PG&E email hints at improper contacts with PUC’s Mike Florio

REPORTING FROM SACRAMENTO —  An ongoing scandal continues to unfold over what critics contend is an overly chummy relationship between electricity and natural gas companies and state utility regulators.

A controversial new email has emerged that hints at improper contacts between Public Utilities Commissioner Mike Florio and the state’s biggest power utility, Pacific Gas & Electric Co.

In a Jan. 14 electronic memo to two company executives, then-Vice President Brian Cherry summarized his communications with Florio concerning which commissioner and administrative law judge would handle a natural gas rate-setting case.

According to Cherry, Florio said he was too busy to be the presiding commissioner but promised to “mentor” fellow Commissioner Carla J. Peterman in coming up with a proposed decision. What’s more, Cherry wrote, Florio “even volunteered to do an alternate [decision] if we didn’t like Carla’s decision.”

Cherry, the vice president for rates and regulations, was fired along with two other PG&E officials in September in response to the release of an earlier email memo. It detailed his communications with PUC President Michael Peevey and other PUC senior staff that outraged some lawmakers and ratepayer advocates.

Florio dismissed Cherry’s statements as inaccurate.

“Mr. Cherry’s internal summary of his conversations with me does not accurately reflect my own recollection of that same conversation,” the commissioner said. Florio, 62, has been a commissioner since he was appointed by Gov. Jerry Brown in 2011. Before that, he served as a staff attorney for decades with a ratepayer group, the Utility Reform Network.

The contents of the newly released Cherry email were first reported on the website of the San Francisco Chronicle.

An earlier Cherry email was part of hundreds released in recent months by the PUC and PG&E, detailing potentially improper contacts. In the most colorful one, Cherry briefed company executives on a 2010 dinner conversation, accompanied by “two bottles of good pinot” that he drank with PUC President Michael Peevey at Peevey’s Sonoma County coast vacation home.

According to Cherry, Peevey dispensed public relations advice to the company and sought contributions for a political campaign opposing an initiative to weaken the state’s efforts to curb global warming.

Both Cherry memos, if accurate, raise concerns about “backdoor communications” between regulated utilities and the PUC, said Mindy Spatt, a spokeswoman for the Utility Reform Network.

The group last month filed a formal request with the PUC for all communications between top utility executives and commissioners and senior staff at the regulatory agency. The latest email release, Spatt said, is expected to be “just the first batch.”

In a related action, the commission voted 3 to 0 last month to fine PG&E $1 million for contacting commissioners and senior staff about cases before them. Commissioners Peevey and Florio abstained.

PG&E, which already has submitted hundreds of internal emails to satisfy various requests from regulators and the public, said it has made a strong effort to review all possible violations and make them known to the PUC and others.

“We took quick, definitive action from the beginning,” said PG&E spokesman Keith Stephens. “We self-reported violations, we held senior-level officers accountable and we are making significant changes designed to prevent this from happening again.”

The company, he added, also is cooperating with law enforcement investigations. Both the U.S. attorney in San Francisco and the California attorney general’s office are reportedly probing the allegations of so-called judge-shopping in the PG&E rate case.

Meanwhile, Peevey, a former president of Southern California Edison Co., has announced he will leave the PUC at the end of the month after completing two six-year terms.

Though Peevey has been a lightning rod for criticism of the PUC, his departure should not release lawmakers and the governor from cleaning house at the powerful San Francisco-based commission, said state Sen. Jerry Hill (D-San Mateo).

The senator said he has no way of testing the validity of Cherry’s description of his dealings with Florio.

Nevertheless, Hill said, he was troubled by the way PG&E has been slowly dribbling out some of the 65,000 internal memos that it said it reviewed for improper communications with regulators.

“PG&E should release all 65,000 and, frankly, the commissioners should release all their communications with publicly regulated utilities,” Hill said. “Then the public can make its determination as to the behavior and conduct of the commissioners.”

[email protected]

Twitter: @MarcLifsher