Gov. Gavin Newsom and his wildfire “strike force” surprised some with the vagueness of its most important recommendation: That it’s time to revise the “inverse condemnation” state law that holds energy utilities can be held fully responsible for fires that were caused by their equipment even if the equipment was properly maintained. The law appears to be an existential threat to Pacific Gas & Electric, the state’s largest investor-owned utility, which filed for bankruptcy protection in January after being blamed for fires that resulted in $30 billion in damages.

Newsom’s pointed deference to state lawmakers – saying he hoped they could hash out a plan by mid-July – is an example of the “leading from behind” management gambit, which has a mixed history. Just as the Obama administration did with aspects of its foreign policy, the Newsom administration is expecting its allies to take the helm. The governor said he believes progress is more likely with him in the background.

“I’m purposely not including my personal opinions because I actually want to accomplish something. And I believe it’s incumbent upon me to create the conditions where we can actually get something done, versus to assert a political frame,” Newsom told Capitol reporters.

The governor may also perceive political risk if he puts out his own specific blueprint for how PG&E, Southern California Edison and San Diego Gas & Electric can survive in a hot, dry era in which massive wildfires are common annual events.

Tactic seen as best for long-range causes

Leadership experts, however, think the “lead from behind” gambit works better for issues with low stakes or for long-term causes – for the most famous example, Nelson Mandela’s decades-long effort to end apartheid in South Africa – and isn’t necessarily right for addressing pressing problems.

Jack Dunigan, a longtime management consultant who runs The Practical Leader website, believes that “it works best in times and places of non-crisis. If a child is running into the street and into traffic, it is not the time to convene a focus group to discuss the threats of playing in the street. It is the time for action. Leading from behind, as [Harvard business professor Linda] Hill describes it, works best in non-threatening, non-urgent conditions.”

Given that PG&E emerged in 2004 after three years in bankruptcy and returned to regular operations, that may suggest that there is no urgent reason for Newsom to take a bolder approach. But the idea that the Legislature will be able to come up with a plan in three months or less is difficult to square with its recent history – and the intense dislike that many state lawmakers and Northern California residents have for scandal-scarred PG&E.

In January, after PG&E’s bankruptcy filing, state Sen. Bob Hertzberg told a Sacramento TV station, “Nobody in the Capitol wants to bail out PG&E, period, exclamation mark, end of story, full stop. They just don’t.”

While lawmakers don’t hold Southern California Edison and SDG&E in such contempt, any attempt to help them deal with wildfire liabilities that also protects PG&E would face tough sledding.

This background is why Newsom’s predecessor, Jerry Brown, got nowhere last year with his proposal to give state judges the flexibility to limit the amount of liability a utility has for wildfire damages based on circumstances – including consideration of the importance of a utility being able to continue to provide power to millions of customers.

Further complicating the prospects for relatively quick approval is that “inverse condemnation” is written into the California Constitution. Changing it would appear to require a vote of the public as well as two-thirds approval of both the state Assembly and Senate.

One of the more embarrassing scandals in the history of the California Public Utilities Commission appears to have finally concluded with a settlement on how to pay for the costs of shuttering the broken San Onofre nuclear plant – one that’s far friendlier to ratepayers and far harder on shareholders than the original deal.

First opened in 1968, the San Onofre plant was long one of most heavily relied on sources of electricity for both Southern California Edison, which owns nearly 80 percent of the plant, and San Diego Gas & Electric, which owns 20 percent. But severe problems with relatively new Mitsubishi steam generators caused a series of radiation leaks in 2011 that led to the plant being shut down soon after and closed for good in 2013.

In 2014, the California Public Utilities Commission decided that about 70 percent of the $4.7 billion cost of San Onofre’s closure should be borne by Edison and SDG&E ratepayers – $3.3 billion. The decision angered some activists because of the view that San Onofre’s failure resulted from poor management of the plant by Edison officials, not anything ratepayers had done.

But attempts to overturn the decision ramped up in early 2015 with the revelation that the framework of the deal had been worked out in 2013 in a Warsaw, Poland, hotel in a private, never disclosed meeting between then-PUC President Michael Peevey and an Edison executive. After more than a year of intense criticism of the state regulators from lawmakers and activists, the PUC agreed to reopen the settlement in 2016.

Last week, commissioners voted unanimously to lop $750 million off the amount assessed ratepayers, meaning they and shareholders roughly split the cost of San Onofre’s closing. The savings will show up immediately in electricity bills of 6 million customers. That’s because fees that have been included in Edison and SDG&E bills since the settlement was approved in 2014 have been immediately cancelled, retroactive to December.

The deal was agreed on by Edison and SDG&E and by Citizens Oversight, a San Diego-based consumer group that sued in federal court over the 2014 settlement. The lawsuit claimed that forcing ratepayers to pay for a power plant that produced no power was an unconstitutional taking of property. The argument was rejected by a U.S. district court judge. But after the 9th U.S. Circuit Court of Appeals agreed to hear an appeal, the utilities began talks for a new settlement.

Probe of PUC president ends with no indictments

The fallout from the covert way the costs were initially divvied up went beyond forcing open the 2014 settlement. It added a new front in a criminal investigation of Peevey over allegations he traded favors with utilities. The probe ended up without any indictments.

The PUC fined Edison $16.7 million for failing to disclose its executive’s meeting with Peevey.

Meanwhile, Edison and SDG&E’s $7.6 billion lawsuit against Mitsubishi Heavy Industries over its allegedly defective equipment ended in 2017 with a result that deeply disappointed the utilities. The International Chamber of Commerce in San Francisco awarded them $125 million – but also required they cover $58 million of Mitsubishi’s legal fees, leaving them with a net $67 million.

Edison and SDG&E could also face staggering new bills because of San Onofre. That’s because they’re under huge pressure to find a new site to store the 3.55 million pounds of nuclear waste now kept at the San Onofre site. A report in March about basic problems emerging with the canisters storing the waste only added to concerns about the wisdom of having so much highly radioactive material in a heavily populated area.

Unless plans to open a huge federal nuclear waste repository in Yucca Mountain, Nevada, are revived, the utilities could be forced to set up their own remote storage site.

Pacific Gas & Electric and its shareholders could face a huge financial blow from this month’s massive wildfires in the wine country of Northern California – unless they can get the state Public Utilities Commission to overturn a recent precedent-setting ruling made by its staff involving disastrous wildfires in 2007 in San Diego County. The PUC apparently is taking the request seriously, putting off a decision on whether to uphold the ruling.

The Bay Area News Group reported on Oct. 10 that Sonoma County fire dispatchers received many calls about downed PG&E power lines and exploding electrical transformers the night of Oct. 8, when fast-spreading fires began that eventually killed 42 people, incinerated nearly 9,000 structures and burned more than 245,000 acres. Cal Fire and the PUC are investigating whether PG&E is partly or entirely responsible for the inferno because it failed to trim trees near power lines, as is required by state law.

Now the Bay Area News Group is reporting that PG&E officials are pleading with the PUC to be able to shift the cost of such disasters to ratepayers even if a utility is to blame. PG&E faces billions of dollars in claims from this month’s fires but says it only has $800 million in insurance.

A PG&E official told PUC staffers that the state’s three giant investor-owned utilities – PG&E, Southern California Edison and San Diego Gas & Electric – have been put in an “untenable situation” because of growing wildfire risks and a tough insurance market.

PUC judges said SDG&E couldn’t escape $379 million in wildfire costs

But two months ago, two PUC administrative law judges – S. Pat Tsen and Sasha Goldberg – rejected a request for $379 million in relief from SDG&E in a case with parallels to PG&E’s situation. The ruling dealt with three 2007 fires in San Diego County that killed two people, destroyed 1,300-plus homes and charred more than 206,000 acres.

Based on evidence gathered by Cal Fire and PUC investigators, the judges concluded that SDG&E was responsible for the fires because of failure to do adequate tree trimming near a power line and because of slow responses to equipment malfunctions. The judges also rejected claims that excessive winds that couldn’t have been expected were responsible – a claim PG&E is making about this month’s fires despite evidence to the contrary.

Because of these circumstances, the judges said it would be improper to ask SDG&E ratepayers to cover the $379 million in costs that the utility had to pay after settling billions of dollars in claims and getting reimbursed by its insurers.

Suggesting it might have some sympathy for both PG&E and SDG&E, the PUC on Thursday again put off a vote on whether to ratify the administrative law judges’ decision.

PG&E’s call to let it shift disaster costs to ratepayers was immediately slammed by consumer groups – and not just because they saw this as the utility trying to duck responsibility for this month’s massive fire. They warned it would lead the state’s three large utilities to cut back on wildfire safety efforts, knowing they wouldn’t be held responsible for their lax efforts.

Fears that PG&E already does an inadequate job were bolstered Tuesday by the San Francisco Chronicle’s report that over a recent five-year span, PG&E missed the deadlines to complete more than 3,500 work orders in Sonoma County, many of which were safety-related.

With roots dating back to 1852, PG&E is an iconic California company that has endured its share of hard times, including going into Chapter 11 bankruptcy from 2001-2004 because of huge losses during the 2000-2001 state energy crisis.

But 2017 is shaping up as the 112-year-old utility’s most fraught year ever. On Jan. 26, a federal judge found PG&E guilty of five felonies for its failings in preventing a 2010 explosion of its gas line in San Bruno, a suburb of San Francisco, and a sixth felony for obstructing the National Transportation Safety Board’s official inquiry into the disaster. Judge Thelton Henderson leveled the maximum fine possible of $3 million.

Eight people were killed and 38 homes were destroyed in the San Bruno explosion and fire, which led to a record $1.6 billion PUC fine in 2015.

Assembly speaker, transparency proponents spar

Good morning!

A war of words erupted in recent days between the proponents of a transparency ballot measure and Assembly Speaker Anthony Rendon, after members of the Legislature and legislative counsel dismissed the measure as full of “ambiguities” and introduced their own watered-down versions.

In a scathing letter, the Lakewood Democrat accused the measure’s proponents of allowing their “passion” for the measure “blind” them to the “shortcomings that may be obvious to others,” painting them as unwilling to work with the Legislature.

But Hold Politicians Accountable — the committee formed by former Republican legislator Sam Blakeslee and Republican donor Charles T. Munger, Jr., backing the California Legislative Transparency Act — fired back that the measure was “refined by three distinguished attorneys, including a Constitutional scholar,” and independent vetting by cosponsors, none of whom found fault.  

CalWatchdog has more. 

In other news:

• Sweeping reforms of the state’s embattled Public Utilities Commission were announced Monday, which, subject to legislative approval, “would give the attorney general new authority to enforce limitations on private communications between PUC personnel and utility executives — a key issue after an email scandal revealed numerous improper contacts,” writes The San Jose Mercury News.
• “In the wake of a scathing state audit released in March, the University of California mounted a $158,000 publicity campaign to dispute claims that its admissions policies had disadvantaged resident students,” writes The Sacramento Bee.
• “The two groups at the center of a violent Sacramento rally that left at least seven people with stab wounds on the Capitol grounds Sunday represent a marriage of the past and future of white supremacist organizations, experts and law enforcement officials said,” writes the Los Angeles Times.
• How bad is water management in California? The Capitol Weekly answers that question. 

Assembly:

• Full day of hearings. 

Senate: 

• Full day of hearings. 

Gov. Brown:

• No public events announced.

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In San Francisco, federal prosecutors are laying the groundwork for a criminal trial of Pacific Gas & Electric that will begin in March. In preliminary filings, prosecutors paint a scathing picture of PG&E negligence leading to the 2010 explosion of natural gas pipelines in San Bruno, which killed eight and wiped out a neighborhood.

How is that bad for the PUC? Because implicit in the federal allegations that 28 felonies were committed by PG&E is that the utility was not facing serious regulation before the catastrophe in San Bruno, a suburb south of San Francisco. Here is part of the San Jose Mercury News’s recent coverage:

“The government intends to offer proof that PG&E’s willful decisions not to maintain records, conduct proper pipeline assessments, and otherwise comply with federal pipeline safety regulations were part of a corporate culture of prioritizing profits over safety,” federal prosecutors wrote in papers filed on Nov. 2 with the U.S. District Court in San Francisco.

 

“The prosecutors in the trial are being very aggressive,” said Peter Henning, a professor of law with Wayne State University in Detroit. …

 

“They are trying to frame this case for a jury, and the government is attempting to frame this around a single word: greed,” Henning said.

 

PG&E faces a fine of up to $1.13 billion if convicted on the federal criminal charges.

‘Edison was driving the bus’

Meanwhile, in Southern California, politicians and consumer advocates have grown increasingly critical of the PUC-orchestrated, already-approved plan to have ratepayers cover 70 percent of the $4.7 billion cost to close the San Onofre nuclear plant and safely shutter its two reactors, whose 2011 malfunctions led to the release of small amounts of radiation.

Since the plan was approved in fall 2014, it’s been revealed that Peevey had never-disclosed meetings with Southern California Edison executives over how to apportion San Onofre closing costs, including a 2013 meeting in a Warsaw hotel room between Peevey and an Edison official. Edison owns 80 percent of San Onofre and San Diego Gas & Electric owns 20 percent.

But other questions have emerged about the PUC’s stewardship that go beyond the propriety of these undisclosed meetings.

The Los Angeles Times delved into the expert testimony that the PUC reviewed before approving the settlement and reported that one expert blamed Edison’s poor management for the problems with leaking steam generators which are used to cool the nuclear reactors and keep them safe to operate. The expert questioned the utility’s insistence on blaming Mitsubishi Heavy Industries, the branch of the Japanese conglomerate that made and installed the generators.

Arnie Gundersen, a nuclear engineer who served as an expert witness regarding the handling of San Onofre’s generators, said at a minimum both Edison and Mitsubishi are at fault.

 

“When I reviewed all the data it was clear to me that Southern California Edison was the one driving the bus,” Gundersen said.

 

“Mitsubishi wanted the contract and agreed to some very onerous terms in order to get it.”

 

Gundersen said the San Onofre case is similar to two incidents in Florida, where an agreement was reached over the closed Crystal River nuclear plant that led to billions in costs to consumers. In addition, he said, the St. Lucie nuclear plant had similar steam generator problems as San Onofre.

A KPBS report also alleged that Edison acted deceptively in its 2006 meeting with the Nuclear Regulatory Commission, never telling NRC officials of concerns about the steam generators that let Edison to complain to Mitsubishi in both 2004 and 2005. It appears the PUC was unaware that the utility’s concerns about steam generator problems dated to 2004.

‘The same people always get paid’ by PUC

A San Diego Union-Tribune analysis also raised questions about the PUC negotiations that led to the agreement assigning most of the shutdown costs to ratepayers.

The biggest beneficiary of a state program aimed at leveling the playing field between utilities and their customers is a Bay Area consumer group that privately negotiated the deal assigning customers 70 percent of the costs for the failure of the San Onofre nuclear plant.

 

The Utility Reform Network, or TURN, collects millions of dollars a year in so-called intervenor compensation – almost half of all the money handed out by the California Public Utilities Commission since 2013. …

 

TURN receives as much as 90 percent of its operating income from commission awards, so it’s highly dependent on regulators for its livelihood. Whether consciously or not, the group might allow that dependency to shape its advocacy, critics say.

 

“The public really doesn’t have anyone at the commission looking out for them,” said San Diego lawyer Michael Aguirre, who is suing to overturn the San Onofre settlement as an undue burden on utility customers. “They are being charged for advocacy that really is not being performed. The same people always get paid.”

Peevey is facing criminal investigations by both the state and federal government. His home in La Cañada Flintridge, a Los Angeles suburb, was searched by investigators in January.

But at another powerful state agency, what appears to be an open conflict of interest is playing out without objection from its leaders. A CTA lobbyist who sits on the State Board of Education wants the board’s test-giving contractor to pay the teachers it hires to grade the tests more than the contractor thinks is necessary.

John Fensterwald mentions this in a post on EdSource on the board’s decision to award a three-year, $240 million contract to the Educational Testing Service to administer standardized tests required by state law:

ETS will continue to handle the administration and scoring of the new online tests, including the Smarter Balanced English language arts and math tests in the Common Core State Standards, which debuted this spring, and the yet-to-be developed Next Generation Science Standards. … 

In its revised bid, ETS said it will hold summer institutes and weekend trainings for teachers and would pay California certificated teachers $20 per hour to be trained in and score the tests. Ashley acknowledged that’s less than teachers earn per hour, but the primary benefit, he said, would be the knowledge that teachers would gain in both the end-of-the-year tests and the interim assessments that teachers would give during the year.

However, board member Patricia Rucker, who works as a lobbyist for the California Teachers Association, called $20 per hour “insufficient” and predicted that fewer than half of the scorers will end up being teachers. Teachers “carry the greatest burden to see that students are prepared and have the greatest stake” in the test results, and yet still will not be the primary focus of the recruitment strategy for scorers, she said.

Gov. Jerry Brown wouldn’t have appointed Rucker to the state school board without the general expectation that she would take the same positions as the CTA. However, a union official openly using her role as a state board member to push a contractor to help her union members get more money is unusual.

Two state laws spell out conflicts

On city councils, members routinely recuse themselves when contracts come before them in which they have some financial connection. They are heeding Government Code 1090:

Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.

Government Code 87100 offers a similar injunction:

No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest.

In California, union members and officials are often on governing boards, where they participate broadly in setting policies that affect unions.

But that doesn’t usually apply to matters directly involving pay. For example, in Ontario, a police officer and a senior fire department official served on the City Council in the 1990s. They abstained from contract negotiations or other matters involving compensation and the city agencies that provided their full-time jobs.

This cloud over the PUC comes at a particularly delicate point. California’s embrace of renewable energy is forcing the regulator to rethink how the state’s electricity grid can be maintained and kept healthy going forward. As the San Jose Mercury News reported last month, it wasn’t built with the idea that it would receive energy from so many different sources.

Nearly 23 percent of California’s energy now comes from renewable sources such as wind and solar, and the state is on track to reach its goal of generating one-third of its energy from renewables by 2020. But feeding all that green energy into the Golden State’s grid — without overloading it — has become a major challenge.

That’s because the state’s aging natural gas plants aren’t nimble enough to turn off when the sun starts shining and then quickly switch back on when it gets dark. And while the technology to generate clean energy is growing by leaps and bounds, efforts to store the power haven’t kept up. …

Roughly 140 companies sell to the market, resulting in about 27,000 transactions per day. The [California Independent System Operator, or ISO] makes sure the purchased electricity makes it to the utilities’ substations. …

Solar generation hit record in early March

In the morning, electricity demand rises as people wake up and turn on appliances, lights and electric toothbrushes. And as the day wears on, the state is increasingly dependent on solar plants, especially in the afternoon.

A recent record was set on March 6, when solar peaked at 5,812 megawatts, five times what it was three years ago. All this solar power is allowing California to cut back on natural gas — which now provides about 60 percent of the state’s energy needs — and other traditional sources of electricity.

But this can be a problem because the sun sets at the same time that people are returning home. That causes electricity use to surge, and the power plants that were turned down or even off need to start producing — fast.

The majority of California’s power plants, however, aren’t up for the abrupt on-and-off challenge.

Officials with ISO, the nonprofit that manages the state’s electricity grid, see a need to build new natural-gas plants and retrofit old ones to deal with the headaches the system now faces. Peevey was much less hostile to natural-gas plants than members of the state’s green movement.

But if the PUC, with new president Michael Picker, continues this approach, he is sure to be depicted as being under the thumb of giant utilities.

Another headache: How to deal with solar homeowners and grid?

The PUC faces a related headache with homeowners and companies with solar panels which want to continue favorable rates they get for sending their excess power to the grid. San Diego Gas & Electric says the current approach doesn’t pencil out, as the U-T San Diego reported:

Under current regulations, solar owners get to sell their power into the grid at the full retail price, offsetting their costs at night when they pull electricity into their homes.

Everywhere else in the utility economy, power producers must sell at lower, wholesale prices. In most cases, they even pay for their use of the grid to reach customers.

So the PUC faces explosive questions here as well. Thousands of homeowners and companies with solar technology only made the costly investment because of a long-term expectation of a great deal from utilities. But if this great deal plays havoc with utilities’ bottom lines, they’ll need to transfer costs to their customers who don’t have solar panels.

And every rate change SDG&E, PG&E and Edison seek will be considered with the backdrop of recent scandals in which Peevey appeared to have an extraordinarily chummy relationship with the three utilities.

It appears to be a recipe for distrust and controversy going forward as the PUC reckons with a new era in California power generation.

Today, the Assembly Utilities and Commerce Committee is scheduled to consider legislation by Asm. Adrin Nazarian, D-Sherman Oaks, that, some say, is intended to put ride-sharing companies out of business and force Californians back under the thumb of the taxi cab cartel.

Assembly Bill 24 would force transportation network companies, more commonly known as ride-sharing companies, to register with the Public Utilities Commission, display an identifying decal on all ride-share vehicles, and go through extensive bureaucratic red-tape for all their drivers.

“Nazarian’s bill is a blatantly anti-competitive example of regulatory capture at its very worst that will only serve to pile on bureaucratic redundancy and red tape while choking innovation,” argues CALinnovates, a tech group that lobbies in Sacramento and Washington, D.C.

Nazarian seeks end to “high-tech hitchhiking”

Nazarian makes no secret of his intention to run the ride-sharing industry out of California. His latest bill was introduced on December 1 – one month before last year’s compromise measure became law.

“Ridesharing is simply high-tech hitchhiking,” Nazarian said in a March press release announcing his latest proposal for new ride-sharing regulations. “Consumers are being blindly picked-up by complete strangers and entrusting them with their safety.”

Of course, Nazarian’s statements about naive consumers are hyperbole. Last year, he voted for Assembly Bill 2293, which forced ride-sharing companies to abide by new statewide regulations. That law requires companies to carry at least $1 million in commercial-grade insurance and set new minimum levels of additional insurance to be carried by drivers.

The bill also ordered the state’s Public Utilities Commission and Department of Insurance to produce a study on transportation network companies before December 31, 2017 – to see how well the new law is working.

But, before there’s any data on the new law, Nazarian is seeking to add more requirements to the books.

AB24 violates 2014 ride-sharing compromise

Nazarian’s latest proposal would make your next ride home more expensive by forcing ride-sharing companies to put all their drivers through a Department of Motor Vehicle Employer Pull Notice, a Department of Justice Fingerprint Background Check, and random drug and alcohol testing.

Critics of this year’s proposal say that Nazarian is resurrecting bad bills that were previously sponsored by their competitors, the taxi cab industry.

“If the vast majority of AB24 looks familiar; that’s because it is,” Alex M. Leupp, the West Coast public policy lead for Uber, wrote in his opposition letter. “Last year, the state Legislature twice rejected nearly identical bills, AB612 (Nazarian), and AB2068 (Nazarian).”

Both of those bills were sponsored by the Taxicab Paratransit Association of California, a trade group that represents the taxi cab industry. Rather than embrace government-controlled monopolies, business groups believe the state should support innovative technologies.

“The California Legislature should embrace companies like Uber, Lyft, and Sidecar, who are not only changing the future of transportation, but are driving economic growth and job creation in cities all around the State,” said Robert Callahan, the state executive director for the Internet Association. “A primary reason for the wide-scale adoption of ridesharing by consumers is the enhanced safety experience.”

Serious safety concerns with taxis

Consumer safety, Nazarian says, is exactly why more government mandates are needed.

“As a public servant, I want to ensure your driver gets you home safely through the enactment of common sense safety measures,” he said. “Who would be against making sure your driver is not a convicted felon or a reckless driver?”

Yet, if safety is his top concern, Nazarian may want to turn his attention to taxi cabs. Los Angeles taxi drivers have been cited more than 10,000 times in the past five years, according to a review of citation data from the city of Los Angeles. In some cases, taxi drivers were caught drinking on the job, aiding in prostitution and driving without a license.

Unlike popular ride-sharing companies that allow passengers to rate their drivers, the information supplied by the city of Los Angeles redacted all driver information from the citation database.

Meanwhile, Uber is ready to respond at a moment’s notice to complaints against more than 70,000 drivers in California.

“Uber has resources available 24/7 to respond to any allegations from riders or drivers, and can within minutes suspend access to the TNC platform in real time while it performs a thorough investigation with the rider, driver, trip data and third party resources,” Leupp, a representative of Uber, wrote to lawmakers.

On the safety front, Uber and Lyft have also received high-profile support from advocacy groups that see ride-sharing as a way to reduce the number of drunk drivers. As CalWatchdog.com reported last year, Mothers Against Drunk Driving opposed efforts to regulate ride-sharing.

“MADD supports new ridesharing platforms like Uber, Lyft and Sidecar as well as traditional taxi services that are enabling more options to provide safe rides in communities across the country,” J.T. Griffin, MADD’s chief government affairs officer, wrote in an open letter to state lawmakers.

The Assembly Utilities and Commerce Committee is scheduled to debate the bill at 3 p.m. You can listen live here.

Divisions on CalPERS’ Board of Administration, where Brown can count on allied appointees, opened around the controversy. Although Brown’s side in the controversy lost a close vote, plans have already been hatched for a rematch.

The bout has been a long time in coming. As summer turned to fall, Controller John Chiang took CalPERS to task for juicing up pensions while dishing them out at unsustainably high levels. Chiang was just elected state treasurer, so he will remain an ex officio member of the CalPERS board.

In late August, Brown tasked his team with doing all it could legally to prevent CalPERS from engaging in the pension spiking.

In that procedure, a public pension fund passes rules that allow pension levels to be adjusted significantly upward by taking temporary or exceptional kinds of work and pay into account. CalPERS had pushed the credibility of these measures to the breaking point, in effect securing special pension increases simply because employees did their jobs, such as librarians shelving books.

But Brown made a point to object only to CalPERS’ temporary pay rules, which allowed unique, fleeting raises for non-permanent work to be factored into pension setting.

By mid-September, Chiang had concluded that CalPERS’ pension spiking was unacceptable in theory, but unpunishable in practice. CalPERS’ “available resources” for spiking oversight, Chiang concluded, “limit its annual reviews to only 45, or 1.5 percent of the more than 3,000 reporting entities. At this current rate, pension spiking could go undetected for an extended period of time, as each reporting entity would be reviewed, at the earliest, every 66 years.”

The task of auditing CalPERS’ shenanigans had to fall, in other words, to the Legislature.

As a matter of common sense, it was much more attractive for Brown to try to exercise oversight by reforming the rules CalPERS used to set pensions, instead of by pouring the state’s time and energy into auditing those rules after scores of changes went into effect.

A tough matchup

That is why, as the Sacramento Bee reported, Brown’s appointees on the CalPERS board proceeded to force a vote on removing temporary pay from the fund’s cornucopia of pension-spiking sweeteners. Unfortunately for Brown, the vote failed, splitting 7-5 in favor of retaining the objectionable rule.

In an interview, state human resources head Richard Gillihan — a Brown ally on the board who voted against temporary-pay pension spiking — told the Bee that 2015 would offer another shot at reform. “What should or shouldn’t be included in final compensation is absolutely something that we think needs broader revisitation,” he said. “We hope to see that sooner rather than later.”

According to the fund’s website, “The CalPERS Board of Administration consists of 13 members — six elected ‘member representatives,’ three appointed representatives, and four ‘ex officio’ representatives. The elected candidates will serve a four-year term and represent active and retired members in all aspects of CalPERS’ business – including benefit and membership issues, and oversight and investment of Fund assets.”

But as the Bee observed, “The board’s composition will lean more heavily toward labor’s interests next year.” The Service Employees International Union shelled out some $250,000 to secure the election of incoming member Theresa Taylor.

Even though California taxpayers are on the hook for any CalPERS shortfall, they have no say in the six elected “member” representatives. Those representatives are chosen, according to CalPERS, by ballots “mailed to eligible, active state and public agency CalPERS members.”

Leadership trouble

A complication, however, has added further difficulties to the equation. September also saw the board approve the appointment of Ted Eliopoulos, former CalPERS senior investment officer for real estate, as its new chief investment officer.

That provoked the ire of J.J. Jelincic, a board member unable to vote against Eliopoulos because he was recused for being on leave. Jelincic told Pensions and Investments that Eliopoulos lacked “the temperament and management skills” needed for the job.

Pensions and Investments noted, “He said Mr. Eliopoulos relied 四人打麻将 too much on the advice of consultants, made the wrong decision to increase CalPERS’ exposure to riskier non-core real estate assets before the financial crisis, and played favorites with employees.”

The enmity has served to cloud Brown’s prospects even further for charting an effective course toward CalPERS reform.

Late on a September afternoon in 2010, the big orange California sun was dropping toward Sweeney Ridge just east of the blue-collar town of San Bruno on the San Francisco Peninsula. Families were preparing dinner and catching up on the day’s activities when, at 6:11 p.m., a section of pipe in a 30-inch-diameter intrastate natural gas pipeline owned by Pacific Gas & Electric ruptured near the corner of Glenview Drive and Earl Avenue.

A half-million cubic feet of natural gas gushed out of the pipeline in the first minute after the rupture, and for 94 minutes thereafter, until PG&E finally was able to shut down the flow of natural gas.  Almost instantly after the first highly explosive molecules escaped the pipeline’s confines, something ignited it — quite possibly a gas stove heating up dinner in one of the nearby homes.

The resulting explosion and inferno obliterated that home and 37 others and killed eight people.  It created a crater, long since filled in, that was big enough to swallow any of the houses destroyed in the explosion.  The twisted remains of the ruptured section of pipe, weighing 3,000 pounds and about as long as three elephants lined up nose-to-tail, lay smoking where the explosion hurled it, 100 feet away.

Worse news

The tragic San Bruno pipeline explosion on September 9, 2010 was hardly the worst man-made disaster in California — that dubious honor goes to the failure of the St. Francis Dam in 1928, which killed about 600 people — but it stands as a monument to the longstanding ineptitude of California’s bureaucracies and state Legislature. And last week, two and a half years after explosion, the story of San Bruno’s catastrophe and California’s ineptitude got even worse.

On Tuesday, staffers at the California Public Utilities Commission unveiled their proposed punishment for PG&E: a $2.25 billion fine, the largest ever imposed by the PUC. It includes $300 million that will go directly to the California treasury to be spent on who knows what, and $1.95 billion of required safety upgrades to PG&E’s natural gas distribution system.

The five appointed — not elected — board members of the PUC will decide on the staff proposal this fall, possibly coinciding with the explosion’s third anniversary. They are expected to approve the recommendation, or something close to it. But they are not expected to do anything about who’s just as much at blame as PG&E, because missing from the recommendation is a similarly sized fine for the state of California.

The actions of the state and the PUC are in fact the root cause of the catastrophe, according to the National Transportation Safety Board, which, as the federal regulator of pipelines, investigated the incident. Its accident report found 28 contributing factors to the explosion, two of which stand out.

The first is that the section of pipe that ruptured had defects so pronounced they should have been visible to the PG&E work crews and state inspectors when the pipe was installed in 1954.  The second is that, when the PUC adopted new pipeline inspection standards in 1961, it decided against all logic not to apply them to pipelines that were in place prior to that year. All pre-1961 natural gas pipelines in the state, including the one laid seven years earlier under San Bruno, would be grandfathered.

PUC decision

If not for this half-century-old PUC decision, PG&E’s pipeline would have undergone hydrostatic pressure tests that very likely would have revealed the defect under San Bruno. Obviously, industry lobbying, not safety concerns, were behind that decision, because the NTSB report states: “There is no safety justification for the grandfather clause exempting … pipelines from the requirement for post-construction hydrostatic pressure testing.”

The grandfathering happened long before most current legislators and regulators were born, but they’re still not off the hook, because they got a wake-up call less than two years before the San Bruno catastrophe. On Christmas Eve 2008, another PG&E gas pipeline exploded in the Sacramento suburb of Rancho Cordova and killed one person, injured five others and caused severe damage to two homes. Even after that, neither the legislature nor the PUC thought to revisit the grandfathering of the state’s natural gas pipelines.

Clearly, California is culpable for much of the blame for this great tragedy, but it has let itself off the hook — just as it always lets itself off the hook for all the mistakes, missteps and crazily expensive, profoundly useless regulatory crusades it routinely subjects its citizens to.

What a shame.

Laer Pearce, a veteran of three decades of California public affairs, is the author of “Crazifornia: Tales from the Tarnished State.”