Smoking Guns in PG&E E-Mails Point to CPUC’s Mike Peevey


by Mark Toney, executive director, TURN

In PG&E’s new disclosures on October 6, 2014, the public now has smoking gun evidence of CPUC President Mike Peevey’s corruption. An E-mail between two PG&E executives indicates that Mr. Peevey agreed to shower ratepayer money on utilities as long as the utility companies ponied up big bucks for Peevey’s pet projects.

In a lengthy e-mail describing a May 2010 dinner with Mr. Peevey (where they consumed two bottles of “good Pinot”), PG&E’s disgraced Senior VP Brian Cherry recounts at least two instances in which Peevey explained the quid pro quo that he needed to get from PG&E if they wanted decisions that gave them more ratepayer money:

Energy Efficiency incentives: According to Cherry, Peevey told him that, if PG&E put up $3 million to oppose a ballot measure to roll back AB 32, the California Global Warming Solutions Act, he would give PG&E $26 million for Energy Efficiency “incentives.” These incentives, effectively bonuses which are paid for by customers, were supposedly to reward utilities for above and beyond success in implementing energy efficiency programs, despite PG&E’s failure to meet the standards to qualify for the bonuses.

President Peevey more than came through for PG&E, penning an “alternate” decision that gave PG&E $29 million more in ratepayer money than the administrative law judge’s decision proposed. (Peevey also earmarked $34 milllion extra in ratepayer funds for California’s other big utilities.) Mr. Peevey’s proposal won by a 3-2 vote despite vigorous dissents by two Commissioners who objected to the extra money for the utilities. Had it not been for the corruption of Mike Peevey, PG&E and the other utilities would not have gotten the extra $65 million.

2011 General Rate Case decision: After President Peevey explained that he expected PG&E and the other major utilities regulated by the CPUC to pony up $100,000 apiece for the Commission’s 100th Anniversary celebration, Cherry made a case for why PG&E needed a big rate increase. Cherry reported that Mr. Peevey agreed with PG&E that PG&E’s two main opponents in the case – TURN and ORA (the Commission’s Office of Ratepayer Advocates) – “would ruin the industry if left to their own devices.”

President Peevey then told Cherry to expect a decision in January – “around the time of the PUC’s 100th Anniversary celebration.” Cherry said, “I told him I got the message.” In other words, Peevey was making clear that, if PG&E wanted favorable action on its rate case, it had to kick in for the Anniversary event.

As it turns out, PG&E settled most of the issues in that case with ORA and TURN, but on the one main contested issue, the profits PG&E wanted on trashed meters that were replaced by smart meters, Peevey wrote an alternate for PG&E’s benefit. President Peevey wanted to give PG&E more ratepayer money for the retired “analog” meters that had been replaced by “smart” meters. Peevey again cast a deciding vote, ultimately compromising with another Commissioner in a 3-1 split that gave PG&E more money than the Commission’s judge recommended but less than Peevey would have liked.

These revelations put in doubt the validity of these decisions. Who knows how many other decisions were the subject of similar quid pro quos? This is the most damning evidence yet of the Peevey Commission’s culture of coziness and favoritism toward PG&E that contributed to the fatal San Bruno blast.