Negotiations with PG&E over San Bruno Explosion

story first appeared on mercurynews.com

SAN FRANCISCO -- Recent moves by state regulators to bargain with PG&E over its fine for the San Bruno gas explosion have been riddled with backroom dealing and could lead to the utility paying a lighter penalty, watchdogs said Wednesday.

Speaking on the steps of the California Public Utilities Commission, some participants in the regulatory case against PG&E, including San Bruno city officials and The Utility Reform Network, told reporters they have been shut out of recent, major decisions.

One of the most troubling, they said, was the involvement of the PUC's top attorney -- a former PG&E lawyer -- in the commission's move to suspend public regulatory hearings about the explosion. Another was the decision, apparently made by PG&E and state regulators, to appoint former Sen. George Mitchell and his law firm to mediate negotiations with the utility over its fine. San Bruno and TURN were among those who filed a letter with PUC President Michael Peevey on Tuesday opposing that choice.

Regulators say several company failures, including shoddy record keeping, led to the explosion that killed eight people and destroyed 38 homes. The utility said it expects a fine of at least $200 million, though a recent report said PG&E's parent company could absorb a $2.5 billion hit.

PG&E said it's goal has always been a fair and quick resolution for all parties involved.

A PUC spokeswoman didn't immediately respond to an email seeking comment, but Peevey said last week the controversy has been fueled by misunderstanding.

The outrage expressed Tuesday finds its roots in a confrontation two weeks ago. Officials from San Bruno, San Francisco, TURN, the PUC's divisions of Ratepayer Advocates and Consumer Protection and Safety, all of which are legally part of the proceedings against PG&E, were meeting Oct. 5 on the case, DRA interim Chief Counsel Karen Paull said.

PUC's lead attorney Frank Lindh, who used to represent PG&E, arrived and told the parties to agree to a motion seeking to suspend a scheduled public regulatory hearing on the blast.

With just two weeks of testimony left in the hearings, which would help determine the utility's fine for the blast, most of the parties refused to back the suspension, Paull said. Ultimately only the Consumer Protection and Safety and PG&E advocated the suspension, which was granted.

Lindh did not immediately respond to a call seeking comment.

Watchdogs were also outraged by the "backroom" decision to hire former Sen. George Mitchell and his law firm DLA Piper to handle penalty negotiations between PG&E and regulators.

The parties, except PG&E and PUC, said they only learned of the choice when the commission sent out a news release Monday.

PG&E apparently knew about the choice at least since last week, TURN Legal Director Thomas Long said. He said Mitchell's firm, which will be paid by PG&E, could favor the utility. Piper has already worked for numerous corporate clients, including Southern California Edison, which Peevey used to run.

Also, it's doubtful the mediation attorneys would be specialists in the arcane world of California natural gas regulations.