PG&E fined $1.05 million in judge-shopping scandal

Mike Florio Mike Florio Photo: Rich Pedroncelli / AP Photo: Rich Pedroncelli / AP Image 1 of / 3 Caption Close PG&E fined $1.05 million in judge-shopping scandal 1 / 3 Back to Gallery

With two members sidelined because of their entanglement in a judge-shopping scandal, the California Public Utilities Commission voted Thursday to levy a $1.05 million fine against Pacific Gas and Electric Co. for lobbying the regulatory agency in back-channel communications.

Carla Peterman, one of three commissioners voting on the penalty in San Francisco, said the sum was the maximum allowed under the law, given that PG&E’s efforts to secure a favorable judge in a rate-setting case stemming from the deadly San Bruno pipeline explosion amounted to a one-time violation of commission rules.

“While this fine alone may not have enough deterrent value, I think it is important for this commission to continue to signal that violations will be met with our primary tool for compliance — namely, monetary sanctions,” Peterman said.

The commission penalized PG&E for the actions of since-fired Vice President Brian Cherry, who lobbied in e-mails to commission higher-ups for a favored judge in a case in which PG&E is seeking to have customers pay for $1.3 billion in gas-pipeline improvements.

Commission President Michael Peevey, whose chief of staff pledged to help Cherry, and Commissioner Mike Florio, who also promised assistance to the PG&E executive, did not take part in the discussions Thursday and did not vote. They have said they will recuse themselves from the rate case and associated matters.

In its 3-0 vote, the utilities commission imposed other restrictions on PG&E, including limiting contacts the company may have with regulators and making the utility liable for any losses to customers arising from the judge-shopping affair. The commission deferred a decision on how that sum would be calculated.

Concerned that temporary restrictions on communications have already had a “chilling effect” on the information flow, Peterman and the other commissioners applied the communication restrictions only to PG&E contact with top state regulators, not the agency’s staff.

PG&E said it would challenge the fine and other sanctions in court.

“We self-reported these violations, held individuals accountable and are making significant changes designed to prevent this from happening again,” PG&E spokesman Keith Stephens said in a statement. “The CPUC’s decision doesn’t appropriately take account of these corrective actions. It imposes sanctions that aren’t warranted and that may go beyond the CPUC’s legal authority.”

Advocates for PG&E customers and commission critics said the penalties didn’t go far enough.

“A million-dollar fine is a drop in the bucket, when you consider that PG&E makes $1 billion annually.” said Britt Strottman, an attorney for the city of San Bruno. “This decision means there’s absolutely no repercussions for PG&E’s actions.”

To regain the public’s trust, she said, the commission should order PG&E to release 65,000 e-mails between the company and commission officials. PG&E says it found Cherry’s communications among them, and fired him and two other vice presidents when it made those e-mails public in September.

The company made more e-mails public in October, in which Cherry said Peevey appeared to be tying energy efficiency-program bonus money for PG&E to utility political contributions to defeat a state ballot measure that the commission president opposed.

San Bruno is asking the commission to turn over all 65,000 e-mails. On Wednesday, an administrative law judge ordered PG&E to sift through the e-mails for what it considers relevant communications and give them to a customer-advocacy group that requested them, The Utility Reform Network.

Mark Toney, executive director with TURN, took solace in the commission’s decision making PG&E liable for any costs to customers stemming from delays in settling the pipeline rate case that were caused by Cherry’s judge-shopping.

That could amount to tens of millions of dollars, he said. “That’s real money.”

The utilities commission’s actions Thursday may not be the last word in the case. Federal and state prosecutors have opened investigations into whether any laws were broken, and this month, investigators with the state attorney general’s office removed records from the commission’s Van Ness Avenue headquarters.