CPUC Commissioner Ferron shocked the audience at a Commission meeting Oct. 3 by parroting PG&E’s threats on proposed San Bruno penalties, which basically boil down to “if you make us pay we’ll make you pay even more.”
PG&E has launched a full court press threatening bankruptcy and higher rates if the Commission penalizes the company for San Bruno and has enlisted its BFFs from Wall Street to help. And help they did.
Wall Street delivered PG&E’s warning to Commissioner Ferron a few days earlier, and he apparently took it to heart. During his bi-weekly “Commissioner report” Ferron warned that he had been told in no uncertain terms that if the Commission’s decisions were perceived as“capital unfriendly,” these same investors would see to it that PG&E’s borrowing costs went up. That would mean billions extra in rates. The discomfort in the room was palpable.
The Commission has already been under fire for blurring the lines in the San Bruno case. Previous missteps included accepting a wish list from PG&E and entering a back room deal to bring in an outside mediator. Here was more of the same, a pitch for abandoning the legal record, evidence and arguments in favor of Wall Street fearmongering and manipulation.
TURN’s Legal Director Tom Long said “Ferron’s statement is an engraved invitation to the utilities to ramp up the Wall Street gambit in any important case.” Long, one of several attorneys who have spent years making the case for meaningful penalties against PG&E at the Commission, deeply objects to the Commission’s decision being influenced by these off-the-record, backroom conversations.
“The investor perceptions that [Commissioner Ferron] says should be a focal point of the Commission’s decision-making are not part of the evidentiary record in CPUC cases,” Long said. “Commissioner Ferron wants such perceptions to be an important “fact” the Commissioners consider, yet we have no opportunity to probe the basis of these opinions through discovery or cross-examination. This makes the evidentiary record a farce.”
Commissioner Ferron assured everyone that no ex parte rules had been violated, meaning that no one had uttered a substantive word about San Bruno during the meeting- or San Onofre, another disaster utility companies want customers to pay for.
But those cases were clearly the subject. If investors weren’t threatening higher borrowing costs after these decisions, what were they talking about? The only other possibilities are trying to strong arm the Commission into approving PG&E and Edison’s outrageous rate requests, thereby signaling the “positive regulatory environment” that Wall Street wants.
Ferron, himself a former banker, seemed unduly impressed with his visitors: “collectively, theses investors represented more than $3 trillion dollars in assets under management,” he gushed, “That’s trillions with a T.”
We’re less impressed with their credentials, especially when it comes to enforcing pipeline safety rules. Or standing up for customers, all of whom were harmed by PG&E’s mismanagement.
PG&E is managing the threat of over $2 billion in penalties far more effectively than it managed its pipelines. CEO Tony Early went running to Wall Street threatening bankruptcy. Wall Street has obliged, although the bankruptcy scenario is so outlandish it seems to have been abandoned in favor of the threat of higher rates.
This issue was dealt with in the Overland report, commissioned by the CPUC itself, which found that PG&E could sustain $2.4 billion in penalties without financial consequences that would force higher rates. The penalties recommended by TURN and others take this into account. But that doesn’t mean PG&E is willing to see shareholders take a hit.
TURN’s proposal, which paved the way for the CPUC Safety Division’s, is for $1 billion in penalties to offset CUSTOMER costs for pipeline safety. PG&E wants that money to go to their shareholders, shielding them from the costs of PG&E’s mistakes.
Still, pressure is building on the CPUC to finally stand up to PG&E, and demand that customers get the safe system they’ve been promised- and paying for- all along.
The San Bruno disaster has barely caused a blip in PG&E’s profits- or executive pay- so far. If justice is done, the company’s shareholders have to pay for the mismanagement that previously enriched them. Instead of running to its Wall Street buddies to run interference with the CPUC, PG&E should man up and pay up. We customers are simply not the ones who should be paying PG&E’s way out of San Bruno. That’s what the evidence shows, regardless of threats and intimidation from PG&E or its flunkies.