Background On The $34 Million In Socal Edison Fines Proposed By CPUC
FOR IMMEDIATE RELEASE, August 6, 2015
For background or to arrange an exclusive interview, contact Charles Langley 858-752-4600
Follow the blood trail at #SanOnofreGate
Stonewalling Continues At CPUC
Today, Public Advocates called on Governor Jerry Brown to make a public statement on his plans to reform California’s corrupt Public Utilities Commission, and to reverse the secretly negotiated ratepayer funded bailout of the failed nuclear generators at Southern California Edison’s San Onofre facility.
As Governor, Brown is responsible for all appointments to the Commission, which is currently under two separate criminal investigations.
Background:
Yesterday, August 5th, 2015, the California Public Utilities Commission (CPUC) issued what appears to be a “get tough” demand to Southern California Edison to explain why it should not be fined $34 million for perjury (Rule 1 violations) and for holding secret “ex parte” meetings with top Commission officials in hearings that swindled ratepayers into paying for a multi-billion dollar bailout of the failed nuclear facility at San Onofre.
Judicial Wrist-Slap
Yesterday’s order for sanctions is little more than a half-hearted wrist-slap for Southern California Edison. It fails to address the issue of what happens to CPUC staff who participated in unlawful activities, and fails to address the fact that the CPUC participated and actively paved the way for an unlawful out-of-court settlement that is costing an estimated $1,600 per electric meter for SCE and ADG&E customers.
Proposed fines of $34 million for perjury violations
This proposed fine is about 1% of the $3.3 Billion dollars SCE will receive in guaranteed profits as the result of CPUC’s active participation in setting the stage for an out-of-court settlement that forced ratepayers to involuntarily pay for SCE’s mistakes without public hearings If hearings had been convened, the record would show that SCE was 100% at fault for the failed nuclear generators at San Onofre.
Why the document is more CPUC “Stonewalling”
The new CPUC ruling sounds tough, but it conceals CPUC and SCE’s conspiracy to defraud California ratepayers. The evidence suggests that CPUC’s the Administrative Law Judge and the presiding Commissioner, Mike Florio were intimately involved in a cover up of potential criminal activities in collusion with Southern California Edison (SCE).
Yesterday’s ruling leaves out the fact that on December 4, 2012, the Administrative Law Judge for San Onofre called a top executive at Southern California to discuss “phases” of the investigation into whether or not ratepayers or SCE should foot the bill for the failed nuclear plant (see story in San Diego Union Tribune). The unreported phone call, (a secret “ex-parte” meeting) was documented in the following e-mail uneartheed in the Aguirre & Severson investigation into fraud and corruption at CPUC:
This e-mail shows that on December 5, a CPUC Administrative Law Judge conspired with SCE to conduct a three-phased hearing. Because of the “phased” hearing schedule, SCE’s wrongdoing was never investigated.
Why that email is a smoking gun
As a result of the secret unreported phone meeting with SCE executive Russell Worden, the investigation into the failure of the nuclear generators at San Onofre was stonewalled by breaking the public hearings into three separate “phases.” The last and final hearing (Phase III) would be to determine if SCE was at fault for installing an unlicensed souped-up nuclear generator at San Onofre. The record shows that the new generators were not tested, reviewed, or approved by the Nuclear Regulatory Commission, and were therefore unlicensed. Meanwhile the first phase of the investigation would be to determine how much money the ratepayers should pay SCE.
In effect, the Three-Phase hearing schedule put the cart before the horse. If SCE was at fault for its reckless behavior, then why should ratepayers pay anything? Especially for a generators that was supposed to last 40 years.
The Plan: “Kill Hearings at any Cost”
The Three-phased investigation was designed to stonewall fraud investigators. It was the intent of the Commission to make certain that the public and our political leaders will never know about SCE’s reckless behavior. But in order to prevent a full investigation, SCE and the CPUC needed the cooperation of consumer advocates such as TURN, The Utility Reform Network to secretly broker an out-of-court settlement that would prevent hearings into whether or not it was Okay for SCE to install a defective, unsafe, and unlicensed nuclear generator. In addition, CPUC had to obscure the fact that it was no longer protecting the public, and was unfairly charging the ratepayers for the profits the generators might have earned if they had not failed in the first year of their alleged 40-year lifespan.
However, in order to complete the plan, CPUC needed the cooperation of Attorney Matt Freedman at TURN, The Utility Reform Network. And to do so, it relied on a former TURN employee, CPUC Commissioner Michel “Mike” Florio, to complete the plan.
Florio is the Commissioner appointed by Governor Jerry Brown to preside over the San Onofre hearings.
Commissioner Florio’s successful efforts to kill hearings
A key component of the cover up on behalf of SCE by top CPUC official is revealed on page 30 of yesterday’s ruling by the Administrative Law Judge. It documents how SCE convened a meeting with Mike Florio’s advisor to encourage a secretly negotiated out-of-court settlement (highlighter emphasis added):
“ Similarly, communications SCE identified as “notice” of its decision to
permanently shut down SONGS on June 7, 2013 relayed an objective fact that SCE would permanently shut down as it could not operate without the NRC authorization to do so.51 A4NR points to SCE’s disclosure that when Mr. Hoover notified Commissioner Florio’s Chief of Staff, she urged SCE to “move quickly to address cost recovery and other shutdown issues,” discussed how to engage others parties (e.g. Alternative Dispute resolution, initiate settlement talks), and that “we agreed that it would be best if SCE got out in front…to put a process in place that would result in resolution….”
The secretly negotiated out-of-court settlement
As a result of that conversation, TURN was enlisted to broker a secretly negotiated out-of-court settlement. The final agreement, which was ratified on 14 May, 2014, deceptively touted a $3.3 Billion ratepayer funded increase as a “refund” to SCE and SDG&E ratepayers.
The truth was that there would be zero dollars awarded as a refund, yet Commissioner Florio, and CPUC president Michael Peevey both issued press releases touting the non-existent refund.
These deceptive official refund announcements were also echoed by TURN iin a media blitzkreig designed to conceal the reality of the rate increase: consumers are being forced to pay an average of $1,600 per meter for the failure at San Onofre.
Litzinger’s perjury
On May 14, 2014, the full Commission held a public hearing to ratify the proposed bailout, which killed the investigation into whether or not SCE was at fault. The hearing was designed to prevent any investigation onto SCE’s involvement and attorneys trying to expose the fraud were given less than 90 minutes to make their case.
During the hearing, SCE president Ron Litzinger, perjured himself when asked by ratepayer attorney Michael Aguirre. Section 6.3 (page 44) of the ruling documents the perjury:
“A4NR alleges that Mr. Litzinger testified falsely at the May 14, 2014 hearing on the proposed settlement. In particular, he was asked under oath whether “SCE was having ex parte meetings with the Commissioners” while settlement talks were underway. Mr. Litzinger responded, “The only ex parte communications I had with Commissioners was following the Phase 1 Proposed Decision.”
The truth was that less than two hours earlier on May 14, Litzinger had met secretly with Commissioner Mike Florio and Commission President Michael Peevey to discuss the out-of-court settlement. Curiously, the CPUC ruling omits this critical act of perjury in the list of ten violations found on page 37.
Peevey’s mental breakdown and Darling’s obstruction
During the three-hour May 14, 2014 hearing to approve the illicit settlement, Judge Darling actively interfered and obstructed attempts by attorney Mike Aguirre to expose Litzinger’s perjury on the stand (click here for an annotated transcript or visit http://ow.ly/QA2Xf ).
It was during this hearing that Peevey became enraged at Aguirre’s questioning, shouting Shut up Goddammit, I don’t have to answer your questions!” (see minute 54 of video for Peevey’s mental breakdown, or visit http://ow.ly/QA3uo ).
The evidence now shows that CPUC’s then-president, Michael Peevey, was enraged because Peevey had met secretly in a hotel room in Warsaw Poland one-year earlier to craft the settlement that was being approved. During this hearing Judge Darling made heroic efforts on SCE’s behalf to obstruct Mr. Aguirre’s efforts to expose a conspiracy to defraud ratepayers.
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Video of the Administrative Law Judge’s efforts to obstruct justice. |
The cover up
Yesterday’s ruling is designed to inoculate CPUC from accusations that its Administrative Law Judge helped engaged in a cover up of the wrongdoing at San Onofre with Commissioner Florio, TURN, and former Commission president Michael Peevey.
It conveniently leaves out fines associated with Litzinger’s perjury during the May 14, 2014 hearing on video above where Litzinger lied, neglecting to mention that he had just engaged in a secret ex-parte meeting with Peevey and Florio prior to stating that he had not attended any secret settlement meetings with CPUC.
Moreover, the CPUC is relying on a paper-thin technical argument that its recommendations to SCE to break the hearings into three phases to prevent an investigation of wrongdoing by SCE were “procedural” in nature, and therefore not subject to investigation.
Summary:
CPUC has obstructed justice . Yesterday’s ruling is a thinly veiled effort to expunge the Administrative Law Judge who authored the ruling of complicity in a conspiracy to defraud California ratepayers. The CPUC’s Administrative Law Judge actively helped SCE, TURN, Commissioner Florio, and Michael Peevey engage in a cover up of wrongdoing at San Onofre by Southern California Edison. The judge enabled the cover up by holding secret ex-parte meetings with SCE that excluded the opposition. In these meetings the judge instructed SCE to endorse a three-phased hearing schedule to stonewall any investigation into SCE’s negligence. The fraud was consummated when CPUC brokered and endorsed the out-of-court settlement in press releases that claimed fraudulently that the settlement would deliver a “refund” to ratepayers, when the actual cost of the settlement is estimated at $1,600 per meter for the typical SCE and SDG&E customer (for an analysis of per meter costs by KPBS, clicking here, or going to http://ow.ly/QA7hN ).
What ratepayers can do:
Commissioners are appointed by the Governor. Ratepayers are urged to call Governor Jerry Brown and demand a rehearing and an independent investigation onto the corruption of his appointed officials at the California Public Utilities Commission.
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