PG&E Releases More Emails to CPUC, Acknowledges Rule Violations

PG&E released a second batch of private emails between its staff and the California Public Utilities Commission today and said it believes both sets of messages violated commission rules.

The new messages, which the utility filed with the PUC in San Francisco and also announced in a news release, were exchanged between Commissioner Michel Florio and a now-fired PG&E executive in December.

They concerned whether the pressure in a disputed natural gas line in San Carlos could be restored to normal operating level.

Florio, who was a lawyer for the consumer organization The Utility Reform Network for 33 years before being appointed to the PUC in 2011, was seeking information on why PG&E was contending it needed the full pressure to operate the line effectively.

“Amazing how I’ve become ‘an apologist for PG&E’ in just three short years, isn’t it?” Florio commented in a Dec. 18 message to former PG&E vice president Brian Cherry.

The next day, Florio and the other four commissioners voted unanimously to restore the San Carlos line to its normal pressure.

PG&E said in its news release it believes the messages violate a commission rule that prohibits utilities from sending off-the-record messages, known as ex parte communications, to PUC commissioners and staff.

The release came on the eve of a hearing before a PG&E administrative law judge on the first batch of emails, which were released on Sept. 15.

Those messages were exchanged between Cherry and PUC President Michael Peevey, Peevey’s former chief of staff and Florio in January. They concerned alleged judge-shopping by PG&E for an administrative law judge to preside over a gas transmission and storage rate case.

At Tuesday’s hearing at the PUC’s headquarters in San Francisco, Administrative Law Judge Hallie Yacknin will consider what penalty to impose on PG&E for the messages. In a Sept. 17 order, she said the penalty could be a fine and/or “other appropriate sanctions.”

In a filing with the PUC last week, PG&E acknowledged the messages violated the commission’s rules and said it expects a penalty.

“There are no excuses. We’re accountable and expect to be fined for the Sept. 15, 2014 filing,” spokesman Keith Stephens said today.

Tuesday’s hearing is not slated to address the new batch of messages. But Mindy Spatt, a spokeswoman for The Utility Reform Network, known as TURN, said the group’s attorneys will ask Yacknin to consider those as well.

Spatt said TURN is also asking the CPUC to examine all of the 65,000 emails sent by PG&E staff to the commission since 2010.

“We don’t think PG&E should be able to cherry-pick the emails,” Spatt said.

PG&E voluntarily culled through those emails and came up with the two sets it identified in notices filed with the PUC Sept. 15 and today.

The utility’s review came after the city of San Bruno in July obtained an earlier exchange of emails between PG&E executives and Peevey and his former chief of staff concerning three PUC proceedings, including a probe of a fatal pipeline explosion in San Bruno in 2010.

In San Bruno, a defectively welded pipe that was incorrectly listed in PG&E records as seamless exploded, killing eight people.

San Bruno, which will also participate in the administrative hearing on Tuesday, has asked the commission to impose not only a fine but also orders requiring PG&E to hire an independent ethics monitor and provide ethics training for its staff.

“PG&E’s illegal ex parte communication disclosures show the expected business relationship between the commission and PG&E is broken. The system must be changed to rebuild the public’s trust in it,” San Bruno told the PUC in a filing last week.

San Carlos officials questioned the safety of the pipe in their city, Line 147, after learning that three of its segments were, like Line 132 in San Bruno, incorrectly listed in PG&E records as seamless.

After San Carlos leaders learned that a PG&E engineering consultant had written an email expressing concerns about thin walls and corrosion in the pipe and asking, “Are we sitting on another San Bruno situation?” the PUC last fall reduced the pressure in the pipe to 125 pounds per square inch while conducting a safety probe.

In December, PG&E requested approval to restoration of a normal pressure of 330 psi, arguing that the line had been proved safe and was needed to deliver natural gas to the Peninsula in the winter.

In his email to Cherry on Dec. 18, the day before the PUC hearing on Line 147, Florio wrote, “Brian — this situation is still touch and go given the full court press by San Carlos. I am planning a lengthy explanation in my presentation of the item.

“It would really help if I had a bit more technically sophisticated explanation” of why a compromise of 240 psi would not work, Florio wrote.

Cherry then sent a longer explanation and Florio responded, “I’m good to go unless you find out anything different than this.”

At the Dec. 19 public hearing before the PUC, Florio said of the 240 psi proposal, “Unfortunately, that is not a feasible option.”

“Without the pressure at 330, there simply won’t be enough gas to serve Northern California” during cold winter weather, Florio told the hearing audience before he and the other commissioners voted to restore the stronger pressure.

Asked to comment on the former TURN lawyer’s role as a commissioner, TURN Executive Director Mark Toney said Florio’s messages in both sets of emails were “ill-advised” and “overly friendly,” but said there was no evidence Florio acted illegally.

Toney said the PUC’s current regulations forbid ex parte communications from utility staff to the commissioners and their staff, but do not prohibit such communications from the commission and its employees to utilities.

He said TURN is asking the PUC to revise its rules to prohibit ex parte communications from as well as to the commission.

The PUC said in a statement today, “As announced on Sept. 15, the CPUC is retaining an independent third-party expert to conduct a review of internal procedures regarding ex parte rules and compliance.

“This review will include a retrospective look at the CPUC’s interaction with regulated utilities to help ensure that the agency guards against future ex parte violations,” the commission said.

PG&E is also facing criminal charges in federal court in San Francisco. It is accused of one count of obstructing justice in a National Transportation Safety Board investigation of the San Bruno explosion and 27 counts of violating a federal pipeline safety law.

The San Francisco-based utility said in today’s news release that federal prosecutors have notified it that they have begun an investigation of the ex parte communications. It said it will cooperate.

After the Sept. 15 disclosure of e-mails, PG&E fired Cherry and two other executives.

Peevey, who had previously declined to do so, voluntarily stepped down from participating in a commission’s future decision on whether to uphold two administrative law judges’ recommendation of a $1.4 billion penalty for PG&E for the San Bruno explosion. His chief of staff, Carol Brown, resigned from that position but remains a PUC employee.

Julia Cheever, Bay City News

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  • AngelFive

    Really Florio was TURN’s Attorney during the 2000-1 energy crisies until
    2011 when he was appointed by our corrupt governor. OK then TURN should
    make an apology to all those victims of PG&E’s smartmeters and my
    non-profit including for selling us down the river
    to PG&E after they where caught spying on us, instead of giving the
    state general fund $390,000 for doing it. Here the Decision TURN
    “settled” to support selling the victims out:
    “[P. 2] Summary

    We approve a settlement of this investigation offered jointly by three
    parties: the predecessor of our Safety and Enforcement Division (SED),
    known as the Consumer Protection and Safety Division, Pacific Gas and
    Electric Company (PG&E) and The Utility Reform Network. Based on the
    entirety of the record established to date, and after thorough
    consideration of the settling parties’ arguments and the opposition by
    EMF Safety Network, Californians for Renewable Energy, Inc., Joshua Hart
    and Ecological Options Network, we determine that the settlement, as
    slightly modified by the settling parties in their reply comments, is a
    reasonable, efficient and timely resolution of this investigation.

    As described in greater detail in today’s decision, the settlement
    requires PG&E to do four things: pay $390,000 to the general fund of
    the State of California; carry through with improvements to the social
    media components of its employee policies and with education about those
    policies; sponsor three regulatory industry trainings, which a
    third-party will teach; and verify the completion of these things to SED
    by 2015.”
    Background and Procedural History
    The staff
    report summarizes CPSD’s investigation into the activities of William
    Devereaux (Devereaux), who from October 2009 through October 2010 was
    the “public face” of PG&E’s SmartMeterTM Program. (OII at 2, quoting
    the staff report, Attachment 2.) Devereaux resigned from PG&E in
    November 2010, after it was disclosed in the press that he had used a
    false name to infiltrate online discussion groups hosted by several
    anti-smart meter activist organizations.”