The Cherry Letter Strikes Again
A federal grand jury is probing potentially illegal ties between Pacific
Gas and
Electric Co. executives and regulators with the California Public Utilities
Commission, The Chronicle has learned.
The investigation is looking into "PG&E’s relationship" with state regulatory
officials, according to a May 15 letter to the utility from federal prosecutors.
The probe is separate from the federal court case charging PG&E with
violating
pipeline safety laws and obstructing justice in connection with the 2010
pipeline explosion in San Bruno that killed eight people. Prosecutors in that
case are seeking more than $1 billion in fines from the company, but have
not
charged individual executives.
The latest grand jury investigation was opened after last year’s disclosure
of
e-mails between PG&E and the state utilities commission, which prompted
probes
by both state and federal prosecutors. Some of the e-mails showed
a PG&E executive lobbying commissioners and their staffs
for a preferred judge to oversee a $1.3 billion rate case. Others indicated that
PG&E thought then-commission President Michael Peevey
was dangling favorable state treatment in exchange for
the utility’s backing for his pet fundraising and political causes.
In the letter disclosing the grand jury investigation, Assistant U.S. Attorneys
Kim Berger and Hallie Hoffman told PG&E’s lawyers that they plan to use some
of
the evidence from the probe in the prosecution of the San Bruno case against
the
company. They did not specify what that might be.
The letter came in response to a PG&E request that federal prosecutors
turn over
San Bruno-related evidence and notes gathered by state regulators with the
utilities commission.
Officials with the U.S. attorney’s office in San Francisco declined to comment
on the letter, and representatives of the utilities commission did not
immediately respond to a request for comment.
A PG&E spokesman, Greg Snapper, said in a statement: "We’ve publicly
reported
that state and federal attorneys have begun investigations in connection
with
these communications. We’re going to keep cooperating with officials as
the
process moves forward."
The state attorney general’s office opened its own investigation last fall.
It
has not filed criminal charges.
As part of the probe,
state agents served search warrants on the commission’s
San Francisco headquarters, at Peevey’s home in Southern California and
at the
Orinda home of a former PG&E vice president, Brian Cherry. It was Cherry
who
sent many of the PG&E e-mails that prompted the state and federal probes.
One focus of the state investigation is
an apparently secret deal that Peevey outlined in
2013 to an executive of the utility he used to head, Southern California
Edison,
regarding costs related to the shutdown of the troubled San Onofre nuclear
power
plant.
Notes that investigators seized from Peevey’s home showed that the deal
included
provisions for directing utility money into research to reduce greenhouse
gas
emissions.
When the final deal had no such funding, Peevey pressured Edison to put
up
money, according to a sworn statement by one company executive. Peevey
separately indicated to officials at UCLA that they could be in line for
a
greenhouse-gas funding windfall, e-mails between them show.
When the utility apparently did not budge, Commissioner Mike Florio — who
joined
Peevey during meetings with Edison — proposed in late 2014 that the commission
set aside greenhouse research money from San Onofre for the University of
California system. The same month Florio proposed that funding, Peevey landed
a
seat on an advisory panel at UCLA’s Luskin Center for Innovation.
Additional e-mails involving back-channel communications between utilities and
the state commission continue to trickle out. The most recent came Thursday,
when PG&E released an e-mail that Cherry sent in March 2014 to PG&E colleagues
recounting a conversation he had with Florio involving a regulatory matter.
Cherry said he had asked Florio whether PG&E should seek to have an
administrative law judge, Steve Roscow, recused from a case, which records
show
concerned PG&E’s efforts to obtain customer money to conduct seismic
studies at
the Diablo Canyon nuclear power plant. Florio was the commission member
assigned
to oversee the matter.
"I spoke with Florio about Roscow," Cherry wrote. "Mike believes there is
no
need to bump Steve if he is the assigned commissioner. He understands Steve’s
bias."
Florio figured in another instance of apparent PG&E judge-shopping,
telling
Cherry in a January 2014 e-mail that he would "do what I can on this end"
to
"bump" a judge PG&E didn’t want on the $1.3 billion rate-setting case.
Florio,
an attorney for a utility customer-advocate group before Gov. Jerry Brown
appointed him to the commission in 2011, later explained that he "didn't know
the rules" against back-channel communications between regulators and utilities
and that he had "screwed up."
Florio did not respond to a phone call seeking comment Thursday about the
latest
e-mail.
Jaxon Van Derbeken is a San Francisco Chronicle staff writer. E-mail:
jvanderbeken@sfchronicle.com
