By Jeff McDonald | 5:37 p.m. Aug. 6, 2015
The third man in the room for a secret meeting in Poland two years ago says in a sworn declaration that the Southern California Edison executive at the hotel actively participated in the undisclosed talks about the failed San Onofre nuclear plant failure.
The meeting helped shape the eventual settlement of $4.7 billion of premature shutdown costs for the plant, a settlement deal that's now in jeopardy as a result of after-the-fact disclosures about its less-than-transparent origins.
Recent revelations about the luxury Hotel Bristol Warsaw meeting have focused on the two top executives who conferred there - Michael Peevey, former president of the California Public Utilities Commission, and Stephen Pickett, a former executive for majority plant owner Edison.
Also present was Edward Randolph, the energy division director at the utilities commission.
Randolph has filed a declaration describing the conversation and apparently contradicting what Edison has said about the meeting for months - that it was essentially a one-way chat initiated by Peevey.
The distinction is critical because parties in an open case are not permitted to initiate substantive communications with regulators unless they disclose the exchanges within three days.
Edison did not disclose the Warsaw meeting until two years later, after The San Diego Union-Tribune reported on the meeting notes being seized by criminal investigators reviewing backchannel dealings between regulators and utility executives.
Randolph, who attended an industry-funded study tour to Poland in 2013 with Peevey and Pickett, signed his sworn declaration in June, stating that Pickett was engaged in detailed and two-way settlement discussions with Peevey.
The statement became public Wednesday as supporting documentation for Administrative Law Judge Melanie Darling, who issued a ruling finding that Edison committed 10 separate violations of the utilities commission's rules on offline meetings regarding San Onofre.
"Mr. Pickett initially stated his opinion of what he thought a settlement agreement would look like in the (San Onofre investigation)," Randolph wrote in describing the Warsaw meeting to Darling. "He emphasized that he had not communicated this vision with his management. After Mr. Pickett presented his vision of a settlement agreement, President Peevey stated that any settlement agreement should include protections for the workers and funding to help offset the increased greenhouse gas emissions created by the need to replace power generated by SONGS."
Edison, the majority owner of SONGS, or the San Onofre Nuclear Generating Station, had no immediate comment on the Randolph declaration.
In a statement addressing the alleged violations, Edison said it was disappointed with the ruling but would comply with Darling's request to show cause before Aug. 20 why the company should not be held in contempt and sanctioned.
"SCE's leadership strives to be conscientious and comply with the commission's rules," President Pedro Pizarro said. "Based on the information we had at the time, we did not believe these communications were reportable. We're disappointed that the ruling reaches a different conclusion."
Edison said in its February belated disclosure of the hotel meeting that new information from Pickett led the company to file a report. It said Peevey was the one who initiated the settlement discussions - not Pickett, who retired in November 2013.
"Based on Mr. Pickett's recounting of the conversation, the substantive communication on a framework for a possible resolution of the (investigation) was made by Mr. Peevey to Mr. Pickett, and not from Mr. Pickett to Mr. Peevey," the filing said.
Edison then reported this: "However, based on further information received from Mr. Pickett last week, while Mr. Pickett does not recall exactly what he communicated to Mr. Peevey, it now appears that he may have crossed into a substantive communication."
Commission rules require substantive conversations to be disclosed publicly so that all parties to a proceeding are aware of the exchange and have an opportunity to contact regulators themselves with alternative viewpoints. The commission calls such meetings "ex parte" or one-sided, and requires they be reported for a full airing of the issues involved.
Edison reported that Pickett took notes at the meeting, although Peevey kept them, apparently the same two pages of deal points seized by agents searching Peevey's home office in January.
Randolph said in his testimony that he attended the entire meeting but does not remember Pickett taking notes. Pickett's declaration states he "obtained a pad of paper from the hotel and began taking notes in an effort to organize President Peevey's comments for my own benefit."
The notes were released in April as part of a public filing. They closely resemble an agreement approved by the commission in November, including tens of millions of dollars set aside to study greenhouse gas emissions and a provision that plant owners share any proceeds of a fight with the steam-generators manufacturer with ratepayers.
Once the settlement was approved, assigning customers $3.3 billion of the $4.7 billion in early closure costs, the commission ended its own investigation into what caused the plant breakdown, saying it was no longer necessary.
Consumer groups, including one party to the settlement, have called for the deal to be reopened or recalculated in the wake of continuing revelations that major portions were sketched out in Poland, far from any public process.
San Diego attorney Michael Aguirre, who has taken legal action to reverse the San Onofre settlement, called the Randolph declaration a game-changer that should prompt the immediate reopening of the settlement negotiations.
"The entire foundation of Edison's defense has been obliterated by Mr. Randolph," he said. "You now have two diametrically opposed positions. Somebody's not telling the truth."
The declaration from Randolph also contradicts Pickett's sworn testimony in April, when Edison released several dozen pages of San Onofre-related documents in response to an earlier order from Darling.
Referring to Peevey, Pickett wrote, "He stated his views on how to resolve some of these issues, including the various areas of costs that would have to be addressed....
"To the best of my recollection, I did not react or respond to President Peevey's comments."
The San Onofre case has become a key part of ongoing criminal investigations of the California Public Utilities Commission, which is charged with maintaining safe and reliable electric service for millions of Californians at a reasonable cost.
Besides searching Peevey's home as part of the criminal probe, agents have executed two search warrants at the commission's San Francisco headquarters and one at Edison's offices in the Rosemead area of Los Angeles County.
The commission is spending more than $5 million in ratepayer funds on defense lawyers who are being paid up to $882 an hour each to respond to various inquiries.
The Darling ruling Wednesday noted Pickett's alleged ex parte violation as well as nine others she said Edison executives appear to have committed in the San Onofre case between March 2013 and June 2014.
Besides Pickett, Darling found some of Edison's most senior executives had broken the rules, including then-president Ronald Litzinger and Ted Craver, CEO and chairman of Edison International, parent company of Southern California Edison.
The judge directed Edison to file paperwork by Aug. 20 explaining why it should not face contempt charges and fines of up to $34 million.