New signs of pattern of misconduct with Peevey, PG&E

by Chris Reed | February 17, 2015 11:15 am

The initial investigations by several newspapers and other media into former California Public Utilities Commission President Michael Peevey’s relationship with Pacific Gas & Electric quickly produced several bombshells. Emails show Peevey pressured PG&E to give money to oppose Proposition 23, the failed 2010 ballot measure opposing AB 32; appeared to link his support for rate hikes to PG&E actions on unrelated issues; and was open to PG&E efforts to influence inquiries into a San Pedro pipeline explosion that killed eight people.

But a new San Francisco Chronicle account[1] suggests that rather than these being isolated cases, a you-scratch-my-back-I’ll-scratch-yours approach was Peevey’s modus operandi when dealing with the giant Northern California utility. He sought to prop up a project by the Hydrogen Energy California (HECA) firm by constantly reminding PG&E how much he had done for it.

A Pacific Gas and Electric Co. executive exploited former state Public Utilities Commission President Michael Peevey’s intense interest in a Kern County alternative-energy project in making a backroom deal to win favorable treatment for the company, newly released e-mails show.

Among the 65,000 e-mails that the company made public last month was a string of contacts between Peevey and since-ousted PG&E Vice President Brian Cherry that could prove pivotal to state and federal prosecutors probing possible wrongdoing at the agency.

A Chronicle review of the e-mails shows that in late 2013, Cherry went so far as to tell Peevey that “you owe” another PG&E executive for keeping alive the struggling $4 billion project near Bakersfield. A month later, Cherry called on Peevey’s top aide to repay the debt by intervening to appoint an administrative law judge he wanted to oversee a $1.3 billion rate case.

Socializing — and swapping favors?

The latest piece also adds to the already-established picture of Peevey regularly socializing with top utility executives while discussing major issues.

HECA was still languishing on Jan. 1, 2013, when Cherry wrote a memo to his boss, Tom Bottorf, about a New Year’s Eve he had spent with Peevey at Sea Ranch in Sonoma County, where both men had vacation homes.

“Mike will be reaching out to you in a few weeks over HECA. He strongly believes in this project and its importance to the state of California,” Cherry told Bottorff. …

Peevey then reminded Cherry that PG&E had had “a great day” at the utilities commission’s most recent meeting, when Peevey had pushed through a regulatory decision in the company’s favor. The decision — opposed by customer advocates — awarded $29 million to utilities to encourage them to get customers to reduce energy use, even though the companies had failed to meet conservation targets.After stressing how much PG&E had benefited, thanks to his efforts, Peevey said that “HECA was important to him,” Cherry wrote. “I told him I got the message and would forward it on.

“We ended the conversation with a dram or two of Johnny Walker Blue Label.”

There is still no publicly revealed evidence of bribery or overt corruption. But legal experts say even without such evidence, Peevey is legally vulnerable under anti-corruption statutes dealing with improperly influencing government decisions that are supposed to be  ministerial — based on set standards — not transactional — based on unrelated favors or actions done by regulated utilities.