PUC launches PG&E probe as agency fails to comply with search warrant

A PG&E gas pipeline explosion killed eight people and destroyed dozens of homes Sept. 10, 2010, in San Bruno, Calif.

A PG&E gas pipeline explosion killed eight people and destroyed dozens of homes Sept. 10, 2010, in San Bruno, Calif.

(Justin Sullivan / Getty Images)

The California Public Utilities Commission has launched an investigation of the state’s largest utility at the same time that the agency has failed to deliver documents for an investigation into its own operations.

The PUC is investigating whether the culture at Pacific Gas & Electric Co. contributes to accidents such as the 2010 natural gas pipeline explosion that killed eight people in the Bay Area city of San Bruno.

Commissioners are reviewing PG&E’s structure, policies, practices and governance to see if the utility puts enough emphasis on safety. In April, the commission fined the utility a record $1.6 billion over the pipeline explosion.


“A public utility’s track record of safely operating its system is dependent on more than messages and slogans,” PUC President Michael Picker said in a news release. “An effective safety culture is shaped by the governance, policies, budget, practices, and most of all, the accountability set by the top leadership.”

Responding to the announcement of the investigation, PG&E said it already has taken several actions to address the problems that were revealed by the San Bruno explosion. Those actions include the 2011 addition of Tony Earley as chief executive as well as safety training for 3,500 employees.

“As we have said since this was originally announced, we look forward to a constructive dialogue with the commission and staff and to sharing our commitment to safety and the concrete actions we have taken over the last several years to back it up,” the utility said in a statement. “We’ve made incredible progress toward our goal of becoming the safest and most reliable energy provider in America but we have more to do and we won’t rest until it’s done and done right.”

Meanwhile, the commission -- beset by criticism that its officials have a too-cozy relationship with the utilities they regulate -- failed to respond to a search warrant for records related the California attorney general’s investigation of agency operations.

A court document filed Aug. 7 states that “after multiple requests, and two months after the search warrant was served on CPUC, no records have been produced.”

Special Agent Reye Diaz of the attorney general’s office added: “No extension has been requested and no indication has been given as to when the records will be produced.”


The attorney general is investigating secret talks between the commission and Southern California Edison, the state’s second largest investor-owned utility, that led to decisions that are costing utility customers billions of dollars.

Terrie Prosper, a PUC spokeswoman, said the commission has received 10 separate and extensive formal demands for documents over the past eight months and that the San Onofre-related request was the last served. She said the agency is reviewing 6.5 million documents that might fall under the requests. More than 1.5 million documents already have been produced.

“We continue to review and produce documents in the order in which the formal requests were served,” Prosper said. “The attorney general’s office did not request it to be responded to before any of the other document requests. We will continue to fully comply.”

The secret talks between PUC officials and Edison representatives were highlighted in an Aug. 5 ruling by state Administrative Law Judge Melanie Darling. She ruled that Edison representatives engaged in 10 unreported communications with one or more commissioners or their personal advisors.

The communications, she said, related to the payment of costs from the shutdown of the San Onofre nuclear plant, which closed after revelations that contractors installed faulty new steam generators. One of the new steam generators leaked a small amount of radiation.

The PUC approved a settlement agreement that left customers on the hook for $3.3 billion while the plant’s owners – Edison and San Diego Gas & Electric – are responsible for $1.4 billion.

On Aug. 20, Edison responded to Darling’s ruling, saying that it did not believe nine of the 10 communications needed to be reported. The utility now acknowledges one of the talks should have been reported.

“SCE strives to comply with the commission’s rules by exhibiting the highest standards of ethics and integrity,” said Pedro Pizarro, Edison’s president. “SCE believed the March 2013 meeting was not reportable under the commission’s rules, based on the information provided at the time. It was not until early 2015 that SCE learned additional information that indicated a report should be filed.”

Darling’s ruling, which recommends that Edison pay penalties as high as $34 million, sparked new questions about the San Onofre cost settlement as well as the apparently close relationship between the commission and the companies it regulates.

Starting last year, PUC commissioners and officials, including former President Michael Peevey, were criticized for improper communications with executives at Pacific Gas & Electric Co. The conversations included how much to fine PG&E for the 2010 San Bruno explosion.

Thousands of emails also revealed that Peevey, who retired as PUC president at the end of 2014, involved himself personally in internal decision-making at PG&E, extending to matters such as the utility’s corporate leadership, public relations strategy, safety policies and rate-setting cases affecting billions of customer dollars.

Before his retirement, Peevey denied wrongdoing and defended his record. He has not been available for comment since then.

Peevey’s involvement with executives of the businesses he regulated has prompted probes by the U.S. attorney’s office in San Francisco and the California attorney general’s office.

In January, state law enforcement authorities searched the La Canada Flintridge home of Peevey and his wife, Democratic state Sen. Carol Liu. Also searched was the Bay Area residence of former PG&E executive Brian Cherry.

Picker has promised reforms of the commission and took public comments on proposals for changes earlier this month. But proposals before state lawmakers may trump the commission’s actions.

Twitter: @ivanlpenn