Special Report Part III: Saving Brown's Legacy

• Brown To Answer Records Act Request About McFadden Recusal
• Deferred Pipe Maintenance Cause of San Bruno and Porter Ranch
• PUC House Cleaning & Rules Could Save Legacy 

Part Three

Exhibit C in the case of PUC-gate v. Jerry Brown: San Bruno and Pacific Gas & Electric.

On September 9, 2010 a natural gas pipeline in San Bruno exploded into flames, killing eight, and sending flames, shockwaves and devastation across the community. For the perpetrator, Pacific Gas & Electric, it was fortunate that former PG&E top executive Nancy McFadden joined Jerry Brown’s Administration four months later as his executive secretary, his top aide.

PG&E ratepayers paid billion of dollars for pipeline maintence and safety over decades, but there's no record of how the money was spent, as the Public Utility Commission (PUC) didn't track it.  In fact, the company collected $10 million from ratepayers  between 2007 and 2010 to just upgrade San Bruno pipelines, but never used the money for that purpose. The company did divert the dollars to fork out bonuses to top executives, including the CEO, in the form of cash and stock options.

Then Boom: Dozens of homes destroyed,  66 injuries,  8 deaths.

Word in the Capitol is that under McFadden the horseshoe became the nerve center of the PUC.  And according to the San Francisco Chronicle, based on internal emails, The PUC “allowed Pacific Gas and Electric Co. to investigate itself after the company revealed in 2012 that it had failed to police its major gas pipelines to the point where trees, buildings and even swimming pools blocked access to them…A commission official explained in an e-mail to PG&E executives that it would be better for the company to do its own investigation so the state agency could avoid ‘a lot of ... red tape.’ The findings of PG&E’s self-investigation remain secret, more than two years after the company turned them over to the state.”

Red Tape? That sounds a lot like Jerry Brown’s crusade against regulation.

Did McFadden communicate with PUC officials about San Bruno or any other matters affecting the company?

We don’t know. But unless she officially recused herself from all matters related to PG&E, her role demanded and required she be in the loop on big public policy matters like San Bruno and PUC developments.

At PG&E, McFadden served as Senior Vice President and Senior Advisor to the Chairman and CEO of PG&E. Prior to that, she was Senior Vice President for Public Affairs for PG&E, essentially PG&E’s chief lobbyist.

The $1 million severance payment she received and her employment should have required that she recuse herself officially from all PG&E matters. Consumer Watchdog is waiting on a response to our Public Records Act request to the Governor’s office on this point.

In 2011, PGE’s public policy director Dana Williamson also joined the Gov’s inner circle. In August 2013 she was elevated to Cabinet Secretary. Whether the two aides helped their old employer at the PUC is a legitimate question that Brown should answer emphatically.

What was going on for PG&E at the PUC in the wake of the disaster? As the Chronicle reported, internal PUC emails “have called into question whether anything changed at the regulatory agency even after it endured scathing criticism from federal and state investigators for its lax oversight of PG&E before the San Bruno disaster.  The e-mails show high-level commission officials working to satisfy PG&E requests to pick a particular judge for a rate-setting case, dangling favorable treatment in return for political favors, and swapping lighthearted messages in the weeks after the explosion destroyed dozens of homes in San Bruno’s Crestmoor neighborhood.”

One of those top officials was Brian Cherry, who was PG&E’s lobbyist and regulatory specialist. His ex-parte emails and meeting with PUC Commissioner Mike Florio, a Brown appointee, showed that Florio improperly discussed San Bruno penalties and how to get a certain judge to deal with a $1.3 billion rate-setting case.  Last month San Bruno’s City Attorney asked for penalties against the company for “constant courting” of Florio, who is still on the Commission. It’s much like Peevey improperly buttonholing then Southern California Edison executive vice president Stephen Pickett on San Onofre at an industry shindig in Warsaw for what he wanted to see in the SONGS settlement. Florio still maintains the Governor’s confidence.

There can be little question that McFadden and Williamson’s employer benefited wildly from the favor of the PUC and Governor Brown’s office during their tenure.  

 PG&E and its utility brethren were the principle beneficiaries of the final SB 350 renewable portfolio legislation that moves California toward a fully renewable state.   

Despite PG&E’s corruption of the PUC and improper ex-parte communiques, Brown vetoed a package of bills overhauling the PUC, many of whose recommendations were taken right out of a PUC-commissioned independent study by Michael Strumwasser. The legislation would have banned improper communications and created accountability for the PUC in the Superior Courts, among other provisions to increase transparency. In his veto message, Brown said he wanted to lessen the burden of open meeting laws on the PUC in exchange for any reform.  Sound a lot like a veto message drafted by a former PG&E employee?

Given all we’ve learned about the backroom, under the table influence-peddling at the PUC by Southern California Edison, PG&E and Sempra, it’s unfathomable that any reasonable governor would veto such reforms without PG&E’s minions in the horseshoe whispering in the horse’s ear.

The newest scandal over PG&E’s San Bruno disaster just surfaced last week. A former company official came forward to say that PG&E executives ordered the destruction of company documents that showed the company knew before the blast about pipeline problems that caused it. The documents came to light from a federal court filing in the case over the deaths. Under Picker, the PUC, by contrast, last week closed all San Bruno proceedings except the question of improper communiques with Florio.

If The Leak in Porter Ranch blows out to uncontrollable portions, as the Los Angeles Times just reported might happen, the Governor’s coziness with all the big utilities and his hostility to health and safety regulation in our gas and oil industry may become a defining moment in his legacy.

The fact is deferred maintenance on the pipes in Porter Ranch and San Bruno had huge consequences.  The leaking well in Porter Ranch could be the tip of the cracking iceberg. Inspections at 15 other wells found leaking valves, fittings, or flanges, according to a letter written to air regulators by Patricia K. Oliver, an attorney at the R. Rex Parris law firm that is representing thousands of Porter Ranch residents.  SoCal Gas claims to have fixed the “minor leaks,” but has presented no public evidence of it, the letter says.  Another 16 are simply “not accessible,” meaning there is no way for the company to check them. “It appears that SoCal Gas has lost control of the entire oilfield, a possibility that must be fully disclosed to the public through evidence,” Oliver writes.

Rather than doubling down on safety, Brown either let McFadden and Williamson go easy on the utilities or just turned a blind eye while Peevey and his PUC cared less about oversight than their pet causes.  It appears that Picker, the current PUC chairman, sympathizes.

Millions of dollars charged to ratepayers in San Bruno were not used to keep them safe, as the utilities proposed. Will the scrutiny at Porter Ranch show the same problem at Southern California Gas, whose parent company Brown’s sister Kathleen sits on the board of? Will this become a rest-of-his-term embarrassment?

Not if Brown finally acts to clean up the PUC, DOGGR, and show his commitment to regulation of well safety. He talked about climate change, water, and our health in his State of the State speech Thursday, but he failed to mention the suffering in Porter Ranch and San Bruno.

Brown should act immediately to restore faith by calling for undoing the PUC and SEMPRA’s expansion of natural gas compression in Aliso Canyon.  He should order inspection and maintenance on every ancient well-head in the state. He should apologize for trusting the utilities too much and worrying about the ratepayers and public safety too little, including asking PUC Commissioner Mike Florio to step down following his scandalous ex-parte communications. 

The carbon footprint on an uncontainable Porter Ranch could far exceed any good the Governor’s done with renewable standards in California. It’s a lesson he should learn from and accept if he wants to be remembered as a governor of the people, by the people, and for the people and not the governor of the PG&Es, by the SEMPRA, and for the SoCal Edisons.

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