On July 29, PG&E was charged with lying to federal regulators.
On the previous Friday, the CPUC released emails between PG&E executives and PUC officials. On July 28, the city of San Bruno held a press conference in front of the PUC.
Contra Costa Times, 7-28-14:
San Bruno has asked Gov. Jerry Brown to remove Peevey as the head of the agency and has called for the state Legislature, state Attorney General Kamala Harris and the U.S. Department of Justice to investigate the matter…[California Senator Jerry] Hill, in an interview Monday with this newspaper, said he backed San Bruno’s demand that the regulatory chief be removed. “Peevey has created a culture of complacency at the PUC,” he said. “He needs to step down or be removed.”
The basis for San Bruno’s demands are about 40 emails between PUC officials and PG&E executives about regulatory proceedings that the PUC released to the city on Friday to settle a lawsuit, including one in which a top PUC official gave public relations advice to PG&E and another in which a PG&E executive signed off a note to a PUC official with “Love you. Thanks.”[i]
KCBS, San Francisco, 7-28-14:
State Senator Jerry Hill expressed his outrage.
“When you talk about cozy, the response to one of those emails from the PG&E executive at the end was, “love you” back to the assistant of the president of the PUC. If that’s not cozy, I don’t know what is,” Hill said. “They’re trying to get away with murder, because that’s what to me, the San Bruno experience was. It was not an accident. It was murder.”
…San Bruno officials said the emails indicate an unprofessional, unethical, inappropriate and illegal relationship between the utility company and its regulators. They’re seeking to dismiss the commission’s President Michael Peevey and have formally asked Governor Jerry Brown to fire him.
In addition, they want a criminal investigation to be conducted on both county and state levels with the potential for fines to be imposed.[ii]
In July, the PUC fired a veteran CPUC attorney who pushed for PG&E records and fines in the San Bruno case. The entire article from the San Francisco Chronicle excerpted below is worth reading for the detail on this situation.
Cagen was fired one day after the commission’s legal staff backed away from his effort to make PG&E account for which lines it tested with high-pressure water before the September 2010 explosion.
Sources said Cagen was fired after he protested the decision. PG&E attorneys have resisted turning over the information and recently warned that doing so could further delay a resolution of the long-pending regulatory case.
…Critics of the commission said the dismissal of Cagen – who had a 35-year track record of handling regulatory cases with the agency – was the latest evidence that the agency is overly cozy with the utility it regulates.
“Bob Cagen is a dedicated public servant who we believe held the public interest in safety as a highest priority,” said Connie Jackson, San Bruno’s city manager.
“We think he did a great job. This is absolutely ridiculous.”
She added, “The city continues to be very concerned about the dysfunction of the CPUC – that is an alarming and frustrating situation for the city of San Bruno and the victims.”
…Cagen was retired but brought back to the commission’s legal staff to handle cases involving PG&E after the San Bruno blast.
He has clashed with utilities commission management before. In June 2013, he and several other safety-division attorneys disagreed with a management recommendation that PG&E not be fined for the San Bruno explosion, and were briefly removed from the case.
They were reinstated after the dispute became public, and the commission agreed to pursue fines.[iii]
This is the latest public information on the internal CPUC wrangling over PG&E accountability and penalties. Last year, Jack Hagan, the head of the safety division, and the CPUC General Counsel Frank Lindh (who formerly worked for PG&E) lied to the public about the legal team working on the San Bruno case.
The commission’s head of safety, Jack Hagan, and its general counsel, Frank Lindh, said last week that four members of the attorney team had asked to be reassigned, just days before the agency was to file its case for penalties against PG&E for the 2010 disaster that killed eight people.
On Friday, [CPUC attorney Harvey] Morris sent an e-mail to Lindh asking that he “cease immediately your defamatory representations that I and the other attorneys in the San Bruno (matter) voluntarily left the case.”
The Chronicle obtained a copy of the e-mail from a third party. Morris has declined to comment on the dispute.
In his e-mail, Morris said his team did not spend more than two years on the case, drafting hundreds of pages of briefs, so it could walk away from the case at the last minute.
“How could you or anyone else even question our commitment to ensure that such a tragedy should never happen again?” Morris said. “Your statements about us omit any mention of the fact that we refused to sign a reply brief, that we felt was unethical. Because you did nothing to resolve our ethical concerns, one attorney asked to be taken off the case, and you then claimed that all of us asked to be reassigned.”
Morris, who has worked for the commission for 31 years, added, “Anyone who knows me would question your statement that we voluntarily left.”[iv]
Attorneys said they felt threatened by Hagen.[v] They wanted to impose fines on PG&E, but Hagen said fining PG&E made no sense. The attorneys were then reassigned, until the public found out.
The e-mails were sent to the utilities commission’s lead counsel by attorneys who had spent 2 1/2 years building a case that PG&E should be fined for regulatory violations in connection with the explosion of a natural-gas pipeline that killed eight people and destroyed 38 homes in San Bruno’s Crestmoor neighborhood on Sept. 9, 2010.
The attorneys were overruled by Hagan, the head of the PUC’s safety division, a newcomer to the regulatory agency who told a pair of administrative law judges that the money PG&E’s shareholders are spending to improve the gas system would be penalty enough.
Soon after a May 31 confrontation with Hagan, the entire PUC legal team was reassigned by its boss, Frank Lindh, a former legal counsel for PG&E.
According to the e-mail accounts, the confrontation with Hagan happened when the PUC safety division chief presented Morris with a list of PG&E expenses he wanted to include in the $2.25 billion total.
When Morris pressed Hagan about who had compiled the list, Hagan replied, “Some fairies … I don’t have to tell you. Just include the items or else,” [CPUC attorney Patrick] Berdge wrote.
“Or else what?” both lawyers asked. “Do it or I’ll get another attorney,” Hagan said in a “very threatening” tone, Berdge wrote.
Morris told Lindh in a separate e-mail that some PG&E spending was unrelated to gas safety issues raised in the San Bruno case, and that Hagan “thought he could just order us to do something without giving us a reason or basis for doing it.”
Berdge said the encounter was threatening.
“This angry demeanor, and the slamming of Harvey’s door on his way out, must be placed in the context of (Hagan’s) past habit of carrying a concealed gun and knife on his person while at the commission,” Berdge wrote in his e-mail to Lindh.
Berdge concluded that the clash left “no working or salvageable attorney-client relationship.”
Another PUC attorney, Robert Cagen, told Lindh in an e-mail that he was “horrified” by the exchange, and that unless the commission took action, “I don’t have any intention to be in the same room as Hagan, regardless of whether he is unarmed at the time.”
Hagan spent 20 years in the Marine Corps before joining state government. In an online biography, he identifies himself a brigadier general in the California State Military Reserve, a volunteer force that the governor can activate in an emergency when the National Guard is deployed, and as a former “special agent” with the state Department of Justice. He was hired as the PUC’s safety-division chief last year.
… Morris added, “[Hagen] has also not shown any concern for the victims in San Bruno, who demand justice for PG&E’s decades of mismanagement” that led to the explosion.[vi]
Frank Lindh resigned March 3, and the PUC announced in May that it is looking for a replacement for Jack Hagen.
In 2011, the San Francisco Bay Guardian wrote a detailed article into former SCE President and current PUC Chairman Michael Peevey’s ongoing industry connections, entitled “The Secret Life of Michael Peevey”.
Sen. Mark Leno (D-San Francisco) said the CPUC needed to step it up and start practicing serious hands-on oversight. He recalled a tragedy that occurred in 2008 when a gas leak in Rancho Cordova triggered a pipeline explosion, killing one person and injuring several others. Although an investigation determined that PG&E was at fault, the CPUC hadn’t yet gotten around to fining the company.
“We’ve got a pattern here,” Leno said. “And we’re not doing anything differently.”[vii]
The pattern is astounding.
Emails show PG&E and regulator have ‘illegal, unethical relationship,’ San Bruno official says, 7-28-14
State Senator Says PG&E Trying To Get Away With Murder; Emails Following Deadly 2010 San Bruno Explosion Examined, July 28, 2014
State fires lawyer who pursued PG&E’s pipeline records, July 3, 2014
Infighting over PG&E penalty goes public, 6-15-13
PUC’s gun-toting enforcer denies threats, June 25, 2013
PUC call official’s orders threatening, 6-26-13
The secret life of Michael Peevey, 05/24/2011