Judge-shopping costs PG&E $1 million

The California Public Utilities Commission at a meeting in San Francisco Thursday imposed a $1.05 million fine as well as an additional potentially multimillion penalty on PG&E Co. for illegal judge-shopping in a rate case.

The decision authored by Commissioner Carla Peterman said PG&E “severely harmed the integrity of the regulatory process” by sending private emails to two commissioners and a top staff member that sought to influence the selection of an administrative law judge.

In addition to the fine, the decision requires PG&E shareholders to absorb the cost of rate impacts to customers of a five-month delay caused by investigation of the judge-shopping in a case concerning the rates to cover the costs of natural gas transmission and storage.

CPUC spokeswoman Terrie Prosper said that amount could be up to $400 million. The amount will be determined by the commission in a later decision after the rate-setting case is concluded next year.

Commission rules prohibit utilities from sending private, or ex parte, messages to the commission concerning the selection of administrative law judges.

The back-channel messages were sent by since-fired PG&E vice president for regulatory relations Brian Cherry in January to Commissioners Michael Peevey and Michel Florio and to Peevey’s former chief of staff, Carol Brown. When the messages were revealed on Sept. 15, PG&E fired Cherry and two other executives.

Brown was removed as Peevey’s top aide but remained employed by the CPUC. In one message, Cherry referred to a prospective judge and told Peevey, “This is a problem. I hope Carol can fix it.” In another, he complained to Brown that a different prospective judge “screwed us royally” in a previous case.

The fine includes $50,000 for each of 20 violations of the rule barring communications about judge selection, plus $50,000 for the violation of another rule requiring parties to show respect to judges.

The decision also bars PG&E from sending any individual communications to commissioners and their advisors on any aspect of rate-setting proceedings for at least a year.

Only three of the commission’s five members — Peterman, Catherine Sandoval and Michael Picker — ruled on the sanction. Both Peevey and Florio have recused themselves from acting on the sanction or on the underlying gas storage and transmission rate case.

The proceeding considered only sanctions against PG&E. The commission rules prohibit messages from utilities to the commission about judge selection, but say nothing about communications in the other direction. PG&E had no immediate comment on the commission’s action.

The utility had previously acknowledged the emails were improper, but contended it acted swiftly and decisively after discovering the messages.