Two Corona City Councilmen broke state law by voting to move forward with plans to create a municipal utility while co-owning an energy consulting firm that stands to benefit financially from the action, Southern California Edison Co. claimed in court papers Friday.
The allegation was part of a sweeping legal assault by Edison to discredit and derail Corona's move to seize the company's power lines, electricity substations and other facilities in the city through eminent domain procedures and incorporate them into a municipal utility.
Corona officials disputed the accusations, saying Edison is making false claims in a desperate attempt to hold on to its customers in the Riverside County city of 132,000.
"That issue is a red herring," said David Huard, a lawyer for Manatt, Phelps & Phillips, the firm representing Corona on energy issues.
In its Riverside Superior Court filing, Edison contends that Corona council members Darrell Talbert and Jeff Miller "came to believe that the expertise they had gained in seeking certain electrical distribution systems from SCE might prove valuable to other governing bodies of municipalities in California."
The councilmen last summer created a company called Municipal Energy Solutions Inc. and touted their experience in Corona in seeking to market their services to the city of Temecula, Edison said.
James O'Grady, Temecula's assistant city manager, said in an interview Friday that Talbert and Miller, joined by Corona city staff members, visited his town Sept. 5 to offer "city-to-city advice but also as potential consultants if we were interested in doing that."
Temecula officials were given a draft "professional services agreement" for MES, O'Grady said. In that agreement, which was never signed, MES sought a monthly "management and coordination fee" of $7,500, plus reimbursable expenses, and potential project-specific fees of 2% of gross revenue "from any consultant-specific recommendation or project-specific service or action" implemented by the city, according to a copy of the accord provided by Temecula.
Talbert, however, said that the draft agreement was drawn up at Temecula's request and that MES was not pursuing business with the city. "My goal is free advice," Talbert said Friday. Nonetheless, Talbert acknowledged that if he and Miller "are asked to do the things in that presentation, then there would be a charge."
Rosemead-based Edison said in its filing that Talbert and Miller's participation in the Corona council's Dec. 2 vote to begin the process of seizing Edison's assets is a conflict of interest under the state's Political Reform Act, and that the vote should be invalidated.
But Huard said no law was broken.
"Edison is assuming, without providing any evidence, that their vote was colored by their potential to sign consulting contracts with cities elsewhere in the state based on their reputation of what they did with Corona," Huard said. "But if you look at the conflict-of-interest laws, none of them relate to anything that's" happened here.
Huard also maintained that the value of the advice from the two councilmen would not have been diminished if Corona had chosen a different path, and thus, their votes did not create value for MES.
Still, the Corona experience seemed to be a major part of the MES presentation in Temecula. In describing MES' experience, the firm's material said, "It's Talbert and Miller's vision and Corona's success that created MES' exclusive model for energy municipalization."
Campaign finance expert Bob Stern, a coauthor of the Political Reform Act, called the allegations by Edison "troubling."
"There's no problem with people giving advice to other cities. Council members do that all the time," said Stern, who is now the president of the Center for Governmental Studies, a Los Angeles nonprofit organization. "But if they are selling their service based on the fact that their city is going through it and they are voting on those actions ... it raises an ethical question."
In moving to seize Edison facilities, Corona has asserted that the switch to a municipal utility is in the city's best interest because it would save its residents as much as 15% off Edison's current prices.
In addition to its allegations of conflict of interest, Edison said in its suit Friday that the city improperly made key decisions behind closed doors, hasn't taken all potential costs into account and didn't provide an adequate review of the environmental effects of the proposal to create a city-owned utility.
Corona officials and Huard disputed those allegations as well.