TURN Exposes Secret CPUC Deal, Demands Change


For Immediate Release From TURN, The Utility Reform Network


TURN Exposes CPUC Back Door Deal with SDG&E and Demands Change



Wednesday, March 11, 2015, Sacramento–TURN today revealed a secret deal between San Diego Gas &Electric Co. and former CPUC President Mike Peevey to pass on the costs of unneeded power purchases on to customers.


The back-door deal was referenced in TURN’s testimony during a state Senate Energy, Utilities and Communications Committee hearing on the recent scandals at the CPUC. TURN is urging passage of legislation to strengthen rules against Commissioner bias and back door dealing.


An eyewitness, former Sempra attorney Kelly Foley, described the back door detail in a letter to TURN stating that she had participated in a meeting in 2003 in which Mr. Peevey had offered a quid pro quo to Sempra’s subsidiary SDG&E; approval of a proposal to acquire the Sempra-owned Palomar plant IF SDG&E also signed a contract with Calpine for output from the nearby Otay Mesa pant.


Under the scheme, Peevey promised approval of transmission upgrades SDG&E sought, but warned that Palomar would be rejected without Otay Mesa. Also participating in the meeting was Carol Brown, who was later assigned to be Administrative Law Judge in the case. No ex parte notice was ever filed reporting this meeting.


TURN knew the $739 million deal for Otay Mesa stank at the time, and had complained to the Commission that approval of both contracts would be overkill, since SDG&E had failed to show the proposed ratepayer expenditures were necessary. TURN also complained about Mr. Peevey’s bias. Peevey’s enthusiasm for the Calpine plant was clear, and he fast-tracked it through the CPUC. That led TURN and UCAN, The Utility Consumers Action Network, to move for his disqualification in 2004.


Under the current, ineffectual system, Peevey himself ruled on TURN’s motion, denying it as he did all other allegations of bias against him. TURN staff attorney Matt Freedman told the Committee that the legislature must modify state law to ensure that a Commissioner cannot engineer secret backroom deals and then vote on whether they are reasonable.


Freedman said that during Peevey’s tenure, “TURN attempted to have him removed from several cases. It is hardly surprising that Mr. Peevey never granted our requests.” Freedman said Foley’s letter highlighted the need for stricter standards for proving bias and an end to the ineffectual system that allows Commissioners to rule themselves on whether or not they are biased.


Freedman also urged a ban “ex parte” communications, meetings outside of the formal proceeding, in all Commission decisions involving rates. “Utilities should not longer be able to take advantage of loopholes in the ex parte rules that have given their lobbyists unfettered, open access to the Commission’s top brass,” he said.

Freedman Testimony
Foley Letter to TURN
TURN/UCAN brief describing Peevey intervention at pages 14-20
Peevey ruling denying motion
TURN/UCAN motion for reconsideration