Federal prosecutors probing PG&E-CPUC e-mails

Federal prosecutors have told Pacific Gas and Electric Co. that they are investigating five years’ worth of back-channel communications between company employees and the California Public Utilities Commission, including several that enmeshed utility executives in a judge-shopping scandal, PG&E said Monday.

The company revealed the investigation by the U.S. attorney’s office as it released additional e-mails that it said violated rules against off-the-record communications between PG&E and state regulators, including one in which a utility vice president said the head of the commission was pressuring PG&E to fund the campaign against a state ballot measure.

PG&E said it had found the the e-mails among 65,000 exchanged between state officials and utility employees over five years.

The company said it would cooperate in the federal investigation. It did not say what laws may have been violated.

A representatives of the U.S. attorney’s office in San Francisco had no comment. The state utilities commission said it has hired an independent expert to try to ensure against future back-channel exchanges.

PG&E told to 'step up big’

Among the documents PG&E released Monday was a 2010 e-mail in which one utility executive told his boss that Michael Peevey, president of the state commission, expected PG&E to spend “a lot more” than $1 million opposing a ballot measure that would have put on hold California’s law capping greenhouse gas emissions.

“Mike stated very clearly that he expects PG&E to step up big and early in opposition” to the ballot measure, PG&E Vice President Brian Cherry wrote to his boss, Tom Bottorff, in May 2010. “He said it would undermine our reputation if we didn’t fund it.”

Cherry wrote that Peevey said he had approached two other utilities, Sempra and Southern California Edison, with the same request, “and said we would have egg on our face if they came out in opposition to the initiative before we did.”

PG&E announced its opposition to the measure, Proposition 23, less than two months later. It contributed at least $500,000 to the campaign against the initiative, according to the nonprofit campaign-money watchdog Maplight.

Voters overwhelmingly defeated the measure in November 2010.

“We’ve made it clear that we are committed to complying with both the letter and the spirit of the law and PG&E’s own code of conduct at all times. No excuses,” Tony Earley, PG&E chairman and CEO, said in a statement. “Our customers and the communities we serve expect no less. We took immediate and definitive action, self-reported these violations, held individuals accountable and are making significant changes designed to prevent this from happening again.”

Last month, PG&E fired Bottorff, Cherry and another vice president as it released e-mails in which one of the executives lobbied for a preferred administrative law judge to be assigned to a $1.3 billion rate-setting case stemming from the deadly San Bruno explosion in September 2010.

'Inappropriate’ exchange

The utilities commission labeled the e-mail exchange “inappropriate” and said the chief of staff to Peevey had resigned, though she remains with the agency as an administrative law judge. Peevey recused himself from a separate case in which PG&E faces $1.4 billion in penalties for violations related to the San Bruno case.

Among the additional e-mails that PG&E released Monday were several showing communications between its executives and utilities commission member Mike Florio, who has already apologized for having told Cherry in January that “I’ll do what I can” to appoint the executive’s preferred judge to the rate-setting case.

In December, Cherry e-mailed Florio about a dispute involving a gas pipeline in San Carlos for which the city had obtained a court order cutting pressure. The city got the order after PG&E revealed that its records inaccurately described the pipe, a problem similar to the one that led to the San Bruno explosion.

PG&E was lobbying the commission to restore full pressure, arguing that it was necessary to maintain full gas service on the Peninsula. “Is it good public policy to have one city disadvantage everyone else with no concern for the greater public good?” Cherry asked Florio in an e-mail.

Florio replied that “this situation is still touch and go given the full court press by San Carlos.” He wrote that he was about to add an item about the pipeline pressure to the commission agenda and “it would really help if I had a bit more technically sophisticated explanation” for why San Carlos’ proposed pressure was inadequate.

Florio warned Cherry that Gov. Jerry Brown’s office was trying to broker a compromise and might be contacting Earley with questions, “so you should probably warn him.”

“Mike and I are very leery (about San Carlos’ proposed pressure), since we have no basis for that number and don't know the impacts,” Florio wrote.

Becoming 'an apologist’

Florio, a longtime attorney with the consumer watchdog group The Utility Reform Network before Brown named him to the commission in 2010, added, “Amazing how I've become 'an apologist for PG&E’ in just three short years, isn't it?”

The day of the commission’s vote, Cherry e-mailed Florio, saying, “Good luck today. This is why they pay you the big bucks!”

In the end, the commission voted to restore full pressure on the line.

Florio said Monday that he had done nothing improper in responding to PG&E’s concerns. He said San Carlos officials had met with him and that he was just trying to get the facts.

“I felt like I went above and beyond the call of duty to investigate everything that they (San Carlos officials) brought up,” Florio said.

He said it had been PG&E’s responsibility to report the e-mail exchange to the utilities commission within three days, to avoid violating rules against secret communications. “I have plenty of things to do besides police all these people,” he said.

Jaxon Van Derbeken is a San Francisco Chronicle staff writer. E-mail jvanderbeken@sfchronicle.com