Special Report Part II: Will PUC-Gate Ruin Brown's Legacy?

Utility Cronyism in Brown Admin
Brown Hides Contacts With Edison Over San Onofre
Exec Sec McFadden Got $1 Million PG&E Payout
 
Part Two 
 
Exhibit B in the case of  PUC-gate vs. Jerry Brown: the scandal at San Onofre Nuclear Generating Stations (SONGS), the PUC corruption scandal around its closure, and Brown’s complicity with more-of-the-same.  
 
There’s a very, very strong case that ratepayers were wrongly duped into paying for the SONGS failure based on back-room deals by former PUC Chief Michael Peevey and executives at Southern California Edison, as well as concealed evidence.  
 
 
The off-the-record, improper emails and communications showed that ratepayers picked up $3.3 billion of the $4.7 billion dollar tab so Peevey could get $25 million for a pet project at UCLA. It’s one of the more shameful and corrupt cases in California PUC history.
 
Peevey’s house has been raided by the California Justice Department and, based on recent court documents, a criminal prosecution is in the works.  Emails have been subpoenaed from Microsoft.  The San Diego Union Tribune has called for a reopening of the case settled in 2014. SONG's failure now appears to be Edison’s own fault. Recently, the Administrative Law Judge in charge of the PUC probe into San Onofre, Melanie Darling, retired after sitting on damning evidence – that the manufacturer of damaged parts at the plant, Mitsubishi, had discussed the problem with Edison, which chose not to fix it – and after having an ex-parte discussion with Edison about it
 
What’s been Brown’s reaction to the disturbing new evidence and backroom bargains with So Cal Edison and Peevey over the ratepayer bill for the closure of SONGS?
 
He’s bucked a San Francisco Superior Court judge and refused to turn over emails between his administration and the PUC.  He’s vetoed legislation to compel disclosure about back room deals and bar ex-parte communications, and he has said the PUC needs new exemptions from public meeting laws. He’s appointed Michael Picker, his right hand man, to take Peevey’s President’s chair at the PUC. Picker nonchalantly told the Los Angeles Times in a late December interview that he did not see good reason to reopen the deal.  Happy New Year Edison!
 
In early December,  I told KQED’s California Report that Brown wanted to take the public out of the Public Utilities Commission. But it looks a lot worse when you add up all the evidence. The evidence includes not only Picker’s end-of-the-year statement that he saw no reason to reopen the SONGs case, but emails from Edison CEO Ted Craver about a conversation he had with Brown that suggests Brown’s complicity.
 
Brown’s call with Craver followed Senator Boxer’s public release of the damning evidence that Judge Darling had sat on about Edison’s culpability in the matter.  Rather than sticking up for ratepayers, Brown reassured Edison’s CEO.
 
Syndicated columnist Tom Elias writes of the email:
 
A June 6, 2013 note sent by Edison CEO Ted Craver to company board members starts with Craver saying he “wanted to give you a quick report on my phone calls with Gov. Brown.” This came while Brown was in a Rancho Mirage meeting with President Obama and Chinese President Xi Jinping. Reported Craver, “He said what we were doing seemed right under the circumstances.” Craver also said Brown “indicated a willingness to” say publicly that Edison was acting responsibly.  What else might have been said in that call?
 
For sure, Brown spoke to Craver while meeting with two of the three most powerful world leaders. That’s how hands-on the governor can be, even when he has no formal voice in a decision…. Maybe Brown was more directly involved than we know. That’s only a guess, but Brown invites speculation when he and his PUC appointees use tax dollars trying to hide their contacts.
If Brown loses the court battle now brewing in San Francisco over his Administration’s email, we may know a lot more.  But the fact the Governor is fighting so hard to keep his office’s role private in a public corruption scandal does speak volumes.  Brown should apologize for the scandal and come clean, but he doesn’t seem to think anything wrong really occurred.
 
Telling too is that Brown has been a strong, if silent, supporter of Peevey. Peevey was, from 1990 to 1993, the President and Director of Southern California Edison and Edison International, and served as an Executive Vice President of the companies from 1985 to 1990.
 
How anyone could have thought the former president of So Cal Edison should head the ratepayer watchdog agency that oversees Edison tells you everything you need to know about PUC values. And then for Brown and his hand-picked successor Picker not to support re-opening the SONGS settlement after the criminal investigation of its architect Peevey and exposure of new hidden evidence that Edison was at fault?   WTF.  (For a great read, see the  “The Secret Lives of Mike Peevey” in The Bay Guardian for a full accounting of Peevey’s corporate sponsored travels and other exploits at the PUC.)
 
The cronyism at the PUC took center stage in February 2015 as public outcry roiled the San Francisco political establishment trying to celebrate Mike Peevey’s retirement following raids on his home, and the outing of his Warsaw trysts with utility lobbyists to set terms of deals. The Peevey good-bye party hosts were a Who’s Who of Brown Administration officials. 
 
The San Diego Union Tribune reported: “Sponsors include Robert Weissenmiller of the Energy Commission, Mary Nichols of the Air Resources Board, Denise Tyrrell of the Public Utilities Commission and Dan Richard of the High-Speed Rail Authority.” And, of course, Michael Picker, whose voting record at the PUC mirrored Peevey’s, according to the columnist Tom Elias.
 
Another big organizer of the “Thank You Peevey” soiré was Susan Kennedy, former chief of staff to Arnold Schwarzenegger and cabinet secretary and deputy chief of staff for Gray Davis. Her newest venture?  Owner of a company that received mega contracts for energy storage from So Cal Edison that could launch her company on a path to earn hundreds of millions of dollars.  
 
The utility-statehouse revolving door is really more like a Sacramento escort service.
 
Just look inside the “horse shoe” – as the Governor’s office is known in the statehouse due to its shape.  
 
Two of the Governor’s top aides, Nancy McFadden, his #1, and Dana Williamson, were previously top executives at Pacific Gas & Electric.   Both were appointed in the wake of the 2010 San Bruno explosion and the PG&E negligence and corruption that caused eight deaths.  And McFadden received an extraordinary parting gift from the company not previously discussed.
 
According to a filing with the Securities Exchange Commission, when she left PG&E McFadden received a $1 million severance payment that was not part of a previous employment agreement.  For a public utility that’s a generous gift. Stress gift because the filing itself says PG&E was not required to pay her. 
 
"Even though Ms. McFadden is not otherwise entitled to them, in consideration of her acceptance of this Agreement, the Company will provide to Ms. McFadden the following separation benefits: a. Severance payment. Under the terms of the PG&E Company Officer Severance Policy, Ms. McFadden’s severance payment amount is $1,040,400. (ONE MILLION FORTY THOUSAND FOUR HUNDRED.)" Here is the link.
 
The SEC filing shows the agreement was effective in February, one month after McFadden had joined Team Brown, and as her former employer’s conduct at San Bruno was coming into full focus.
 
McFadden may be a highly effective executive secretary, as many in the Capitol would attest, but she has a big conflict when it comes to advising the Administration on how to deal with her former employer and industry. 
 
With scandals at San Onofre and in San Bruno mounting, McFadden should have officially recused herself on every matter related to both issues.   
 
While the SEC filings showed a $1 million payment to McFadden in February 2011, her required state ethics disclosure forms signed in April 2012 only show final compensation in excess of $100,000.   While McFadden may have complied with the letter of the law,  the specter of the payment should have guaranteed that she create a strict fire wall at the Governor’s office on utility business.
 
$1 million is a big utility company parachute to the top spot in an Administration dealing with tragedy in San Bruno, the secret deals and buried evidence at San Onofre, and now The Leak. McFadden should have made an official record of her recusal from all the matters above. A public records request of the Governor from Capitol Watchdog seeks an answer as to whether or not she did. 
 

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