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Shake-up at PUC, PG&E over emails related to San Bruno blast case

Michael Peevey, president of the California Public Utilities Commission, has removed himself from proceedings involving a fatal explosion in San Bruno. Above, he attends a meeting at the Metropolitan Water District board room in Los Angeles in May.
Michael Peevey, president of the California Public Utilities Commission, has removed himself from proceedings involving a fatal explosion in San Bruno. Above, he attends a meeting at the Metropolitan Water District board room in Los Angeles in May.
(Cheryl A. Guerrero / Los Angeles Times)

Stung by criticism that the Public Utilities Commission had developed “too cozy” of a relationship with the state’s largest utility, PUC President Michael Peevey removed himself from further proceedings over a huge explosion in 2010 that killed eight people in the Bay Area city of San Bruno.

Peevey also said he asked his chief of staff, Carol Brown, to resign for “inappropriate communications” with the San Francisco utility, Pacific Gas & Electric Co., and she did. Brown could not reached for comment.

At the same time, the utility confirmed that it had made improper communications with PUC officials related to the selection of administrative law judges on a natural gas rate case. As a result, the company said it fired three top vice presidents.

The PUC moves were part of a number of actions the commission announced Monday to distance itself from PG&E in ongoing proceedings.

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The action followed complaints filed in July by the mayor of San Bruno and others that PUC officials, including Peevey, did not properly notify the public of confidential communications with the utility.

Monday’s announcements were proof that the city’s concerns about informal links between the PUC and the utility are valid, said Connie Jackson, San Bruno’s city manager.

City officials have labeled dozens of emails, which included Peevey giving public relations advice to PG&E, as “too cozy” and a violation of law. The city asked the state attorney general’s office and other law enforcement agencies to investigate the relationship.

“We are pleased that Mr. Peevey has come to the realization that his actions at least could be interpreted as improper,” Jackson said.

Peevey in a statement said he removed himself from deliberating in the two matters because he wanted “to remove any doubt about my objectivity regarding these important cases.”

The commission in recent months has been deciding whether to levy a steep fine against PG&E for negligence related to the fatal blast in San Bruno that also injured 66 and destroyed 38 homes. Commission staff this year had proposed a $2.25-billion fine, and two PUC judges recently proposed a $1.4-billion penalty.

The utility also has been indicted by a federal grand jury on suspicion of criminal violations of pipeline safety laws and alleged obstruction of a federal investigation.

PG&E is appealing the $1.4-billion proposed punishment to the commission, and it has denied any wrongdoing in connection with the federal charges.

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As for Monday’s statement regarding PG&E emails, the utility said it discovered the most recent problematic emails during a review of five years’ worth of internal messages.

In a letter to employees, the company acknowledged that it had “earned some of the criticism” of being too cozy with commission staff and members. “We need to take action to change that,” the letter said.

In addition to firing top officials, PG&E announced it had appointed a new senior vice president of regulatory relations and hired former U.S. Interior Secretary Ken Salazar as a special counsel for regulatory compliance.

The commission, in a statement, said it is considering penalties against PG&E for its reported “inappropriate communications.”

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PUC rules prohibit certain communications with decision makers when they are not available to all parties in the case.

Peevey, who is finishing a second six-year term on the five-member commission, said that he removed himself from the two PUC proceedings to “ensure the public’s confidence in the credibility and objectivity of the CPUC’s decisions.”

Finally, the PUC said that Peevey directed the commission’s executive director to conduct a review of any possible inappropriate communications between PUC staff and the utility.

The flap over reportedly illegal communications is the latest surrounding Peevey, the former president of Southern California Edison Co.

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He has been criticized for favoring utility shareholders over ratepayers, for dominating commission business and for taking a number of free international trips paid for by business-friendly foundations. Supporters praise Peevey for pushing to build more power plants and for encouraging the development of renewable power and energy efficiency.

Peevey has declined to say whether he would seek a reappointment to a record third term from Gov. Jerry Brown. His tenure expires at year’s end.

The latest dust-up should make Brown think again about sticking with Peevey, said Mindy Spatt, a spokeswoman for the Utility Reform Network, a San Francisco group that advocates for ratepayers.

“This is just the tip of the iceberg,” Spatt said. “In TURN’s view, President Peevey’s leadership is so compromised that the commission can’t possibly move forward with him at the helm.”

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marc.lifsher@latimes.com

Twitter: @MarcLifsher


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