Top California regulator accused of secret dealings with utility to leave post at end of year

SAN FRANCISCO – California’s chief utility regulator, under fire over emails showing secret dealings with the state’s largest utility, said Thursday that he will not seek reappointment when his term ends at the end of the year.

California Public Utilities Commission President Michael Peevey made the announcement after a state lawmaker said he would bring legislation to block Peevey’s reappointment to a third term. Democratic state Sen. Jerry Hill applauded Peevey’s decision, saying it was “more than just a great first step.”

“We can stop fighting and start rebuilding the commission,” he said.

Peevey was under fire in connection with a series of emails describing alleged backroom dealings between him and others at the commission and California’s biggest utility, Pacific Gas & Electric Co.

In emails released by PG&E on Monday, a utility official described Peevey pressing the utility for more than $1 million in campaign donations and other gifts during a dinner in which the two also discussed at least five PG&E regulatory matters before the commission.

The emails were the latest released by the utility and others that show PG&E executives privately hashing out utility-rate cases, financial penalties and other regulation with California Public Utilities Commission officials.

The company has said prosecutors have informed the utility that federal authorities are investigating the legality of five years of back-channel communications between it and the utility commission. The U.S. attorney’s office said it would have no comment.

Officials from the San Francisco suburb of San Bruno — among the sharpest critics of both PG&E and its regulators since a 2010 PG&E gas line blast killed eight people in the city — said the emails showed a cozy relationship between the regulators and PG&E. The company is facing federal criminal charges in connection with the explosion.

Peevey said in a statement only that 12 years as head of the utilities commission was enough.

As recently as August , California Gov. Jerry Brown publicly defended the regulator as a man who “gets things done,” especially on Brown’s priority of promoting renewable energy. Brown has been silent as three separate releases of emails showed Peevey privately negotiating utility fines with PG&E and pressing PG&E executives for donations.

Brown’s spokesman, asked for comment Thursday, repeated the response he’d given earlier about the utilities chief’s fitness to regulate utilities: If Brown has anything to say, “we’ll let you know,” spokesman Jim Evans said in an email.

Brown is headed into a November re-election ballot with a wide lead over his little-known Republican challenger. He had nothing to gain politically from taking public note of a scandal that still was below many voters’ radar, said Jessica Levinson, a Loyola University law professor, political analyst and vice-president of the Los Angeles Ethics Commission.

Brown late last month vetoed ethics bills — regulating campaign donations and gifts — that lawmakers had presented in response to other political scandals.

“I don’t think that he’s running on a pro-reform platform right now,” Levinson noted. With Peevey stepping aside, “Brown’s breezy re-election has just gotten even breezier.”

A watchdog group called The Utility Reform Network said Thursday that Peevey should leave immediately, noting he has more than two months left before his term expires. So did Peevey’s immediate predecessor.

“Why is he voting on anything that benefits the regulated entities that he has shaken down for money?” asked Loretta Lynch, the former utilities commission chief.

Then-Gov. Gray Davis appointed Peevey in December 2002, hoping Peevey’s experience in utilities would help resolve a state energy crisis then causing widespread blackouts. Peevey previously served as president of energy company Edison International and its subsidiary, Southern California Edison. He is married to Democratic state Sen. Carol Liu.

The utilities commission has said it initiated a third-party review of its communications with regulators.

PG&E’s legal counsel has sought to portray the back-channel contacts in the emails as rare events rather than standard practice and stressed that the utility let go the three executives it believed were responsible.

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Sudhin Thanawala and Olga Rodriguez contributed from San Francisco. Juliet A. Williams contributed from Sacramento.