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PG&E may benefit from CPUC’s political power play

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POSTED October 19, 2012 12:51 a.m.

Mediators - by definition - are supposed to be neutral disinterested third parties to a conflict they are being asked to resolve.

That’s why as a PG&E consumer you should be very leery of former U.S. Senator George Mitchell from Kentucky. He’s the man handpicked by former Southern California Edison head honcho Michael Peevey to “negotiate” a fine for his former colleagues in the California electrical industry over at PG&E for their culpability in leveling a neighborhood and killing eight people.

Mitchell once earned his paycheck as chairman of the law firm that represents Sothern California Edison

Peevey is now head of the California Public Utilities Commission. The CPUC in reality is just as culpable as PG&E for the fatal failure to make natural gas pipeline safety a real priority. It is the CPUC that is supposed to regulate PG&E et al to make sure that consumers are treated fairly and their safety isn’t jeopardized. At best, they are nothing but a reactive agency forced into action because of the legitimate outrage over what they - along with PG&E - allowed to happen in San Bruno.

So who does Peevey want to mediate settlement negotiations? He essentially handpicked a lawyer from a law firm that had his back when he was running Southern California Edison.

Making matters even worse is the fact Peevey didn’t bother to inform the CPUC’s own consumer advocacy branch known as the Division of Ratepayer Advocates about Mitchell’s appointment until days after it happened. Guess who was told right upfront? You guessed it, PG&E. It wasn’t for several days later that the advocates for ratepayers - the CPUC’s Division of Ratepayer Advocates and attorneys for the city of San Bruno and San Francisco - were informed.

So why not let an administrative law judge selected for the job under California law that takes great pains to make sure they are neutral handle the case?

Well, Peevey said he believes holding closed-door negotiations could bring the matter to a quicker end.

A friend who is essentially a former contracted lawyer of the CPUC chairman is going to mediate fines behind closed doors with PG&E and consumer advocates that are essentially commission employees.

If that doesn’t leave any doubt that PG&E is Southern Pacific circa 1910 reincarnated, nothing else will. It was the infamous “octopus” chokehold Southern Pacific had on the economy and politicians in California that prompted reform minded Gov. Hiram Johnson - with the help of an incensed public - to push through establishment of the California Railroad Commission. That commission was the predecessor to the CPUC with the mission to protect ratepayers.

So what kind of fines will Mitchell help negotiate? The CPUC staff - after combing through laws regulating penalties duly established through the elected representatives of the people of California regarding pipeline safety noted the maximum that PG&E could be fined was $220 billion. You read that right. The maximum fine as determined under California statutes is $220 billion.

Staff, trying to be reasonable, advocated a $2.2 billion fine.

Any bets that Mitchell will deliver a much smaller fine?

Apparently Peevey knows a fellow power company lapdog when he sees one.





This column is the opinion of managing editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA.  He can be contacted at dwyatt@mantecabulletin.com or 209-249-3519.

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