Riechel Reports... San Bruno City Manager on Settlement With PG&E

Article Source: San Bruno CA City Manager Connie Jackson

29 March 2017 - For Immediate Release:

San Bruno Announces Settlement With PG&E, Ratepayer Advocacy Groups, & the CPUC's Safety Enforcement Division in CPUC’s Investigation Into Illegal Ex Parte Communications

PG&E Agrees to Change Corporate Culture and Regulatory Relationship with CPUC

San Francisco—The City of San Bruno announces a settlement with Pacific Gas & Electric (PG&E) that significantly reforms PG&E’s relationship with the California Public Utilities Commission (CPUC) and penalizes PG&E for backroom dealings at the CPUC. The settlement comes over five years after the National Transportation Safety Board’s independent investigation found that PG&E’s too-cozy relationship with its regulator contributed to the deadly 2010 explosion of PG&E’s gas pipeline in San Bruno.

During the CPUC safety and enforcement proceedings arising from this tragedy, San Bruno sought release of public records that exposed illegal meetings and 164 improper communications between senior PG&E executives and CPUC decisionmakers. Recognizing the severity of San Bruno's allegations, the Commission initiated the Order Instituting Investigation (OII) that today's settlement resolves. San Bruno’s efforts to expose the illegal communications not only resulted in the CPUC opening the investigatory proceeding against PG&E, but also led to resignations by senior PG&E executives, high level CPUC employees, and former CPUC President Michael Peevey, who did not seek reassignment to the Commission. San Bruno’s efforts also led to ongoing Public Records Act (PRA) reform proceedings at the CPUC, state legislative reform, and reported investigations by the California Attorney General’s office.

In the settlement, PG&E admits wrong-doing and agrees to provide ratepayers with a record $73.5 million in rate relief through 2019. PG&E also agrees to changes in its corporate culture and its regulatory relationship with the Commission and ratepayers, representing the culmination of reforms at both the Commission and PG&E.

“This settlement demonstrates that PG&E is willing to take responsibility for its backchannel communications with the CPUC and that it will take the necessary steps to make sure it doesn't happen again,” said San Bruno City Manager Connie Jackson. "We hope that this settlement closes the final chapter on illegal communications between the CPUC and PG&E. We look forward to seeing that PG&E is finally changing its culture and ways of doing business."

The unprecedented settlement includes an $86.5 million fine, of which$73.5 million in rate relief will be provided to PG&E ratepayers. The presiding Administrative Law Judge will review the settlement agreement, following which it must be approved by a final vote of the Commission.

Under the settlement PG&E Shareholders will pay:

• $73.5 million of rate relief in 2018 and 2019 because customers were harmed by PG&E’s conduct.
• $1 million fine to the State of California General Fund.
• $6 million to the City of San Carlos’ general fund for ex parte communications related to a CPUC proceeding regarding pressure reductions on a gas transmission line that affected the safety of San Carlos residents.
• $6 million to the City of San Bruno’s general fund for its role in bringing the ex parte violations to light.

Under the terms of the settlement, PG&E admitted that during the period from 2010 to 2014, PG&E committed multiple violations of the Commission’s Ex Parte Rules through communications that were either prohibited or not reported to the Commission as required and agreed to the following reforms:

• For two years, PG&E will provide notice of “meet and greets,” with Commissioners including tours, to the CPUC's Safety Enforcement Division and ratepayer advocacy groups.
• For three years, PG&E will provide any investment-related information that it shares with decisionmakers, to the CPUC's Safety Enforcement Division and ratepayer advocacy groups.
• PG&E will also provide annual ex parte rules training to certain employees to assure their understanding and appropriate adherence to ex parte communication regulations.

Chronology:

Throughout 2013 – 2015, San Bruno made several Public Records Act (“PRA”) requests to the California Public Utilities Commission (“CPUC”) seeking communications between the CPUC and PG&E about the CPUC investigations against PG&E regarding the 2010 gas pipeline explosion in San Bruno. San Bruno had been informed by various sources that PG&E executives and employees were communicating with CPUC decisionmakers about the investigations. Communications between “interested parties” (PG&E) and “decisionmakers” (CPUC Commissioners and Administrative Law Judges) are prohibited by law and they are considered “ex parte” communications. Ultimately, in order to obtain the public records, San Bruno was forced to file a lawsuit against the CPUC for PRA violations and formally requesting that the CPUC order PG&E to disclose the communications. As a result of San Bruno’s advocacy, the CPUC and PG&E produced over 70,000 pages of public records. The public records confirmed San Bruno’s suspicion that CPUC decisionmakers and PG&E employees participated in improper, pervasive, systematic and continuous illegal ex parte communications from 2010 to 2014 about the San Bruno explosion during the pendency of the CPUC investigations.

In July 2014, San Bruno filed a motion asking the Commission to order PG&E to show cause why it should not be sanctioned for the illegal communications. PG&E opposed the motion and began a review of email communications between it and the Commission over a nearly five-year period beginning in 2010. In September 2014, PG&E disclosed additional ex parte communications in a rate case. The Commission sanctioned PG&E for these communications in November 2014. PG&E also reported additional illegal communications to the parties and the CPUC. On November 10, 2014, San Bruno filed a second Order to Show Cause asking that PG&E be held in violation of the rules for these additional ex parte communications.

Initiation of the San Bruno “ex parte” communications investigation:

On April 9, 2015, the three CPUC investigations into the pipeline explosion in San Bruno culminated in the CPUC penalizing PG&E $1.6 billion and the Commission determining that the ex parte allegations that San Bruno raised in its two motions should be addressed in a separate investigation. On November 23, 2015, the Commission instituted a separate investigation into the ex parte communications. The Commission’s Order identified additional communications at issue. Through a review of the public records, San Bruno discovered numerous additional ex parte communications. Through a lengthy meet and confer process ordered by the Judge, the Parties agreed to add the additional communications (in total 164 communications) and the judge agreed to include the additional communications on July 12, 2016. The settlement recently announced resolves the ex parte investigation subject to approval by the ALJ and the Commission.

Contact: Connie Jackson, City Manager
Phone: (650) 616-7056
Email: CJackson@sanbruno.ca.gov

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Robert Riechel

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Photo Credit: San Bruno CA Patch Archives

Source Credit: City of San Bruno CA

Web Site: https://sanbruno.ca.gov/

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