Michael Peevey - Poland

The Hotel Bristol Warsaw, where state regulators met with a Southern California Edison executive to discuss San Onofre. (Publicity image)

Jeff McDonald
September 22, 2016

State utility regulators, already under criminal investigation for their ties to monopolies they oversee, should ban gifts and travel from energy companies and trade groups to avoid the appearance of improper relationships, a state audit released Thursday said.

The 64-page report issued by California State Auditor Elaine Howle said the California Public Utilities Commission should increase transparency and accountability, and found that its contracting practices do not comply with state requirements or the highest industry standards.

Howle called on state lawmakers to pass legislation to improve operations at the regulatory agency, something several legislators have sought for years.

“The CPUC has not effectively guarded against the appearance of improper influence in its public decision-making,” the audit said. “The CPUC has failed to fully disclose important communications between commissioners and external parties.”

Auditors singled out an undisclosed meeting in Warsaw where former commission President Michael Peevey and a Southern California Edison executive discussed the 2012 failure of the San Onofre nuclear plant north of Oceanside. They sketched out a framework for a deal that assigned ratepayers $3.3 billion of the $4.7 billion in premature closure costs — a ratio that is now being re-examined.

“The former president of the CPUC engaged in private discussions that were not disclosed in a timely manner and that have cast doubt on a key CPUC decision,” auditors wrote. “These occurrences demonstrate a need for changes in the way such conversations are disclosed to the public.”

The audit criticized other overseas travel by regulators at the expense of groups run by utility and telecommunications interests.

Including the 2013 trip to Poland, where Peevey and an Edison executive met at the luxury Hotel Bristol Warsaw, auditors counted 19 international tours by seven commissioners between 2010 and 2015. The report included a world map showing the experiences of the regulators, including trips to Australia, China, Japan, Sweden, Belgium and Italy.

The costs, often picked up by nonprofits such as the utility-dominated California Foundation on the Environment and the Economy, totaled more than $150,000. The foundation says its tours are instructive for policymakers and allow for a casual exchange of ideas with industry leaders; auditors said they should be banned.

“To help restore its image as a trustworthy, unbiased regulatory agency, the CPUC would benefit from establishing a prohibition against accepting travel, meals or other gifts from individuals or entities that have a strong or direct connection to the utilities it regulates,” the report said.

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