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Michael Peevey’s tale of turmoil

Michael Peevey at a December meeting of the state Public Utilities Commission. (Photo: Jeff Chiu/Associated Press)

It’s almost impossible these days to see the name Michael Peevey without the word “embattled” attached to it.

Peevey, a former utility executive who enjoyed the backing of three California governors, stepped down last December after serving two six-year terms on the California Public Utilities Commission, almost all of them as PUC president. He has been subjected to withering public criticism up and down the state for fostering a too-cozy relationship between the PUC and the utility firms he was charged with regulating, most recently Pacific Gas & Electric. “Don’t shoot, I surrender,” Peevey wryly told the commission at its December meeting, a comment that drew laughs.

The PUC hit the giant utility with a $1.6 billion fine last week, stemming from the September 2010 explosion of a PG&E natural gas line that killed eight people and leveled dozens of houses in San Bruno.

Connie Jackson, the San Bruno city manager, said the contacts between the PUC and PG&E were evidence of “collusion.”

Peevey’s Southern California home has been searched by investigators from the State Department of Justice, who took thumb drives, day books and computers. The search warrant specified the investigators were looking for improper communications and said their raid was part of a felony investigation. The U. S. attorney’s office in San Francisco is also looking into communications between Peevey and PG&E.

A source of investigation and indignation are 65,000 emails between PUC and PG&E executives following the San Bruno explosion.  The city of San Bruno, which filed requests under the Public Records Act that resulted in the disclosure of the emails and thousands of other PUC documents, last year demanded Peevey’s resignation. Two high-ranking PG&E executives, Brian Cherry and his boss, Thomas Bottorff, have been fired as a result of what was found in the emails.

After analyzing thousands of the emails, Robert McCullough, an energy industry consultant and former manager of Portland General Electric in Oregon, told The Los Angeles Times that Peevey had passed beyond improper contacts with PG&E and in effect was acting as a senior manager of the firm, commenting on and recommending promotions.

McCullough said he was “amazed” at the degree of intimacy between the regulator and the regulated. Connie Jackson, the San Bruno city manager, said the contacts between the PUC and PG&E were evidence of “collusion.”

Among other things, the emails talked of a joint PUC-PG&E effort at “judge shopping” to gain a more sympathetic hearing for PG&E in a rate-setting case. Mark Toney, executive director of the Utility Reform Group, claimed that “backroom deals” between the PUC and PG&E have cost ratepayers millions of dollars because it may have prejudiced legal decisions.

It will be years before the legal ramifications, necessary cultural changes and investigations are resolved.

State Sen. Jerry Hill, whose district includes San Bruno, theorizes that Peevey, coming from the private sector where a CEO’s word is usually law, “did not have the patience, or did not develop the patience,” to deal with the vagaries of the sometimes slower-moving public arena. “He has the arrogance that comes with always getting your way,” Hill said.

“I try not to make it personal — with him it’s always personal,” Hill said. He told of the time in 2013 that he and a group of San Bruno residents were at the PUC, waiting to testify in connection with the explosion, when Peevey came down the aisle and, accidentally or not, knocked Hill down into a seat and kept on walking.

“It was an example of that arrogance, or whatever you want to call it,” Hill said.

The University of California at Berkeley’s Goldman School of Public Policy was to have been the recipient of proceeds from a lavish $250-a-plate testimonial dinner for Peevey, honoring him for “a lifetime of service to the people of California.” Willie Brown emceed the event. The school eventually backed away from taking the money after a storm of criticism erupted because of the Peevey association. Peevey resigned from the school’s advisory board.

It will be years before the legal ramifications, necessary cultural changes and investigations are resolved, even leaving aside the lingering public relations problems PG&E and the PUC face.

It wasn’t always this way.

Peevey was appointed to the PUC by Gov. Gray Davis in March of 2002,  who said Peevey’s “insight on the ever-changing electricity market will be invaluable to the commission as it makes decisions about California’s energy future.” In December of that year, Davis, a Democrat, promoted Peevey to PUC president. Gov. Arnold Schwarzenegger, a Republican who succeeded Davis after a recall election, reappointed Peevey to a second six-year term in December 2008.

Gov. Jerry Brown has been consistent in his support of Peevey, describing him as “a very effective leader” who “tries to do the right thing.”

Before Davis put him on the PUC, he was president of Southern California Edison and Edison International. From 1995 until 2000, he was president of NewEnergy Inc., a company using water currents to generate power. He was a major figure in the energy world and a key player in the state’s march to green energy. San Francisco’s Commonwealth Club honored him in 1997 with its “Distinguished Citizen Award” for his work on behalf of green and sustainable energy.

“Mr. Peevey is committed to maximizing energy efficiency and demand response opportunities and ensuring that California’s environment is protected. He is a strong supporter of renewable energy and renewable procurement requirements for utilities, and is a leader in implementing California’s Solar and Greenhouse Gas Initiatives,” says the PUC’s biography of Peevey.

Gov. Jerry Brown has been consistent in his support of Peevey, describing him as “a very effective leader” who “tries to do the right thing.”

“He gets things done,” Brown told the The Sacramento Bee. “He’s promoted renewable energy in a way that I don’t think anybody else could have.”

Brown has probably conducted his last political campaign, but at the very least, gubernatorial embarrassment could be an eventual fallout from l‘affaire Peevey.

A picture emerges from all this, especially from the emails, of a surpassingly able and dominant public utility executive and leader of renewable energy efforts who, as the top dog in one giant utility company, couldn’t resist the urge to be the top dog in another giant utility company. The documents suggest Peevey is a man who came eventually to regard himself as a comrade-in-arms to the utility companies he was supposed to be regulating.

The calm eye in the center of the storm is Peevey’s wife, State Sen. Carol Liu, a former teacher at the Goldman school who has said almost nothing publicly about the PUC-PG&E convulsion. But in a place as gossipy as the Capitol, it is impossible that she has not become a subject of speculation about her own political future. Now in her second term, Liu, who is termed out, heads the senate committee on education, a job she has long sought. The upheaval apparently hasn’t affected her career so far, although having her home searched can’t be good.

At age 76, what’s ahead for Peevey?

He has become politically radioactive. Reporters, utility executives and state officials are all awaiting the results of the federal and state investigations. There have been no reports so far that Peevey has hired an attorney, and if needed, the PUC may bring on attorneys to defend itself and Peevey’s actions as its head.

It’s uncertain whether the federal and state probes will lead to formal allegations of wrongdoing.

But investigations such as these rarely end with a whimper.

Ed’s Note: Deletes reference in 22nd graph to reelection and corrects to show that Liu is termed out. Chuck McFadden, a veteran journalist and regular contributor to Capitol Weekly, is the author of “Trailblazer: A Biography of Jerry Brown” from the University of California Press.


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