CPUC Acts After New Round of 'Inappropriate' Emails With PG&E

The California Public Utilities Commission announced Monday that it's taking steps to deal with newly uncovered "inappropriate email exchanges" earlier this year between a Pacific Gas & Electric Co. executive and senior CPUC officials, including CPUC President Michael Peevey and his chief of staff.

In a statement, the commission said the chief of staff, Carol Brown, has agreed to resign. For his part, Peevey has recused himself from the rate case that was at the center of the newly disclosed emails, as well as the commission's ongoing deliberations over final penalties against PG&E for the September 2010 San Bruno gas pipeline disaster.

As the CPUC made its action public, PG&E announced it had dismissed three executives involved in the email exchanges, including Brian Cherry, vice president for regulatory relations.

The company said the messages "may have violated CPUC rules prohibiting certain ex parte communications -- meaning communication with decision-makers that takes place without the knowledge of all parties to a proceeding." PG&E said it discovered the exchange of emails during a review of five years of emails between the company and the commission.

The exchange is apparently separate from a series of messages made public in July. Those messages included emails between Peevey, Brown and CPUC Executive Director Paul Clanon with Cherry and others at PG&E. Both the company and the commission defended the earlier emails, which discussed issues relating to the San Bruno blast and its regulatory aftermath, as routine messages necessary for the conduct of business. San Bruno city officials and The Utility Reform Network (TURN) blasted the emails as unethical, unprofessional and possibly illegal.

The email exchanges disclosed Monday and published on the CPUC website focused on a major proceeding initiated last December in which the commission is to set future rates for PG&E's gas transmission and storage services.

In a series of messages sent in January 2014, PG&E's Cherry sought inside information from Brown, Peevey's chief of staff, about which commissioner and which of the CPUC's administrative law judges would be assigned to oversee the case.

In his messages, Cherry expressed a preference for the appointment of Commissioner Mike Florio and Administrative Law Judge John Wong. His tone is peremptory at times, as when he wrote Brown, in reference to Wong's appointment, "Can you get it done ASAP please?"

Cherry pointedly opposed the appointment of judges he said were unfriendly to the company. In several brief notes, Brown told Cherry that Wong would be unavailable for the case due to a heavy workload.

But Cherry persisted.

At one point, he wrote directly to Peevey that Wong's apparent unavailability "is a problem. Hope Carol [Brown] can fix it."

Later, Cherry wrote Brown, "I'm not sure we could get someone worse" when he learned of one judge's possible appointment to the case. He told Brown another judge candidate "screwed us royally" in an earlier case. "Let's just say she has a history of being very hard on us," he wrote.

Cherry also emailed Commissioner Florio about Wong's appointment, asking "what cases Wong is working on that is keeping him so busy?"

Eventually, the gas transmission case was assigned to Wong, prompting Cherry to write Brown, "Thank you, thank you, thank you."

The appointment also occasioned an email from Florio to Cherry, saying, "I trust you're happier now?? Not sure how this came about, but John is the best." As part of the CPUC's statement today, Florio conceded he "should not have" responded to "PG&E's inappropriate inquiry."

TURN, which had earlier called for Peevey to recuse himself from the CPUC's San Bruno proceeding, on Monday said he should resign.

“It is clear that PG&E was calling the shots at the CPUC, and was accustomed to doing so,” said Mark Toney, TURN’s executive director, in a statement. Toney said the emails show “PG&E had a personal shopper in Peevey’s office, helping to pick and choose the judges that suited PG&E best.”

Toney said TURN wants PG&E to make public every email sent to CPUC commissioners and staff for the last five years.

In its statement, PG&E said it was dismissing Cherry, senior vice president of regulatory affairs Tom Bottorff and vice president of regulatory proceedings and rates Trina Horner. The company said it's creating a new oversight position, chief regulatory compliance officer. It also announced it's retaining former Interior Secretary Ken Salazar "as special counsel on regulatory compliance matters to assist in developing a best-in-class regulatory compliance model."