CPUC Corruption Cost Customers $68 Million


For Immediate Release from TURN, The Utility Reform Network

$68 Million in Statewide Refunds at Stake in CPUC Corruption Scandal

Wed., Nov 19, 2013, San Francisco–TURN today demanded that the California Public Utilities Commission (CPUC) rescind a 2010 decision that awarded $29 million in excess profits to PG&E [and an additional $39 million to California’s other large energy utilities]. There is mounting evidence that disgraced President Mike Peevey, currently under investigation by state and federal authorities, engineered the unearned award to pay PG&E off for political support.

The payoff came to light in an email by former PG&E Vice President Brian Cherry to his superiors, describing a quid pro quo Cherry said was offered by Peevey over “two good bottles of Pinot”. Cherry recounted that Peevey would reward PG&E with unearned and unwarranted “incentive payments” for energy efficiency programs if PG&E donated to a pet political cause of Peevey’s, telling his superiors at PG&E:

“Mike supports us getting incentives but told me not to expect too much given the large amounts we got the last two years….I jokingly suggested that if he gave us $26 million, we could come up with $3 million or so for AB 32 (No on Proposition 23). He said that is a deal he could live with ….”

PG&E donated at least $650,000 to the campaign to defeat Proposition 23. Shortly afterwards, President Peevey proposed granting PG&E over $29 million in energy efficiency incentives, ignoring a determination by the CPUC’s own Energy Division that PG&E had failed to meet the minimum performance standards established by the Commission, and had earned no incentives. President Peevey’s decision also gave unearned bonuses to Southern California Edison of $24.1 million, San Diego Gas & Electric, $5.1million and Southern California Gas, $9.9 million.  

TURN objected to the incentive payments from the first. Utilities are paid by customers to run energy efficiency programs, but demanded millions extra to run them effectively. While unable to stop the excess profits, TURN had won minimum performance standards on which incentives would be based. But the utilities failed to achieve the required energy savings. Hence, the Administrative Law Judge assigned to the case determined poor performance by PG&E, like the other utilities, justified no reward at all. 

Nevertheless, President Peevey pushed through the unearned payments. His alternate proposal was adopted on a 3-2 vote on December 16, 2010.

“The Cherry e-mail raises serious doubt about President Peevey’s impartiality, especially considering that he had to ignore the actual evidence in the case to get the result he wanted,” said TURN Legal Director Tom Long. “To address the apparent bias by Commissioner Peevey, the Commission should rescind the entire $68 million given to PG&E, SDG&E, SoCal Edison and Socal Gas, and re-consider it from the point at which the process is free of taint.”

“President Peevey appears to have played fast and loose with customers’ money,” said TURN executive director Mark Toney. “The incentive program was a sweetheart deal for the utilities to begin with, mitigated only by the standards won by TURN. But President Peevey ignored those standards in favor of his own preferred outcome, costing customers $68 million which should now be refunded.”

TURN’s motion to rescind CPUC decision awarding utilities $68 million