For Immediate Release Jan 12 2015 – Severson Calls On Picker To Reform CPUC

For Immediate Release, January 12, 2015

Utility Fraud Investigators Demand Forensic Investigation Of Michael Picker’s Hard Drives

To view the NEW incriminating e-mails click here

Today, on the heels of an alarming public admission by the new President of the California Public Utilities Commission in the  UT Sand Diego Sunday Edition that Michael Picker may have implemented a policy of e-mail destruction, Utility Fraud Investigator Maria Severson called for full forensic investigation. Severson seeks access to Michael Picker’s computers for e-mails that Picker claims have been erased prior to Friday, October 10, 2014.

Picker’s predecessor, former CPUC President Michael Peevey, announced his resignation 96-days ago on October 9 of 2014 after CPUC was subject to a criminal investigation related to incriminating e-mails between Mr. Peevey and Pacific Gas & Eletric Co. (PG&E), along with fellow Commissioner Michel Florio. The e-mails provoked the Indictment because they vividly document how both Peevey and Florio agreed to participate in what appears to be a judge-fixing scheme.

The e-mails show that both Peevey and Florio colluded with Pacific Gas & Electric Co executives to participate in a judge-fixing scheme that would limit PG&E’s liability in the lethal gas line explosion in the community of San Bruno. The key take-away to the story is that Peevey’s wrongdoing was not limited to PG&E; it appears he was routinely assisting Southern California Edison during the time of the proceedings involving Edison’s failed nuclear plant and the rate-payer funded bailout that ensued.

“What’s troubling,” says Maria Severson, “is that Picker has only been with the Commission for one year prior to becoming President, and he has already destroyed three-fourths of his e-mails. This is conduct unbecoming to the State’s most powerful appointed bureaucrat, and does little to engender the public’s trust. Picker appears to have established a practice of concealment, not transparency and open government at the CPUC. It can only get worse now that he is in charge.”

Investigation exposes more smoking gun e-mails
(see the new e-mails here)

Yesterday’s story in the U~T San Diego shows that Peevey’s cozy relationships with top utility executives extend well beyond the San Bruno scandal to San Onofre. The new e-mails, which were unearthed in Aguirre & Severson’s 23-month probe into fraud at the San Onofre Nuclear hearings show that Peevey, a former Edison lobbyist and employee of the nuke plant’s owner, has an excessively cozy relationship with Edison executives.

The e-mails show Peevey routinely met with top EDISON executives for costly dinners, sporting events and travel to glamorous and dazzling vacation destinations.

“The Peevey e-mails show a persistent pattern of cozy non-public meetings with Southern California Edison executives who thought of him as a ‘dear friend.’ These secret meetings are inappropriate when billions of ratepayer dollars are being negotiated over caviar at five-star restaurants and hotels,” says Severson.

Call for Picker to sign an Ethics Pledge

Severson and partner, former City Attorney Mike Aguirre, want more than a full forensic search for Pickers’ destroyed e-mails. They also want the incoming CPUC President to sign an Ethics Pledge, agree to obey state laws going forward, and to change legally unusual exemptions in the law that shield the CPUC from ethics restrictions to which real judges in real courts of law must comply.

“The idea that a judge would call a litigant in his courtroom up and offer public relations advice, have caviar dinners with them, and travel abroad with them on exotic junkets is absurd. Yet that’s what is happening and is being tolerated at CPUC. It is time for CPUC to comply with the rules that regulate conduct of judicial officers. Without those rules, the public can never expect to see justice,” says Severson.

Nine reasons why CPUC must be reformed

The proposed bailout of Southern California Edison vividly illustrates why the CPUC must submit to an Ethics Code and immediate legal reforms.

1. Southern California Edison charges the highest rates in the contiguous USA.
Edison charges the highest rates in the lower 48, followed closely by SDG&E with the third highest rates. Significant factors in the high rates are the unfair and unlawful charges associated with bailing out and subsidizing the failed nuclear generators at San Onofre. This bailout has been enabled by regulators who suppressed evidence, delayed cost reasonableness hearings, and stymied the media with carefully orchestrated sham hearings designed to delay or prevent reparations to ratepayers.

2. Bailout costs are in the hundreds, even thousands, of dollars per meter.
SDG&E owns 20% interest in San Onofre. As a result, each SDG&E ratepayer has been paying for state guaranteed profits to SDG&E for the failed nuclear reactors. The cost to local businesses is even higher.

3. Customers are paying twice for profits on electricity they only use once.

In addition to paying for state mandated profits to SDG&E and Southern California Edison (Edison), ratepayers must also pay for the costs and profits associated with buying the replacement electricity that San Onofre is not producing.

4. Edison knew that its “jumbo” replacement generators would fail.

Dwight E. Nunn, a top Edison executive, accurately predicted that the new, oversized replacement generators purchased by Edison were defective and likely to fail quickly, yet Edison purchased the oversized equipment with full knowledge of the safety risks and the high potential for failure.

5. Edison deceived the public and regulators with its failed restart plan. Once two of the four generators failed, Edison engaged in a successful and highly deceptive media spin campaign designed to convince the media and the public that San Onofre was still capable of operating at 70% capacity. The truth was that with two generators down, San Onofre was operating at 50% capacity. In addition, the remaining two generators were only capable of operating at less than 2/3 capacity, or 35% of the total generation, yet EDISON touted it as a “70% Restart Plan” in an attempt to fool the public and Federal Regulators. In other words, a truthful name for the plan should have been the “35% restart Plan.”

5. The “Restart Plan” violated regulatory guidelines.

Regulatory guidelines require the steam generators at San Onofre be fully functional for the costs (and shareholder profits) to be passed on to ratepayers. Shareholders have continued to profit at ratepayer expense despite San Onofre’s inability to produce electricity.

6. Public hearings were designed to subsidize Edison’s failure at ratepayer expense.
The agenda of the Phase I “hearings” for 5 days (15 May to 17 May 2013) provides compelling evidence that the so-called “Phase I proceedings” were used to inaccurately portray the CPUC as an effective regulatory watchdog, when in reality, the hearings were created to justify charging ratepayers rates for electricity that has not — and is not — being produced.

7. CPUC violated its own rules by preventing cost “reasonableness hearings.” By manipulating the hearing agenda into three phases, CPUC bureaucrats avoided engaging in legally mandated hearings to evaluate whether or not it was reasonable to continue charging ratepayers for the state guaranteed profits being enjoyed by Edison from generators that failed to produce electricity.

8. Lack of cost reasonableness hearings violates the California Constitution. Forcing utility customers to pay guaranteed profits on failed generators is bad enough. So is making them pay for the electricity the generators were not producing. Even worse, ratepayers were forced to pay for replacement electricity. All of these decisions were made to Edison’s benefit without proper hearings, and in violation of due process, and the California Constitution.

9. CPUC Bureaucrats intentionally suppressed evidence.

Common sense suggests that charging ratepayers for electricity that is not being produced, in addition to profits for the shareholders for the same non-electricity is unfair, yet these hearings have been delayed for years, effectively rewarding and encouraging Edison and SDG&E for their costly and foolish blunders. By permanently delaying hearings into the reasonableness of Edison’s charges and whether or not the San Onofre Nuclear Facility is “used and useful” in favor of an unlawful out-of-court settlement, the Commission is intentionally suppressing evidence.

Reform is required

Now more than ever, the CPUC must begin a process of legal and ethical reforms.

The reforms recommended by the public advocates at Aguirre & Severson can be found on their Web site at

##30##  For more information or to arrange an interview with Maria Severson, contact Charles Langley at (858) 752-4600

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