Consumer Federation of California

The California Public Utilities Commission’s president should be removed as head of the regulatory agency in light of San Bruno explosion-related e-mails that show state officials are “subject to undue influence” by Pacific Gas and Electric Co., the city’s mayor said Monday.

Mayor Jim Ruane said the e-mails, including an exchange in which commission President Michael Peevey’s chief of staff advised a PG&E executive on ways to deflect a request to disclose public information – and the executive replied, “Love you” – showed that state oversight of the utility “is corrupted.”

The utilities commission “has lost its ability to carry out its mandated function as a watchdog for the public,” Ruane said.

While the commission’s reaction was muted, PG&E said it was looking into whether the executives who wrote the e-mails had acted in an “ethical manner.” And the head of PG&E’s parent company apologized that a utility official wrote in an e-mail that he had “no respect left” for a state senator who represents the neighborhood where eight people were killed and 38 homes destroyed when a natural gas pipeline exploded in San Bruno in September 2010.

Large fine looms

Ruane called on Peevey to be removed both as commission president and as head of regulatory proceedings into whether PG&E should be fined more than $2 billion for safety violations related to the explosion.

The mayor made his comments outside the commission’s San Francisco office, in a news conference that officials called after obtaining the e-mails in a lawsuit settlement with the utilities commission.

In one e-mail exchange last year, Carol Brown – Peevey’s chief of staff – suggested to PG&E official Laura Doll that the company fight a public-information request related to a safety seminar that the commission was planning to hold. Brown said PG&E could send a “sweet note” deflecting the request and then “wait for them to throw a fit.” Alternatively, PG&E could answer “any simple question” but refuse to answer others, Brown said.

Doll replied in an e-mail, “Love you.”

In another e-mail, Doll invited Brown to “get together or just have a phone call to talk about Mike’s (Peevey’s) potential remarks at the safety symposium.”

Another e-mail exchange showed that Peevey himself critiqued PG&E’s public relations strategy when it was indicted on federal criminal charges in connection with the San Bruno case earlier this year. Peevey told a PG&E executive that the company’s handling of the news was “inept.”

‘He obviously has a bias’

San Bruno officials said Peevey’s critique was improper, given his role as arbiter of the still-unresolved regulatory case against PG&E.

Rep. Jackie Speier, D-Hillsborough, joined Ruane in calling for Peevey’s removal from the case.

“He obviously has a bias,” Speier said in a statement. “If Mike Peevey wants to be a consultant to PG&E, then he should resign.”

Peevey, a former president of Southern California Edison Inc., will complete his second six-year term on the commission at the end of 2014. He was originally appointed by former Gov. Gray Davis and was reappointed by former Gov. Arnold Schwarzenegger.

Gov. Jerry Brown has the power to replace Peevey as president. Brown is on an official visit to Mexico, and his office did not respond to a request for comment.

In addition to calling for Peevey’s removal as commission president, San Bruno officials filed a complaint with the state agency against PG&E for “knowingly and intentionally attempting to illegally influence the outcome” of cases related to the 2010 disaster.

The city also asked for the appointment of an independent monitor to oversee the utilities commission and PG&E, “so the public can once and for all be confident that the actions of this public agency will no longer be subject to undue influence by PG&E.”

The utilities commission said in a statement that it “takes seriously all allegations of bias and rule violations and will evaluate the motions when filed by the city of San Bruno.”

PG&E promises review

PG&E President Chris Johns sent a letter to San Bruno officials and the utilities commission saying the company is “absolutely committed to conducting ourselves in an ethical manner at all times. I want to assure you that we will review the e-mails involved in this matter to ensure that this high standard was upheld. If it was not, we will take appropriate action.”

Karen Paull, chief counsel of the utilities commission’s watchdog arm, the Office of Ratepayer Advocates, said there are strict rules against informal talks between state officials and utility executives during enforcement proceedings such as the San Bruno case.

“If you allow back-channel communications, like we have seen in the e-mails, you cannot have a fair process,” Paull said.

Apology to Hill

The head of the utility’s parent company, PG&E Corp., issued an apology Monday to state Sen. Jerry Hill for comments a PG&E executive made about him in a January 2012 e-mail to a utilities commission official.

The executive, Brian Cherry, PG&E’s vice president of regulatory affairs, said in the e-mail that “I have no respect left” for Hill, D-San Mateo, who has frequently criticized the company and the utilities commission since the San Bruno disaster.

PG&E Corp. CEO Tony Earley told Hill in a letter that Cherry’s comments “do not in any way reflect the company’s point of view and are unprofessional.”

“While we may disagree at times, I have always appreciated your passion and even-handed approach on many policy issues affecting the communities we are all fortunate to serve,” Earley wrote.

Hill said he appreciated the spirit of the letter.

“I think Tony Earley means well and wants to make changes,” Hill said. “But it’s difficult because of the size of the bureaucracy and the long-standing historical culture that needs to change.

Tags: CPUC, Michael Peevey, PG&E, San Bruno Explosion, Southern California Edison