SAN BRUNO — In the wake of a deadly pipeline blast that leveled a San Bruno neighborhood, a batch of 100,000 emails from state regulators has raised fresh questions about the integrity of the Public Utilities Commission and how it oversees big power companies, a consumer advocacy group said Tuesday.
Dubbed “The PUC Papers” — released by the group Consumer Watchdog after a public records request — the emails disclose meetings and discussions among top officials at the powerful state PUC, including its current president, and numerous executives in the power industry and financial sector. These included encounters with Wall Street movers and shakers who were seeking insight and information about the regulatory climate in California and how that affected major utilities such as PG&E.
The meetings included a June 2014 visit to Wall Street by PUC Commissioner Michael Picker, now president of the agency. Picker rode in style in a limousine for one-on-one meetings with analysts and investment executives, as well as meetings in small groups.
“Picker talks the talk, but he doesn’t walk the walk, and Picker would rather get a limo ride to an exclusive meeting with a dozen Wall Street analysts,” said Liza Tucker, an official with Consumer Watchdog.
Six months after those meetings, Picker was appointed president of the PUC, succeeding former President Michael Peevey. Peevey exited the PUC under a cloud of accusations that he had created a culture of cozy accommodation and lazy oversight of PG&E, a lax atmosphere that contributed to the September 2010 San Bruno disaster. Picker promised reforms and transparent operations at the PUC.
“This is outrageous and a breach of the public trust,” said Loretta Lynch, a former PUC commissioner and a frequent critic of the embattled agency. “That must have been an expensive limo ride for California ratepayers.
“This makes it look as if the PUC is dealing with the Sons of Enron,” Lynch said, referring to the now-dissolved energy trading company that was the center of one of Wall Street’s worst corruption scandals.
During the spring of 2014, Peevey arranged for Picker’s trip to Manhattan’s financial power hubs. The emails show that the itinerary, described as the Commissioner Picker Roadshow, included visits with a who’s who of Wall Street: Bank of America Merrill Lynch, Goldman Sachs, Pointstate Capital, Avon Capital Advisors, Franklin Resources, UBS and JP Morgan, among others.
“It never helps the PUC’s credibility when you have one-on-one meetings between commissioners and special interests such as those on Wall Street who have a lot of power,” said Democratic state Sen. Jerry Hill, whose San Mateo County district includes San Bruno.
The PUC received a copy of the emails related to Picker’s visit to Wall Street, and a spokeswoman said there are benefits to the agency interacting with investors.
“A clear understanding of California’s policy goals helps investors to better understand the utility and our policies that the utilities must follow,” said Terrie Prosper, a PUC spokeswoman. “This knowledge leads to investors charging utilities less, which leads to consumers paying less. Therefore, it behooves the CPUC to answer investor questions as long as it is not a violation of any rules.”
Ultimately, some Wall Street executives appeared pleased with their meetings with Picker.
“I always appreciate your (Picker’s) insight; refreshing change from a lot of folks we meet with,” Julien Dumolin-Smith, an executive with investment firm UBS, said in an August 2014 email to Picker before a UBS visit to California to meet with the PUC. “It’s been described that you (Picker) are cut from a different cloth from other CPUC folks. I tend to agree.”
Wall Street executives also sought during the trip to California to meet with PUC Commissioner Michael Florio, but Florio turned down the request.
The emails disclosed more than ties to Wall Street. They also indicated that a key former PUC official sought to determine how much of a fine PG&E was anticipating as its punishment for causing the San Bruno explosion.
“What number has PG&E publicly reported to the SEC for a PUC potential San Bruno penalty?” Paul Clanon, then executive director of the PUC and the top staffer at the agency, asked in a December 2013 email to Brian Cherry, a former PG&E regulatory executive.
Clanon was specifically inquiring about the fine PG&E was expecting to pay to the state general fund.
“I believe we’ve simply stated that we have reserved for $200 million as a fine but that it could be more,” Cherry replied.
Eventually, in April 2015, the PUC imposed a $1.6 billion penalty on PG&E for the San Bruno blast — a punishment that included a $300 million payment to the state general fund.
“We have produced tens of thousands of emails to the PUC, The Utility Reform Network, the PUC’s Office of Ratepayer Advocates and the city of San Bruno voluntarily and in response to regulatory and legal requirements,” said Keith Stephens, a PG&E spokesman. “We continue to cooperate with all investigations. In the meantime, we will let the content of the emails speak for themselves.”
San Francisco-based PG&E said it wouldn’t speculate about the motivations of former PUC officials or PG&E executives.
Tucker cited numerous consequences about potentially lax oversight of the California utility industry by the PUC: Eight people died in the San Bruno explosion, customers are paying more for gas and electricity, radioactive leaks plague steam pipes at the San Onofre nuclear plant in San Diego County.
“These relationships come with a price tag,” Tucker said.
Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.
