San Bruno, Ratepayer Advocates Challenge California Public Utilities Commission, PG&E: Demand CPUC Rescind Appointment of Sen. George Mitchell in Blockbuster PG&E Announcement

A blistering attack by the City of San Bruno, ratepayer advocates and Assemblyman Jerry Hill called into question the California Public Utility’s appointment of Sen. George Mitchell and his law firm DLA Piper as mediators in the PG&E explosion and fire settlement.

Mayor Jim Ruane of San Bruno, Thomas J. Long, Legal Director of consumer advocacy group The Utility Reform Network (TURN), and Karen Paull, Acting Legal Counsel, The Division of Ratepayer Advocates (DRA) all stood in front of the CPUC this morning and lambasted the “unholy and cozy alliance” between regulator CPUC and the regulated Pacific Gas & Electric Co.

The City of San Bruno and consumer advocates signed a letter demanding the CPUC rescind the appointment of Sen. Mitchell immediately because the CPUC  went behind their backs in appointing the mediator to oversee the talks and presented evidence that CPUC and PG&E had ex-parte contact in making the decision. The groups objected to the choice of mediator and said they should have been consulted before regulator CPUC appointed the mediator.

The California Public Utilities Commission had announced Monday that it had appointed former U.S. Senator George Mitchell to serve as mediator in the talks.

San Bruno City Manager Connie Jackson and attorneys with San Francisco and the consumer groups said the CPUC had notified PG&E before it appointed Mr. Mitchell, but didn’t notify San Bruno, San Francisco, or ratepayer advocates and officials.

“The unilateral announcement by the CPUC Monday that it had selected a mediator without consulting any of the parties at the negotiating table is consistent with the cozy and unholy relationship between the CPUC and PG&E.  This action is symbolic of the broken, dysfunctional and dishonest relationship between PG&E and the CPUC, the agency that is supposed to be the watchdog and protector of the public’s interest,” said Mayor Ruane of San Bruno.

“San Bruno is rightly concerned that the DLA Piper law firm has previously represented utilities–and that the firm was selected unilaterally by the CPUC and PG&E without the participation of any other party, which goes against the fundamental principles of mediation,” said Mayor Ruane at the press conference today.

“It also is of deep concern to us that DLA Piper has a lengthy list of corporate clients, including Southern California Edison, which the current chairman of the CPUC, Michael Peevey, once headed, according to news media reports about the appointment.

“In order for any mediation to succeed, the mediator will have to assure all the parties to our satisfaction that they have no conflicts, that they can be an unbiased mediator, and that the process will be open, transparent and fair,” Mayor Ruane said.

He continued: “We find that there is too much of a coincidence that one week before the announcement of DLA Piper as mediator, we were told that “a mediator with gravitas” is necessary to settle the negotiations, and now, with the unilateral start of mediation, that PG&E shareholders are paying for the mediation. This leads us, we rightly believe, to the conclusion that the CPUC and PG&E have had improper ex-parte contact as part of this process.

“We state unequivocally for the record that no fine or settlement with PG&E will ever be legitimate or credible without the participation of the City of San Bruno.

“We call into question the integrity of the entire CPUC process that has occurred over the past two years since our community was ripped apart by the negligent and systematic safety failures of PG&E and the inability of the CPUC to independently protect and represent the interests of the residents of San Bruno and the people of California.

“The healing process has physical manifestations in the reconstruction of our Crestmoor neighborhood. However, the scars and horrors of the explosion and fire remain. The City committed to its citizens that it would be an active and relentless participant in all of the investigations that followed.

“We remain at the table to represent the interests of the citizens of San Bruno, the memory of those whose lives were taken by PG&E’s negligence, their families and friends, and equally important, every other city, town and community in the State of California so we can help others prevent what happened to us,” Mayor Ruane concluded.

Mayor Ruane and the consumer advocate attorneys said Sen. Mitchell’s previous work for Southern California Edison, a utility where CPUC Chairman Michael Peevey was formerly an executive, made them question whether he would be impartial.

PG&E and CPUC investigators said Friday that they had started fresh talks to settle the investigators’ allegations that the utility violated numerous state and federal safety rules prior to the fatal 2010 pipeline explosion in San Bruno.

The CPUC had been holding public hearings following three investigations investigators completed after a section of the utility’s gas pipeline in San Bruno ruptured on Sept. 9, 2010, igniting a giant fireball that killed eight people and injured 58. The fire destroyed 38 homes and damaged 70 others. The neighborhood where the blast occurred hasn’t been fully rebuilt, although some houses have been rebuilt.

Both federal and state investigators blamed PG&E for the blast and found that defects in the utility’s aging pipeline and inadequate pipeline safety management contributed to the pipe’s rupture.

A CPUC judge suspended those hearings last week, after state investigators, who are employed by the CPUC, asked to stop the hearings to allow time for a fresh round of talks with PG&E.

Members of the CPUC have said they plan to order fines and possibly other penalties against PG&E over the San Bruno disaster.

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