It’s now possible that mid-February will be remembered for years to come as a fateful time in the century-long history of the California Public Utilities Commission. That’s when, without offering any legal justification, the five commissioners spent public money to hire a criminal lawyer.
If courts find this move was as blatantly illegal as it looks to some, they may soon cease treating this powerful but disgraced body that sets power and natural prices for most Californians with the extreme deference they traditionally have evinced.
Should judges reverse this possibly illegal PUC decision, how long before they begin looking askance at some of the commission’s other dicey rulings favoring giant utility companies over their customers.
Right now, state and federal authorities are investigating the commission and its immediate past president Michael Peevey. Among tens of thousands of released emails are some showing inappropriate, potentially illegal, contacts between Peevey, at least one present commissioner, and high officials of regulated companies like Pacific Gas & Electric Co. and Southern California Edison Co.
This was predictable from the moment Peevey joined the commission more than 12 years ago, first appointed by then-Gov. Gray Davis and later reappointed by ex-Gov. Arnold Schwarzenegger. No one could reasonably expect Peevey, a former Edison president, to deal objectively with his friends and former colleagues. It was a classic case, first noted here in 2004, of putting the fox in charge of the henhouse.
The lawyer-hiring decision shows that despite pious declarations from Peevey successor Michael Picker about how “decisions should be based on the record developed in public,” things may not have changed much since Peevey departed as 2014 ended.
With criminal investigations in full swing, commissioners signed a $49,000 contract with the Los Angeles law firm Sheppard Mullin, defense attorney Raymond C. Marshall of the firm’s San Francisco office in the lead role. Marshall is charging a “discounted” rate of $882 per hour. The $49,000 won’t go far at that rate.
The commission has also used Walnut Creek lawyer Katherine Alberts to stonewall requests for records of PUC communications about a 2014 settlement forcing customers to pay $3.3 billion of the $4.7 billion cost for retiring the San Onofre Nuclear Power Station, owned by Edison and the San Diego Gas & Electric Co.
But California Government Code section 995.8 says that a “public entity is not required to provide for the defense of a criminal action…” It adds that before hiring defense lawyers, an agency like the PUC must formally determine such a defense “would be in the best interests of the public entity and that (employees involved) acted…in good faith…and in the apparent interests of the public entity.”
The PUC made no such determination and held no public hearings on hiring attorneys. Nor has it said who its criminal lawyers will defend.
This spurred a lawsuit from former San Diego City Attorney Mike Aguirre and his partner Maria Severson. They want the commission to reveal who its new lawyer will defend and hold hearings on whether that’s in the public interest.
Aguirre said other commission decisions may have been made improperly, even criminally, including the San Onofre settlement. Another he cited was a ruling last November assessing a measly $1 million fine against multi-billion-dollar PG&E, also cutting its natural gas rates by $400 million a year as penalties for its conduct around the aftermath of the 2010 San Bruno gas pipeline explosion that killed eight persons. Even new commission president Picker, who voted for those penalties, now says the company should pay much more.
Aguirre also questioned a $14 million settlement with SDG&E after a 2007 fire ignited by power lines downed because of poor maintenance. That blaze destroyed 1,500 homes in northern San Diego County.
The courts’ traditional deference to the utilities commission has never before encountered criminality in commission conduct of its business. Meanwhile, the commission refuses to answer questions about its legal authority for hiring outside criminal lawyers.
All of which means utility regulation in California has moved into a state of high flux. Who knows? It might soon be open season on those other questionable decisions and more and that could lead to rolling back some of California’s sky-high utility rates, which are at just as onerous and compulsory as high taxes.
