10 Emails That Detail PG&E’s Cozy Relationship With Regulators

Former California Public Utilities Commission Executive Director Paul Clanon (center) sits between San Bruno Mayor Jim Ruane and PG&E President Chris Johns at a September 28, 2010 Senate committee hearing.

Former California Public Utilities Commission Executive Director Paul Clanon (center) sits between San Bruno Mayor Jim Ruane and PG&E President Chris Johns at a September 28, 2010 Senate committee hearing. (Justin Sullivan/Getty Images)

In the years since the September 2010 natural gas pipeline explosion that  killed eight people in San Bruno, the relationship between pipeline operator Pacific Gas and Electric Co. and high-ranking officials at the California Public Utilities Commission has come under intense scrutiny, undermining public trust in the state agency tasked with ensuring safe pipeline operations.

State prosecutors and a federal grand jury are currently zeroing in on alleged improper ties between PG&E and top state regulators. State investigators acting on a search warrant earlier this year seized iPhones, a laptop and bank statements from the residence of former CPUC President Michael Peevey and took similar items from the home of PG&E’s former Vice President of Regulatory Affairs, Brian Cherry, all on suspicion of felony activity relating to a judge-shopping scandal brought to light by email records.

Those exchanges were made public in the wake of civil litigation brought on behalf of San Bruno, when a judge ordered PG&E to release records consisting of some 65,000 emails and 123,000 documents.

KQED has taken a detailed look into this correspondence, which reveals in granular detail the familiar relationships between key decision-makers and PG&E executives that lasted well beyond the San Bruno incident. There are multiple instances of Peevey arranging to meet with Cherry for holiday visits that involved sipping wine — a keyword search of the email records for the words “pinot” or “cabernet,” for example, yielded 16 separate items.

But two of the closest confidants were Cherry and then-CPUC Executive Director Paul Clanon. The collection of documents provided by PG&E shows that between 2010 and 2014,  Cherry and Clanon were on 2,369 of the same email threads using their official email addresses — that’s an average of 11 times a week.

Although some of these emails were sent years ago, an attempt to force a cultural change at the CPUC is only now making its way through the California Legislature. In an attempt to reform CPUC operations, the Senate recently approved SB 660, a bill that would  overhaul decision-making processes and restrict private exchanges.

In an interview with KQED, CPUC President Michael Picker said that the agency read every email released, conducted legal reviews and went through the state personnel process when breaches occurred.

The agency focused on correspondence from about 80 people below the level of commissioner. Some individuals left the CPUC prior to or during the review. The agency determined that action was not warranted against 54 of the people who remained on staff. CPUC spokeswoman Constance Gordon said “individuals whose emails raised more serious issues” —  the agency won’t say how many  — received “counseling memos” or “letters of correction.” The agency also held a staff training in appropriate email decorum in April.

“The challenge is that we are built for a different era, we were built in a time before emails,” Picker said. “Emails tend toward much more casual relationships. That’s a problem because when you start to get at a certain level of casualness, then you can slide into other kinds of ethical breaches.”

Picker said that communications between PG&E staff and CPUC employees are currently banned for procedural cases. However, he said, the two staffs must be able to talk to each other.

“We can’t do our jobs. We can’t guarantee that the electric system, the gas system work properly, we can’t make sure that people are being protected against unsafe infrastructure unless we are always in communication with the utilities. So if we’re not in contact with PG&E that’s as big of a problem and maybe a larger problem then some of the improper comportment,” he said.

PG&E fired Cherry, as well as Senior Vice President of Regulatory Affairs Tom Bottorff and Vice President of Regulatory Proceedings Trina Horner, following the company’s internal investigation into the emails.

PG&E spokesman Nick Stimmel wrote in a statement: “With respect to the email issue, we have produced tens of thousands of emails voluntarily and in response to regulatory and legal requirements and we continue to cooperate with all investigations. In the meantime, we will let the content of the emails speak for themselves; we are not going to speculate about motivations or the actions of people who are no longer in roles with the CPUC or the company or about events that may or may not have occurred.”

Below we highlight 10 email exchanges that demonstrate just how cozy ties between regulators and the regulated have been in day-to-day CPUC operations.

Read the emails

1) “The Control Room Audit” Sept. 14, 2011
2) “Charlie’s Angels” Oct. 18, 2011
3) “Sea Ranch over Thanksgiving” Nov. 24, 2010
4) “How was Jellystone?” Sept. 12, 2010
5) “Any thoughts – non-attributed of course?” Oct. 20, 2010
6) “We live in parallel universes…” January 10, 2011
7) “Investor relations” Sept. 26, 2011
8) “Happy Birthday!” Sept. 16, 2010
9) “Get this info to [Jerry] Brown” January 11, 2011
10) “Prozac might be a solution!” June 4, 2010
Where Are They Now?

1) “The Control Room Audit” — Sept. 14, 2011

In the aftermath of the pipeline rupture that caused the San Bruno explosion, PG&E’s control room management became a focal point for safety improvement.

Natural gas pipelines may traverse thousands of miles. In a control room, pressure and flow across the underground network are monitored remotely. The federal Pipeline and Hazardous Materials Safety Administration moved to amend federal pipeline safety regulations in the months after San Bruno, imposing tougher regulations on control room operations.

But according to an email from PG&E’s Brian Cherry to CPUC’s then-Executive Director Paul Clanon, dated Sept. 14, 2011, the company encountered “some pressing problems” relating to a “control room audit.” Accordingly, Cherry wondered whether Clanon would be willing to “focus elsewhere.”

In this photo from May of 2011, federal Transportation Secretary Ray LaHood tours the site of the PG&E San Bruno pipeline explosion with Congressional Representative Jackie Speier.
In this photo from May of 2011, federal Transportation Secretary Ray LaHood tours the site of the PG&E San Bruno pipeline explosion with Congressional Representative Jackie Speier. (Justin Sullivan/Getty Images)

“Paul – hope you are enjoying yourself in Jellystone but stay away from the wayward bison,” Cherry wrote. “I received a request from Nick [Stavropoulos, PG&E’s executive vice president of gas operations] and Chris [Johns, president of PG&E] … to seek your advice and counsel on the control room audit.

“Nick and Chris know we have problems in this area and would like you to focus elsewhere for the moment so that we can address some pressing problems. … Nick stated that you once offered to help out in any way you could if the Commission was becoming an obstacle to us getting the work done.”

A formal letter sent to Clanon about two weeks later on PG&E stationary shows the company was preparing for a visit from an independent consultant hired by the CPUC to inspect control-room operations. This audit was conducted to ensure compliance with federal rules. So was PG&E granted a delay? CPUC spokeswoman Constance Gordon said she could not comment on Clanon’s email directly, since he no longer works at the CPUC.

Commission President Michael Picker, who replaced Peevey after he stepped down last year, said that he could not comment directly on the contents of the email, either, since he was unfamiliar with the audit. However, he said, “No one’s ever asked me to focus elsewhere. Chances are that would make me want to focus more.”

Reached by phone, Clanon declined to comment.


2) “Charlie’s Angels” — Oct. 18, 2011

On Oct. 18, 2011, PG&E’s Brian Cherry forwarded CPUC President Mike Peevey an email attachment with the note “FYI.” It was a letter from Rep. Jackie Speier to U.S. Department of Transportation Secretary Ray LaHood, urging LaHood to require natural gas operators to remove from their networks a kind of plastic pipe, Aldyl-A, which is prone to cracking. PG&E has 1,231 miles of the pipe in its system.

Roughly six weeks earlier, a Cupertino condominium had been destroyed, in an explosion and fire caused by a gas leak due to a cracked fitting in a plastic Aldyl-A pipe. When it investigated the cause of the blast, PG&E found six other plastic pipe failures near the blast site, records show.

Former California Public Utilities Commission President Michael Peevey and PG&E executive Brian Cherry made dinner plans at the Bernardus Lodge & Spa, shown here, in October of 2011.
Former California Public Utilities Commission President Michael Peevey and PG&E executive Brian Cherry made dinner plans at the Bernardus Lodge & Spa, shown here, in October of 2011. (Courtesy Bernardus Lodge & Spa)

In response to Cherry’s email, Peevey thanked Cherry for the update. Then the CPUC president moved onto another topic.

“See you for dinner Sunday night,” he wrote. “Where and when? Are you bringing Charlie’s Angels too?”

Cherry responded: “7:30 at Marinus in the Bernardus Lodge in the Carmel Valley.
 About 20 minutes or so from Monterey but well worth the drive. We can make it earlier if you wish.”

He added, “Some angels may attend.”

angelstext

“Sunday night” would have marked the start of the annual meeting of the The Conference of California Public Utility Counsel (CCPUC) at the Monterey Plaza Hotel. The nonprofit organization, which describes itself on the web as a “non-profit mutual benefit corporation,” has representatives from PG&E and other utilities on its board of directors. According to the conference agenda, Peevey was scheduled to speak at the conference on Monday, Oct. 24, 2011.

The conference itinerary shows that the evening activity on Sunday, Oct. 23 was a group activity –- attendees would be treated to a “reception and strolling dinner” at the Monterey Bay Aquarium from 7 to 9:30 p.m. But this email thread suggests Peevey and Cherry had other plans. The Bernardus Lodge & Spa is a luxury facility often booked for off-site corporate retreats, according to its website.

While it’s unclear who, or what, the men were referring to when they discussed whether “Charlie’s Angels” would attend, at the very least the detail illustrates close enough ties for them to share a mutual understanding about a coded phrase. Attempts to reach Cherry and Peevey by phone were unsuccessful.


3) “Sea Ranch over Thanksgiving” — Nov. 24, 2010

On Nov. 24, 2010, about six weeks after the San Bruno pipeline explosion, PG&E’s Brian Cherry emailed CPUC President Mike Peevey with some good news — plus an invitation.

“Mike – FYI. Fish and Game letter on Manzana. Very positive,” he wrote. “Also – Sara and I will be in Sea Ranch over Thanksgiving. We’d be happy to have you and Carol [Peevey’s wife, Democratic Sen. Carol Liu] over for drinks or dinner if you are free. I’ve got plenty of great wine to drink.”
“Mike – FYI. Fish and Game letter on Manzana. Very positive,” he wrote. “Also – Sara and I will be in Sea Ranch over Thanksgiving. We’d be happy to have you and Carol [Peevey’s wife, Democratic Sen. Carol Liu] over for drinks or dinner if you are free. I’ve got plenty of great wine to drink.”

Less than an hour later, Peevey responded. “Thanks for the offer but all tied up with family. Next time.”

Records show that while Peevey at that time declined Cherry’s invitation to the Sonoma County vacation spot, he took him up on similar offers on other occasions. The men shared “two bottles of good pinot” over Memorial Day weekend in 2010, for example, while they discussed renewable energy, gas rate increases and a ballot measure campaign.

Meanwhile, “Manzana” refers to PG&E’s proposed Manzana Wind Project in Kern County’s Tehachapi region, a $911 million, 246-megawatt renewable energy project that PG&E proposed in late 2009 and was then before the commission for approval. The California Department of Fish and Wildlife had reviewed the project’s environmental impacts out of concern that the wind turbines could kill endangered California condors.

Earlier that year, Cherry had emailed Peevey with information from PG&E’s investor relations division, citing a report from a Deutsche Bank financial analyst about the Manzana project. “Analysts are tracking Manzana … closely,” that email noted, with bankers considering it one of “the largest upcoming cases for the rest of the year.”

However, the Manzana project never came to fruition. An independent review by the CPUC’s Division of Ratepayer Advocates ultimately found that the wind project would have left customers bearing “significant risk and an unreasonable price tag.” The commission ultimately denied PG&E’s application.


4) “Can you guys help me with this?” — Sept. 12, 2010

Only three days had passed since the fatal San Bruno pipeline explosion. With images of the blaze still fresh in the media, the CPUC issued a press release to outline its planned response.

State and federal investigations were already underway. In an open memo, then-CPUC President Michael Peevey directed then-Executive Director Paul Clanon to compel PG&E to survey its lines for gas leaks. He demanded an inquiry into PG&E’s spending on pipeline safety and promised, “We are taking immediate action.”

But that same afternoon, Peevey emailed Clanon with a different request entirely.

“First thing tomorrow,” he wrote, “See if you can schedule Darbee and Johns in my office at 2 PM Thursday.”

He was referring to PG&E’s then-CEO Peter Darbee and then-President Chris Johns. Clanon immediately forwarded the request to two PG&E executives, including Vice President of Regulatory Affairs Brian Cherry, asking, “Can you guys help me with this?”

Chimneys remain during a massive fire in a residential neighborhood in September 2010 in San Bruno.
Chimneys remain during a massive fire in a residential neighborhood in September 2010 in San Bruno. (Max Whittaker/Getty Images)

Under many circumstances, a meeting between Peevey, a key decision-maker, and PG&E’s top brass about a matter under investigation would be a violation of state regulations designed to ensure fair dealing.

Under state law, contact between decision-makers and interested parties held outside the formal public process are known as ex parte communications. Whether they take the form of face-to-face meetings, texts or emails, these communications are subject to detailed regulations. And when a formal investigation is involved — designated as an “adjudicatory proceeding” since commissioners act in the capacity of a judge — no ex parte contact is allowed.

Nevertheless, CPUC spokesperson Constance Gordon told KQED that this particular meeting did not violate ex parte rules.

“The investigation that began immediately following PG&E’s pipeline rupture was a staff investigation,” Gordon said, “not a formal investigation opened by a vote of the Commissioners,” which came later. “As such, ex parte rules would not apply.”

After the meeting arrangements were made, Clanon switched to a lighter topic: “How was Jellystone?” he asked Cherry, a possible reference to Yellowstone National Park.

“Amazing,” Cherry responded. “Saw so much wildlife. But it snowed the other day and I brought shorts!”

Cherry urged Clanon to plan his own vacation there. Meanwhile not 72 hours had passed since the fatal San Bruno pipeline explosion.

“Things keep coming up at my work,” Clanon responded.

“Uh. Yes,” Cherry shot back. “You have a challenging job. Guess that’s why they pay you the big bucks.”


5) “Any thoughts – non-attributed of course?” — Oct. 20, 2010

Four years worth of emails show that former PG&E executive
Brian Cherry and former CPUC Executive Director Paul Clanon consulted with each other hundreds of times. While the below emails are not illegal, they are good examples of how Cherry and Clanon often bounced ideas off of each other or problem-solved together. On Oct. 20, 2010, Clanon wrote to Cherry:

“What are we going to do about the San Bruno demand that the pipeline be moved? I can certainly understand on the human level why they’d want that, even though it might not make a lot of operational or design sense.”

Cherry responded, “We are struggling with that. There are a couple different re-routes … Between you and me, I think we should repair 132 temporarily while offering up a longer-term solution involving re-routing. … Any thoughts – non-attributed of course ?”

Clanon did have an idea on how PG&E could “frame” moving the pipeline.

“I think the way to frame the pipe-replacement issue is not to think of it as Line 132, but to think of it as, what, two or three miles?”

The next week, then-PG&E President Chris Johns released a statement pledging to move the pipeline.

The section of Line 132 that exploded was not repaired in the end. PG&E rerouted the transmission line so that the gas now flows through Line 109 at San Andreas Station and returns to Line 132 at Healy Station, both in San Bruno.

The CPUC had ordered PG&E to examine shutoff valves. In the same email, Cherry said that the agency had identified more than 200 valves that needed to be replaced. However, he was concerned that there would be a public outcry if he released that number.

“If we tell you the number of valves that have been identified and don’t have these kinds of estimates, everyone will demand immediate replacement – which just can’t be done for a variety of reasons.”

Clanon responded to Cherry: “Yeah, cost and time estimates for the valves are crucial.”

PG&E’s lack of automatic shutoff valves had come under scrutiny by federal officials at the time. National Transportation Safety Board officials found that it took the utility almost 95 minutes to shut off the gas rushing from the ruptured San Bruno pipeline.

Keith Slibasager, PG&E’s gas system operations manager, testified during the NTSB’s public hearing on the San Bruno explosion that the company could have cut the gas within 20 minutes if the utility had installed automatic valves.

A 2006 PG&E memo shows that PG&E considered installing automatic safety valves, but did not. A PG&E senior gas-consulting engineer, Chi-hung Lee Sr., wrote in the memo that he found most of the damage from a pipeline explosion occurs within 30 seconds.

The engineer later testified at the NTSB hearing that his research was limited. The Pipeline and Hazardous Materials Safety Administration and other safety groups had reached different conclusions about shutoff valves. Federal safety officials have suggested, but not required, the use of automatic shutoff valves since 1999. PG&E officials acknowledged at the hearing that after Lee’s memo they made no effort to further install the valves.

Since the San Bruno explosion, PG&E has installed 208 automated valves that the utility can shut off remotely from a control room and 14 automatic shutoff valves that can shut themselves off in areas where transmission pipelines cross major fault lines.


6) “We live in parallel universes…” — Jan. 10, 2011

In 2008, PG&E purposely boosted pressure on the San Bruno natural gas line to 400 pounds per square inch, the maximum legal limit. Normally, the line ran at 375 psi.

The next time the pressure on that gas line exceeded 375 psi was on Sept. 9, 2010, when a malfunction spiked the pressure to 386 psi, coinciding with the deadly explosion in San Bruno killing eight people and destroying 28 homes.

PG&E later said they increased the pressure in 2008 under a mistaken understanding of federal law. The utility believed that to maintain the ability to run gas at 400 psi, the legal limit, they needed to do so once every five years.

A San Francisco Chronicle investigation published on Jan. 9, 2011, revealed that the earlier pressure surge could have weakened the pipeline.

PG&E and CPUC officials referenced the story the next day, Jan. 10. At 9:35 a.m. Paul Clanon, then-executive director of the California Public Utilities Commission, wrote to senior CPUC staff asking about the spike:

“The Chronicle’s story on the 2008 temporary rise in pressure on Line 132 to 400 psi doesn’t match what I’v­­e heard. What are the facts? Is it standard practice or not to raise pressure up to MAOP [maximum allowable operating pressure] to preserve the maximum? Is 2008 really the only time PG&E has raised pressure on that line above 375 until the explosion?”

About 30 minutes later he contacted former PG&E executive Brian Cherry: “What are your guys saying about the facts in the Chron story yesterday? Contradicted my understanding of the rules, anyway.”

Paul Clanon speaks at a September 28, 2010 Senate committee hearing on gas pipeline safety.
Paul Clanon speaks at a September 28, 2010 Senate committee hearing on gas pipeline safety. (Alex Wong/Getty Images)

Two minutes later Cherry shared his confusion: “Not sure. Let me follow up. I was under the same understanding.”

Clanon wrote back at 10:48: “Our guys are doing the same thing, and you and I can triangulate.”

It is not standard practice for utilities to raise pressure on transmission lines, and federal law requires utilities to conduct a costly inspection on any pipeline when the pressure exceeds the maximum limit. PG&E had not conducted such an inspection, nor did Clanon ask if they had in the emails released.

By 4:53 p.m. Cherry and Clanon began to be concerned that neither PG&E nor CPUC staff could come up with an answer about whether such pressure spiking on a gas line was a normal practice. The two sympathized with each other.

Clanon wrote Cherry: “Nothing back yet?” Cherry responded “Nothing yet…” and later “We live in parallel universes.”

About an hour later, Clanon had received research from CPUC staff and wanted to run it by Cherry:

“Here’s what I get from my people. You agree?  Follows:  PG&E raises the pressure in transmission lines to MAOP once every five years based on its conservative interpretation of 192.917(e)(4)…”

The next day, a Chronicle story included a statement from a PG&E spokesperson that was very similar to what Clanon had written. “PG&E initially said it had conducted the pressure test on the San Bruno line to ‘preserve’ the pipe’s legal capacity, saying federal law required it. A spokesman later backtracked and conceded there was no such requirement.”

CPUC spokesperson Constance Gordon says that Clanon and Cherry were discussing each other’s understanding of the rules, so “if PG&E had a different understanding than that of CPUC staff the issue could be further discussed.”

The Utility Reform Network is one of PG&E’s sharpest critics. TURN spokesperson Mindy Spatt said such conversations are concerning.

“Well, it’s a question of whether the commission should be a watchdog or a lapdog. A watchdog would say, wait a minute PG&E what’s going on here? And a lapdog would say, let’s coordinate our message.”


7) “Investor relations” — Sept. 26, 2011

An email exchange between Commissioner Mark Ferron and PG&E’s Brian Cherry shows Ferron sought advice from PG&E on which Wall Street analysts he should meet with privately on a trip to New York.

“Mark,” Cherry wrote to Ferron in a Sept. 26, 2011 email, “Commissioner Florio was over at PG&E the other day and mentioned that you might need some help meeting with the buy and sell side analysts in New York. If you are interested, Gabe Togneri, our VP of Investor Relations, would be happy to reach out to some of them and have them sponsor a meeting. Our only role would be to make the contact. The analysts would sponsor the meetings themselves and you would meet with them privately.”

Ferron responded: “[PG&E CEO] Tony Earley … highlighted Dan Ford at Barclays Capital as a thought leader worthwhile meeting if I can find the time. Who else might Gabe recommend?”

While there’s no record here of Ferron discussing the proposed San Bruno penalty with Ford, the Barclays analyst was clearly focused on that question.

In September 2012, Ford authored a report noting that PG&E would have difficulty raising $2.2 billion in equity to cover the expected San Bruno fine amount. (The actual penalty amount, finally determined on April 9 this year, was set at $1.6 billion.)

And in a report authored by Ferron, made public in October 2013, the commissioner related investors’ concerns that levying too large  a fine against PG&E would cause them to view California as a “capital-unfriendly, ‘banana republic.’” That could lead to an increase in the cost of financing capital for utilities, warned Ferron, who had worked at Deutsche Bank prior to being appointed as a commissioner in March 2011.

Ferron stepped down as a commissioner in 2014, citing health problems. CPUC spokesperson Constance Gordon said she was unable to offer comment on emails sent by individuals who no longer worked at the commission. Attempts to reach Ferron were unsuccessful.

The question as to whether commissioners had inappropriate ex parte communications with Wall Street analysts was raised in a brief filed by the CPUC’s Division of Ratepayer Advocates. (Since renamed Office of Ratepayer Advocates).

“Some, if not all, of the financial industry representatives who reported discussing the San Bruno investigations with Commission offices represent firms or clients with a financial interest in PG&E Corporation,” the CPUC’s consumer advocacy branch pointed out. “The size of the fine and other penalties the Commission may impose in the San Bruno Investigations is a substantive issue in all three [CPUC] investigations.”


8) “Happy Birthday!” — Sept. 16, 2010

It was 7 a.m. on Sept. 16, 2010, one week after the San Bruno pipeline explosion. CPUC executive director Paul Clanon emailed PG&E’s Brian Cherry with a simple message in the subject line: “Happy Birthday!”

“Thanks,” Cherry replied. He shared his birthday wish. “I’d love a nice muzzle for Mark Toney.”

Mark Toney is executive director of The Utility Reform Network (TURN), a leading critic of PG&E.

Mark Toney, executive director of consumer advocacy group The Utility Reform Network, was the target of an unkind remark in an email from a PG&E executive to the regulatory agency director.
Mark Toney, executive director of consumer advocacy group The Utility Reform Network, was the target of an unkind remark in an email from a PG&E executive to the regulatory agency director. (Courtesy The Utility Reform Network)

As for why Cherry would have wanted a “muzzle” for Toney, TURN spokesperson Mindy Spatt told KQED that Toney had issued a public statement about customer safety just before this exchange took place.

“He was saying: Demand that PG&E put customer safety first – that is the message that PG&E wanted muzzled, a message that said ‘no more San Brunos,’” Spatt said.

On Sept. 15, Cherry had emailed Clanon to tell him then-PG&E CEO Peter Darbee believed “TURN’s behavior has bordered on the irresponsible.” He wondered whether the CPUC would be willing to make a statement publicly discounting TURN’s claims. While it’s not clear from the emails how Clanon reacted to this request, his email reply to Cherry was: “Call me when you can.”

“It was actually six days after the fatal San Bruno explosion that Brian Cherry referred to TURN’s behavior as irresponsible,” Spatt said when asked about this. “His company has just killed eight people and incinerated an entire neighborhood.”


9) “Get this info to Brown” — Jan. 11, 2011

While it’s obvious why a major utility company would be concerned that its stock had been downgraded, it’s not as clear why a commissioner would care. Upon learning about a financial downgrade, then-CPUC president Michael Peevey recommended that PG&E find a way to indirectly alert Gov. Jerry Brown, who was then in the process of determining new commission appointments.

The email thread begins Jan. 11, 2011, when PG&E’s Brian Cherry forwarded Peevey a message from PG&E’s investor relations division about a financial analyst’s report.

“Citigroup downgraded … PG&E,” the email explained. The note showed that analysts feared “uncertainty and potential shifting dynamics in the regulatory arena.”

In response, Peevey wrote in an email to Cherry: “You should find a way to get this info to Brown as he makes his decisions on Commissioners ASAP. Probably best coming from a non-utility source, such as investment banker(s).”

When asked why Peevey would provide this advice, CPUC spokesperson Constance Gordon responded, “The questions you’ve asked involve individuals who are no longer with the CPUC, so we cannot ask them your questions.”


10. “Prozac might be a solution!” — June 4, 2010

PG&E officials had no idea what they were getting into when the utility began installing smart meters in California in 2006. Smart meters are a critical component of the “smart grid” —  the devices track energy usage and transmit data back to customers and utilities, with the goal of reducing electricity consumption and distributing power more efficiently across the electric grid.

Smart meters faced an almost immediate backlash. Users first complained that the devices gave artificially high readings. Later the CPUC found that about 1,480 meters inaccurately recorded electricity consumption in ambient temperatures ranging from 100– 115 degrees Fahrenheit due to a defective chip. Nevertheless, a study conducted by an independent consultant, The Structure Group, determined that the meters generally functioned as intended.

Next, consumer advocacy groups, including TURN, raised concerns that the meters would harm people like seniors who sometimes have no choice but to run their air conditioners in the sweltering Central Valley. TURN also noted that with smart meters, PG&E could simply turn off people’s power if they couldn’t keep up with the bills. Privacy advocates expressed concern about utilities gaining access to information about their use of personal home appliances.

A sign from a smart meter protest in 2010.
A sign from a smart meter protest in 2010. (Amy Standen/KQED)

The biggest battle over smart meters, though, centered on electromagnetic fields (EMFs) emitted by smart meters. The possible health effects of EMFs have been a subject of debate since the Cold War, and fear has intensified in the wireless age with the introduction of countless devices that emit EMFs, such as cellphones, laptops and Wi-Fi routers.

The National Institutes of Health’s National Cancer Institute says that “several early epidemiologic studies raised the possibility of an association between certain cancers, especially childhood cancers, and ELF-EMFs. Most subsequent studies have not shown such an association.”

Unlike high-energy radiation emitted from devices like X-rays, low-energy emissions from devices like smart meters cannot damage DNA or cells directly, the NIH writes. The World Health Organization concluded that low-energy emissions cause “no substantive health issues.” Smart-meter emissions are 60 times lower than the federal health guidelines.

EMF activists remain concerned, however, about the accumulated exposure people face from being surrounded by so many low-emission devices. And they’ve flooded the CPUC and PG&E with complaints.

By June 4, 2010, Carol Brown, then-CPUC President Michael Peevey’s chief-of-staff, wanted an answer for the people contacting her about EMFs. She wrote to then-PG&E executive Brian Cherry: “So far I have done OK just listening to the sad tales of EMF poisoning – and telling them thank you for bringing it to our attention – but then not offering them any solution!!! I just wanted to have a resource in case! Have a nice weekend.”

Cherry responded: “Prozac might be a solution!”

In the meantime, cities, including San Francisco, began petitioning the CPUC to make smart meters optional.

Peevey recommended to Cherry in an email in September 2010 that PG&E consider making the meters optional:

“One thought for the company: If it were my decision I would let anyone who wants to keep their old meter keep it, if they claim they suffer from EMF and/or related electronic-related illnesses and they can produce a doctor’s letter saying so (or expressing concern about the likelihood of suffering same). I would institute such a policy quietly and solely on an individual basis. There really are people who feel pain, etc., related to EMF, etc., and rather than have them becoming hysterical, etc., I would quietly leave them alone. Kick it around. And, it sounds like the company may already have taken this step, based on a couple of the comments at yesterday’s public hearing.”

Cherry said that he would consider it: “I do worry that this policy, no matter how discrete (sic) we try to make it, will surface and town councils and cities in our territory will ask for similar treatment. That said, we will take the matter up and get back to you with our feedback.”

In March 2011, PG&E proposed allowing smart meter users to opt out. The CPUC approved that plan in February 2012. Customers who opt out of the program must pay an initial fee and monthly charge.


Where Are They Now?

Brian Cherry, PG&E’s vice president of regulatory affairs, was fired from PG&E in September of 2014, after inappropriate email exchanges came to light.

Thomas Bottorff, PG&E’s senior vice president of regulatory affairs and Cherry’s boss, was fired along with Cherry. According to a San Jose Mercury News article he was to receive a severance payment totaling more than $1 million.

Chris Johns, president of PG&E, announced several weeks ago that he would retire by the end of the year.

Michael Peevey, president of the California Public Utilities Commission, stepped down from his role after his term came to an end in December of 2014. Peevey came under fire for inappropriate email exchanges.

Paul Clanon, executive director of the California Public Utilities Commission, announced at the end of December that he would retire to study music.

Mark Ferron, former commissioner at the California Public Utilities Commission, resigned in December of 2014 due to health problems.

Carol Brown, former commission president Peevey’s chief of staff, stepped down in the wake of revelations that she had agreed to intervene on a judge appointment for a case involving PG&E. Despite news reports that she might return to the agency as an administrative law judge, a CPUC spokesperson confirmed to KQED that Brown has retired.

Michael Florio, who was also entangled in the judge-shopping scandal, remains as a commissioner at the California Public Utilities Commission.

10 Emails That Detail PG&E’s Cozy Relationship With Regulators 19 June,2015Rebecca Bowe

Author

Lisa Pickoff-White

Lisa Pickoff-White is KQED's data reporter. Lisa specializes in simplifying complex topics and bringing them to life through compelling visuals, including photography and data visualizations. She previously has worked at the Center for Investigative Reporting and other national outlets. Her work has been honored with awards from the Online News Association, Investigative Reporters and Editors, the Society of Professional Journalists and SXSW Interactive.  Follow: @pickoffwhite Email: lpickoffwhite@kqed.org

Author

Rebecca Bowe

Rebecca Bowe is a journalist based in San Francisco. She's covered Bay Area news since 2009, and previously served as News Editor of the San Francisco Bay Guardian. Follow her on Twitter @ByRebeccaBowe.

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