollars from attendees including public officials and utility executives. But the supposed recipient of the funds, the UC Berkeley Goldman School, declined the money.

It goes without saying that the newly revealed emails should be investigated by the CPUC, and, that PG&E should be penalized for these additional violations. As a repeat offender, PG&E should perhaps pay an even higher price. And shareholders should be paying as much attention as customers are. Trust of PG&E continues to be low, and customers are skeptical that the reforms won at the CPUC are enough.

The constant back channel communications, which have an overly familiar tone and include repeated personal insults toward TURN’s Executive DIrector and other public advocates like Senator Jerry Hill, feed the perception that the Commission is too cozy with PG&E. Rather than sweep these new violations under the rug, the Commission needs to come clean- and send a stronger message to PG&E’s management and shareholders. TURN hears from consumers all the time that they still want reassurance that the days of wine and roses are over.