Unfortunately, too many governmental agencies spend their time protecting the interests of the industries they're supposed to regulate, rather than looking out for the public and the environment. But perhaps the most egregious example of this problem is the California Public Utilities Commission (CPUC) and the cozy relationship it has maintained with PG&E. Moreover, Governor Jerry Brown continues to make matters worse by staunchly defending CPUC President Michael Peevey, despite the firestorm of controversy that surrounds him.
On Monday, the months-long scandal that has enveloped Peevey worsened with the disclosure that, in emails, PG&E officials had pressed Peevey; his chief of staff, Carol Brown; and CPUC Commissioner Mike Florio to assign a favorable administrative law judge to oversee a key aspect of the regulatory case related to the 2010 San Bruno disaster. And, ultimately, PG&E got what it wanted: As first reported by the San Francisco Chronicle, a judge who is friendly to the utility will now decide how much its customers will have to pay to upgrade its gas lines.
This disclosure of obvious wrongdoing (and likely illegal communications between PG&E and the CPUC) prompted Peevey to demand the resignation of his chief of staff. Peevey also announced that he will recuse himself from voting on PG&E's appeal of a $1.4 billion fine. But Peevey's actions didn't go nearly far enough. It's long past time for him to resign. It's also long past time for the governor to stop defending him.
The newly disclosed emails reveal a culture of corruption at the CPUC that is startling. In mid-January, after PG&E execs learned that the commission was going to appoint a judge they didn't like — Douglas Long — to oversee a portion of the utility's regulatory case, PG&E Vice President of Regulatory Relations Brian Cherry quickly sent an email to Peevey, Carol Brown, and Florio. The appointment of Judge Long, Cherry wrote, "is a major problem for us." Cherry said PG&E wanted a different judge: John Wong. Florio wrote back, saying "I'll do what I can" to assign another judge.
Not long after, Brown wrote to Cherry that the CPUC had replaced Long with Judge Julie Halligan. But Cherry wasn't satisfied, and continued to press for Wong. Brown replied, "Working on it — I hope all this mess is worth it." A few days later, Brown told Cherry that PG&E would get Wong after all. "Thank you. Thank you. Thank you," Cherry responded. Florio then wrote to Cherry, "I hope you're happy now."
"These emails show that PG&E thinks that they run the commission," said Britt Strottman, an attorney for the City of San Bruno, in an interview with the Chronicle.
Strottman is right, of course, but there's also an argument to be made that the emails and other actions by the CPUC show that PG&E doesn't just think it runs the commission — it actually does so, particularly with Peevey at the helm.
Over the past year, San Bruno officials, consumers' advocates, and rank-and-file staffers at the CPUC have argued that PG&E should be fined $2.25 billion for its role in the San Bruno pipeline explosion, which killed eight people and destroyed a neighborhood, and for its ongoing failure to properly maintain its pipelines. In addition, they have argued that PG&E shareholders — rather than the utility's customers — should have to pay much of the costs of pipeline repairs, because PG&E used hundreds of millions of dollars it collected from ratepayers for gas pipeline maintenance to fund shareholder dividends and executive bonuses. But earlier this month, two administrative law judges at the CPUC recommended that the fine be lowered to $1.4 billion, and that PG&E's customers should pay most of the costs for pipeline upgrades. It was an outrageous decision, but one that was totally in keeping with the favoritism that the CPUC has bestowed on PG&E during Peevey's reign.
Yet despite the grossly inappropriate relationship between the regulatory agency and the company it's supposed to regulate, Governor Brown has remained steadfast in his support for Peevey. In a recent interview with the Bay Area News Group's editorial board, Brown heaped praise on Peevey, calling him "a very effective leader."
For some, the governor's full-throated defense of Peevey might seem bewildering. But for longtime observers, especially those who remember Brown's tenure as mayor of Oakland, Brown's penchant for staying loyal to scandal-plagued public officials is nothing new. In fact, during his eight years leading the city, Brown displayed no interest in taking on corruption at City Hall. He not only continued to work closely with then-state Senator Don Perata, despite Perata's numerous legal problems, but also stood by his good friend and taxpayer-funded bodyguard Jacques Barzaghi despite the fact that several female city employees said Barzaghi routinely harassed them sexually.
In that sense, it would be a surprise if Brown suddenly stops defending Peevey. Which is too bad, because Peevey needs to go — as do Florio (another Brown appointee to the CPUC) and Judge Wong. In fact, the CPUC desperately needs a complete overhaul so it can start protecting the public's interests and not those of PG&E.
Kaiser Pays Huge Fine
Oakland-based healthcare giant Kaiser Permanente decided to pay a $4 million fine last week to the state for failing to provide adequate mental healthcare services to patients. As the Express noted in a recent cover story, "Deadly Delays Part One: A Flawed Model for Care" (8/13), Kaiser originally disputed the huge fine, contending that it was "unwarranted and excessive." But just prior to opening statements at a legal hearing concerning the penalty and Kaiser's shortcomings, Kaiser dropped its opposition and agreed to pay the fine.