The embattled Public Utility Commission's legal bill for criminal defense by an outside law firm is growing rapidly.
The PUC originally budgeted $49,000 for outside legal fees but now is allocating up to $5 million over the next year and a half.
The need for more legal help comes as state and federal investigators are looking into a broad range of possible misconduct, including improper communications between PUC officials and utility executives.
According to a search warrant served in January on the home of former PUC President Michael Peevey, officials said they are also investigating possible judge shopping, bribery and obstruction of justice.
In November, the PUC approved a contract for $49,000 with the Los Angeles firm of Sheppard Mullin.
To better reflect actual legal costs, the contract now has been amended to authorize billings of up to $5.2 million for the period of November 2014 through June 2016.
The head of the PUC's Sheppard Mullin defense team is Raymond C. Marshall, a firm partneer from the San Francisco office.
His biography describes him as a specialist in government contracts and investigations, including proceedings brought by the U.S. Department of Justice, and other state and federal attorneys.
Marshall is charging the PUC a "discounted" rate of $882 an hour. His team members bill the state at rates of up to $764 an hour for lawyers.
The contract stipulates that Sheppard Mullin will represent the commission in investigations currently underway by federal and state law enforcement agencies
PUC spokeswoman Terrie Prosper defended the need for outside lawyers.
The commission she said, "simply does not have the expertise, breadth of experience, resources or time to handle internally the massive amount of work that needs to be done to effectively manage and cooperate with investigations."
Timothy Sullivan, the PUC's interim executive director, signed the updated contract on Thursday. The jump in legal costs was first reported by the U-T San Diego newspaper.
The Sheppard Mullin bill, so far this year, is just over $1.5 million. The entire expenditure is being challenged in state court by San Diego consumer attorney Michael Aguirre.
The contract, he argues, is not valid because the five-member commission has not publicly found that PUC employees, who may have committed wrongdoing, acted in good faith.
"There has been no such finding," Aguirre said. "This is unlawful conduct."
The new PUC president, Michael Picker, recently testified at a Senate hearing that his agency had no choice but to hire an outside law firm.
PUC staff lawyers do not handle criminal cases, he said. And the state attorney general can't represent the PUC because that office already is probing the commission.