Agents search Michael Peevey’s home in PG&E judge-shopping case

California Public Utilities Commission President Michael Peevey listens to public comment during a meeting of the five-member commission in San Francisco, Thursday, Dec. 18, 2014. Peevey, who is retiring at the end of the year after completing two six-year terms, has been under fire in connection with a series of emails describing alleged secret negotiations between him and others at the commission and executives with Pacific Gas & Electric Co. (AP Photo/Jeff Chiu) less California Public Utilities Commission President Michael Peevey listens to public comment during a meeting of the five-member commission in San Francisco, Thursday, Dec. 18, 2014. Peevey, who is retiring at the ... more Photo: Jeff Chiu, Associated Press Photo: Jeff Chiu, Associated Press Image 1 of / 1 Caption Close Agents search Michael Peevey’s home in PG&E judge-shopping case 1 / 1 Back to Gallery

State investigators seized computers and other items from the homes of former California Public Utilities Commission President Michael Peevey and an ousted Pacific Gas and Electric Co. executive at the heart of the judge-shopping controversy that has embroiled the regulatory agency for months, The Chronicle has learned.

Investigators with the attorney general’s office executed a search warrant Tuesday at the home Peevey and his wife, Democratic state Sen. Carol Liu, share in La Cañada Flintridge (Los Angeles County), court documents show. The agents seized computers, smartphones and a thumb drive, a small data-storage device, according to the records.

State investigators also seized a computer and other items Tuesday from the Orinda home of former PG&E Vice President Brian Cherry, court documents show. He and two other PG&E executives were fired in September when the utility released e-mails showing that Cherry had negotiated with utilities commission officials, including Peevey’s chief of staff, to name a judge the utility preferred to oversee a $1.3 billion rate-setting case.

State Attorney General Kamala Harris and the U.S. attorney’s office opened separate investigations into the judge-shopping case to determine whether any laws were broken. The investigations are also looking into e-mails that PG&E later released in which Cherry said Peevey had solicited contributions from the company for a political cause in 2010 and hinted that, in return, the utilities commission would rule in PG&E’s favor in a separate rate case.

The search warrant covering Peevey’s and Cherry’s homes said investigators were looking for evidence of improper “ex parte communications, judge-shopping, bribery, obstruction of justice or due administration of laws, favors or preferential treatment” related to matters coming before the utilities commission from December 2009 on.

Offices searched

Peevey, a former Southern California Edison president who joined the commission in 2002 and became its president later that year, opted not to seek a new six-year term from Gov. Jerry Brown in December.

Efforts to reach him were unsuccessful. Cherry has previously declined to comment.

The search warrant was at least the second that state investigators have executed in the probe. In November, agents went through offices at the utilities commission’s headquarters on Van Ness Avenue, including the one belonging to the agency’s then-executive director, Paul Clanon.

Agents were seen leaving the building with cases of material. Clanon has since retired from the agency to study music.

Willing to cut deals

The e-mails released by PG&E, most sent either by or to Cherry, depict a utilities commission willing to cut deals with the company in return for rulings in rate cases that would result in customers paying more money, critics say.

Several concern Cherry’s effort to have a particular judge assigned to the $1.3 billion rate case, which will determine how much customers should pay for gas-pipeline improvements PG&E undertook after the San Bruno explosion in 2010 that killed eight people and destroyed 38 homes.

Peevey’s then-chief of staff, Carol Brown, tried to help Cherry, the e-mails showed. Brown resigned when the e-mails were released.

In an e-mail to Brown in January 2014, Cherry dangled PG&E’s backing for Peevey’s pet project — a $4 billion coal-gasification plant planned in Kern County — as a possible reward for the company getting its preferred judge. The commission eventually assigned a judge Cherry wanted to hear the rate case, but the matter was given to another judge after the e-mails became public. It has not been resolved.

'Step up big and early’

In another e-mail, this one from 2010, Cherry told his then-boss, Senior Vice President Tom Bottorff, that Peevey appeared to be leaning on PG&E to “step up big and early” with at least $1 million to fight a ballot measure that would have put a hold on a California law limiting greenhouse gas emissions.

“I jokingly suggested that if he gave us $26 million” in compensation for PG&E’s energy conservation efforts, “we could come up with $3 million or so” to oppose the ballot measure, Cherry wrote. “He said that is a deal he could live with.”

PG&E eventually spent $650,000 against the measure, which state voters defeated in November 2010. Two weeks after the election, Peevey got the commission to vote to override a judge’s ruling and give $29 million to PG&E for energy conservation.

In another 2010 communication with his superior at PG&E that the company released last year, Cherry said Peevey had sought PG&E’s $100,000 contribution to a fundraising dinner marking the commission’s 100-year anniversary and suggested PG&E would be rewarded in a pending rate-setting case.

'I got the message’

Cherry wrote that Peevey was “aware that we are looking for a good” decision in the case. “He said to expect a decision in January — around the time of the PUC’s 100th anniversary celebration. I told him I got the message.”

PG&E eventually bought a table at the celebration for $20,000.

The rate case was ultimately settled without a commission hearing, but Peevey helped PG&E on another matter that was related to the case, involving how much money the utility would get for swapping out old electric meters for smart meters.

Peevey proposed paying PG&E $6 million for the decommissioned meters, which consumer advocates said amounted to a gift to the company. Unable to gain support for that sum, Peevey compromised and the commission approved $3.24 million for PG&E.

Taking issue

Peevey has never directly commented on Cherry’s e-mails. In a statement last year, the utilities commission said they were “based on an interpretation of events from the perspective of a PG&E employee, and President Peevey disagrees with the characterizations.”

In the search warrant executed Tuesday, state agents said they were looking for evidence related to the $1.3 billion rate case, the coal-gasification plant, the 100th anniversary dinner and unspecified “other matters.”

State Sen. Jerry Hill, D-San Mateo, a frequent critic of the utilities commission, said he was pleased that Harris “is properly investigating what appears to illegal activity. I’m looking forward to the results of her investigation.”

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