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Utility watchdog under fire: San Bruno files legal motion to block CPUC president from attending safety event
April 25, 2013, 05:00 AM By Bill Silverfarb Daily Journal staff

Michael Peevey

Jerry Hill

Lawmakers will hear today how the California Public Utilities Commission has failed the public “with its fundamental lack of leadership,” its neglect to force utilities to comply with safety requirements, significant weaknesses in how it handles its budget and for approving major energy projects without legislative approval.

Several reports will be discussed in today’s Senate Budget and Fiscal Review Subcommittee chaired by state Sen. Jim Beall, D-San Jose, that contain some stinging rebukes against the CPUC, including that it has not put a priority on safety, budget and basic ratemaking. CPUC commissioners regulate how much a utility can charge ratepayers for electricity and gas.

CPUC President Michael Peevey was urged to attend today’s meeting by state Sen. Jerry Hill, D-San Mateo, who has crafted several pieces of legislation related to CPUC after the San Bruno gas pipeline explosion and fire that killed eight and destroyed nearly 40 homes in September 2010.

Hill wants lawmakers to have a chance to at least question Peevey in a formal setting about the agency’s “culture of complacency” when it comes to safety and for other shortcomings.

CPUC officials told the Daily Journal yesterday, however, that Peevey will not attend today’s subcommittee hearing.

While Hill would have liked to have seen Peevey at today’s hearing on commission matters, officials with San Bruno actually filed a legal motion yesterday demanding that Peevey and CPUC Commissioner Mike Florio not show up to an upcoming safety event featuring Pacific Gas and Electric executives scheduled for May 7-8 in San Francisco.

“This is like the defendant in a criminal case taking the judge to play golf together before the judge rules on his case and his penalty,” attorney Steven Meyers, representing San Bruno, wrote in a statement.

The legal filing cites the symposium for being an illegal “ex-parte” contact between the regulator, CPUC and defendant, PG&E, at a critical time in the commission’s hearing process in the San Bruno explosion and fire case.

The filing says “the participation of the defendant and the judges ... (is) a violation of the law” and calls it “unethical and inappropriate.”

The safety symposium is “nothing but a forum for PG&E to put on a dog and pony show in front of two out of the five commission decision-makers charged with determining the fines and penalties warranted by PG&E’s past misconduct,” according to San Bruno’s legal filing.

Hill has put the spotlight on the CPUC’s failings since the San Bruno tragedy and has even called Peevey a “dictator” who should be fired. Only Gov. Jerry Brown can remove Peevey from office although the Legislature can with a two-thirds vote.

Hill wants Peevey to justify his “continued appointment as president” of the CPUC, according to a letter he sent him last week.

Peevey was appointed to be president of the CPUC by then governor Gray Davis in 2002 and reappointed to a six-year term in 2008 by then governor Arnold Schwarzenegger.

New bills

Hill blames the CPUC’s leadership for its failings and has crafted several pieces of legislation that are now law related to the San Bruno incident, PG&E and the CPUC. He also has three new bills in the works this year that address reform at the CPUC including Senate bills 48, 291 and 611.

SB 48, according to Hill’s office, enhances the commission’s financial accountability and policy oversight by requiring that all ratepayer-funded energy research proposals be considered in a single proceeding.

SB 291 requires the CPUC to strengthen its enforcement posture by giving safety staff the ability to cite and fine utilities for electric safety violations. Following National Transportation Safety Board and Independent Review Panel recommendations, the CPUC allowed staff to cite utilities for gas safety violations. SB 291 requires the CPUC to extend the authority to electric safety violations.

SB 611 reforms the governance of the CPUC by more equally spreading staff resources among the five commissioners and requiring the CPUC leadership to respect due process by prohibiting staff from serving as both prosecutors and advisers to decision makers in an adjudicatory proceeding. The bill also strengthens the CPUC’s Division of Ratepayer Advocates by giving it more control of their operations and closes loopholes that have allowed the CPUC to empire-build by creating its own nonprofits, according to Hill’s Office.

“The CPUC has run amok, diverting the attention of top staff away from the CPUC’s core responsibilities of ensuring safe delivery of energy and managing the public’s money,” according to a statement from Hill’s office.

History of legislation

Hill’s first piece of San Bruno-related legislation was authored when he was still in the Assembly. The San Bruno Gas Pipeline Safety Reforms, Assembly Bill 56, requires remote-controlled shutoff valves in high-population areas and the comprehensive testing and record-keeping of gas transmission lines. It also prohibits utilities from using ratepayer money to pay penalties for safety violations assessed by the CPUC and requires natural gas corporations to meet annually with local fire departments to review emergency response plans.

“The CPUC [is] proceeding to set new rules for the safe and reliable operation of natural gas pipelines in California. [That] is expected to address this bill,” an official with the agency, Christopher Chow, wrote in an email to the Daily Journal yesterday.

Last year, Hill had AB 1456 signed into law by Brown. It requires the CPUC to adopt performance metrics for pipeline safety and evaluate the state’s gas utilities against those metrics. The commission may levy penalties on the utility for poor performance with this legislation.

CPUC’s Chow wrote that the agency’s new rules should address the requirements of this legislation as well.

Meanwhile, San Bruno officials want CPUC proceedings with PG&E to be transparent when it comes to punishing or fining the utility for its part in the gas pipeline explosion and fire that destroyed a significant portion of the Glenview neighborhood.

“San Bruno has participated in these proceedings in good faith for over two years in reliance on the belief that a just, transparent, reasonable outcome which is in the public interest can be achieved. San Bruno cannot achieve this outcome when the very decision makers that are determining PG&E’s fate will be in the same room with PG&E discussing natural gas safety in a forum other than the courtroom,” according to the legal motion filed with the CPUC yesterday.

Hill agrees with San Bruno that Peevey should not attend the safety symposium.

“That’s the culture that will not change until Peevey is replaced. The relationships are too cozy,” Hill told the Daily Journal yesterday.

San Bruno’s request becomes part of the CPUC’s legal process so its own legal team will decide whether Peevey and Florio attending the safety symposium with PG&E executives is against state law.

The CPUC has a budget of $1.4 billion and 1,053 employees.

silverfarb@smdailyjournal.com

(650) 344-5200 ext. 106


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