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Suit Names the PUC’s Lynch

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Times Staff Writer

A San Diego Gas & Electric Co. executive is suing California Public Utilities Commissioner Loretta M. Lynch, alleging that she helped a TV station record what he thought was a private conversation with her -- and that ended up on the air as part of an investigative report on the PUC.

In the lawsuit, Lee Schavrien, the company’s vice president of regulatory affairs, accuses Lynch of violating state privacy laws by luring him into the meeting at a resort restaurant’s patio overlooking the surf in Carmel last month. Secretly recorded by a camera crew, the encounter was included in a story called “Power Play” that ran on KCBS Channel 2 in Los Angeles on Nov. 11.

The story focused on Lynch’s concerns about close ties between the PUC and the utilities it regulates. In an interview aired as part of the KCBS report, Lynch alleged that SDG&E;’s parent company, Sempra Energy, used its influence with PUC President Michael Peevey to win the OK of the utility’s acquisition of a power plant.

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In a statement issued in response to the lawsuit, Lynch called it “frivolous” and said it was “intended to prevent me from exercising my statutory responsibilities.” Lynch, a lawyer, said she was confident the suit would be dismissed.

The filing of the suit is the latest twist in a long-running spat between Lynch and Peevey, both appointees of former Gov. Gray Davis.

Davis fired Lynch as PUC president in December 2002, in the midst of the California energy crisis, replacing her with Peevey. Since then, Lynch has been at odds with Peevey and is usually in the minority on the five-member commission. Lynch’s term ends Dec. 31, and she isn’t expected to be reappointed by Gov. Arnold Schwarzenegger.

Schavrien’s suit, filed Thursday in San Diego County Superior Court, seeks civil penalties of $5,000 for each of the two alleged privacy violations, along with unspecified compensatory and punitive damages.

Under California law, it is illegal to record a private conversation without the approval of the people involved. A violation, if prosecuted criminally, could carry a punishment of up to one year in jail. Attorneys for San Diego-based Sempra said it hadn’t filed criminal charges against Lynch, and a spokesman for Atty. Gen. Bill Lockyer said no investigation was planned.

According to the suit, Schavrien was attending a meeting sponsored by the energy industry at a seaside resort in Carmel on Oct. 1 when he asked Lynch to talk to him about “a procedural question” on a case pending before the PUC involving SDG&E.;

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Lynch suggested they meet at the terrace restaurant of the Highlands Inn at 3 p.m. after the conference, the suit says, and Schavrien and Lynch talked on an isolated patio, at least 25 feet from the closest patrons.

At the start of the meeting, the suit claims, Schavrien received assurances from Lynch that their discussions were legal under commission rules governing such informal contacts between members and the companies they regulate. After the meeting, Schavrien filed a so-called ex parte notice with the PUC as required by law, creating a public record that the talk had occurred.

During the meeting, Lynch peppered Schavrien, the SDG&E; executive most responsible for dealing with the PUC, with questions about Peevey, according to the suit. It says she asked Schavrien whether he felt pressured to make campaign contributions to Peevey’s wife, state Assemblywoman Carol Liu (D-La Canada Flintridge).

Filings with the secretary of state’s office show that Liu received $3,475 in contributions from employees of Sempra and its affiliates in 2004. She also reported $4,000 in contributions from Southern California Edison Co. and $500 from other electric energy generating companies. Such contributions are allowed under state law so long as they are reported and do not exceed certain limits.

In the KCBS broadcast, Schavrien can be heard telling Lynch “we’d look real bad” if no one from SDG&E; had attended a recent Liu fund-raising event. Although Schavrien’s face is clearly visible, he isn’t identified by name and is described on the air as an “energy lobbyist.” Sempra said it was not clear how the conversation was recorded.

Both Peevey and Liu declined to comment on Schavrien’s lawsuit. Mike Nelson, a spokesman for KCBS, said: “We stand by our special-assignment report and are confident that we have not broken any laws.”

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In an action last week, Sempra filed a motion with the PUC seeking to have Lynch disqualified from voting on all matters involving Sempra on the grounds that she was biased against the company.

Lynch is presiding over an investigation into alleged manipulation of the natural gas market by Southern California Gas Co., another Sempra subsidiary.

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