Energy Consultant May Be Fined Over Conflict

An energy consultant should be fined $5,000 for advising the state on a contract with power company Calpine Corp. while he owned Calpine stock, according to a settlement to be voted on next week by the state political watchdog agency.

The Fair Political Practices Commission is scheduled to vote Dec. 13 to impose the maximum fine for violating the state’s conflict-of-interest code on Richard Ferreira, one of dozens of consultants hired at the height of the electricity crisis last year.

A former top official with the Sacramento Municipal Utility District, Ferreira owned 50 shares of Calpine stock worth more than $4,000 when he recommended in June 2001 that the state Department of Water Resources sign a three-year, $150-million electricity contract with Calpine.

Ferreira did not negotiate the contract, and a DWR deputy official made the final decision to sign it. The state had hired Ferreira in January 2001 under a two-year, $500,000 contract.

He and four energy traders who also owned Calpine stock were fired by the DWR in July 2001 after the state required energy consultants to publicly disclose their financial interests. Ferreira sold his Calpine stock that month. He now works as a consultant to the state public power authority, and could not be reached for comment Wednesday.

Although politicians and reporters had raised conflict-of-interest questions about several state workers and consultants involved in the state electricity crisis, Ferreira is the only official to face a personal fine from the Fair Political Practices Commission.

In a settlement last March with the FPPC, the Department of Water Resources agreed to pay a $69,500 fine from its budget for belatedly requiring 52 energy consultants to disclose potential conflicts of interest.

In summarizing their case against Ferreira, the FPPC investigators noted that he told two supervisors at the DWR that he owned Calpine stock before he offered his opinion on a Calpine contract. The DWR officials did not advise him that he might face a conflict of interest violation.

The investigators concluded that as a veteran public servant, Ferreira “should have known of his obligation to avoid conflicts of interest.”