Consumer Report Alleges Conflicts Of Interest Between Gov. Brown and Sempra

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One day after Sempra Energy’s regulated natural gas utility announced it had reopened the Aliso Canyon natural gas storage plant, a Southern California consumer activist group raised new questions about the San Diego energy giant’s close ties to Gov. Jerry Brown.

The Governor’s Office rejected the groups’ report as old and baseless, saying there are no conflicts of interest and Brown-appointed regulators are holding utilities to account.

The 16-page report by from Santa Monica-based Consumer Watchdog is titled “Power Play: How the Governor’s Sister Makes a Million Dollars from Sempra While his Appointees Let Sempra Bilk Ratepayers For Billions.”

It alleges that decisions made by Brown and his political appointees helped usher in hefty profits and a run-up in stock valuations that nearly tripled the company’s market capitalization in less than seven years.

The report says the governor’s sister, former State Treasurer Kathleen Brown, has received almost $1.1 million in personal compensation since she joined the Sempra board of directors in 2013.

The report criticizes the decision to re-open the Aliso Canyon natural gas well, a Sempra facility in the Los Angeles area that leaked some 100,000 metric tons of methane in late 2015 and early 2016.

“The Brown Administration’s favoritism toward Sempra, including its willingness to overlook a serious threat to public health at Aliso in allowing the facility to reopen … has protected the company’s value while helping Kathleen Brown become a millionaire,” the report states.

Sempra stock has risen by 117 percent since Brown was sworn in as governor, the study said. Other private utilities benefited during the Brown Administration but not as much, the report said.

The Governor’s Office issued a statement defending the reopening of the gas-storage facility and dismissing the Consumer Watchdog findings.

“The bark of California’s first dog, Colusa, has more substance,” the statement said.

Pressed for an additional response, spokesman Evan Westrup said the conflict-of-interest claims are totally baseless — and old news.

“Repeating and repackaging them in a new press release every few months – as is the practice of this particular interest group – does not change that,” he said. “The state is exercising its full regulatory and oversight authority. The focus is the health and safety of residents, period.”

Spokeswoman Colleen Windsor of Sempra’s San Diego Gas & Electric utility issued a statement saying every action it takes is scrutinized by regulators.

“The report mischaracterizes our efforts to deliver safe and reliable energy, and completely ignores the fact that our customers are receiving 43 percent of their energy from renewable sources — more than any other utility in the state,” she said. “Asserting that there is a relationship that influences decisions fundamentally misrepresents how California’s utilities operate and how they are regulated.”

Kathleen Brown, now an attorney in private practice in Los Angeles, did not respond to requests for comment on Tuesday.

Consumer Watchdog is a Santa Monica nonprofit group that advocates on behalf of utility ratepayers, insurance customers and other members of the public.

Last year, it published “Brown’s Dirty Hands,” a report claiming the governor and other California Democrats accepted almost $10 million in political contributions from oil and gas interests while promoting policies that benefited the donors.

In response to that report, Westrup said, “The governor’s leadership on climate is unmatched. These claims are downright cuckoo.”

The report issued Tuesday lays out a series of regulatory decisions, claiming they helped earn Sempra and its regulated utilities San Diego Gas & Electric and Southern California Gas billions of dollars in revenue on Brown’s watch as California governor.

Specifically, the study singled out Aliso Canyon, the storage field north of Los Angeles that was the site of a huge leak in 2015. The ruptured lines spewed gas for four-plus months, sickening tens of thousands of people and driving them from their homes.

Brown appointees “green-lighted the reopening of SoCalGas’s Aliso Canyon gas storage facility even though no seismic study or environmental report has been completed and the cause of the biggest methane well blowout in U.S. history remains unknown,” the report said.

The analysis also noted that the investigation into what caused the Aliso Canyon break has not been completed and that no one at SoCalGas was sanctioned for the accident.

“Gov. Jerry Brown issued a carefully worded emergency proclamation on the Aliso well blowout in January 2016 after publicly ignoring the start of it three months earlier,” the report said. “He assured the public that a (Public Utilities Commission) ‘investigation’ was underway and that oil and gas regulators would perform a technical review of what went wrong.”

No root cause analysis explaining what prompted the mass emergency has been released.

Westrup said the Aliso process has been sound.

“The process from the onset has been guided by facts, science, safety, objective analysis, public input and the requirements set forth in statute and the emergency order,” he said.

The Consumer Watchdog report also criticized the approval of 15 natural gas plants in California at a time when demand is declining and projected to continue dropping. Those approvals came even as Brown publicly touted his commitment to reducing greenhouse gas emissions, researchers noted.

“Under Brown, the PUC never stepped in to stop a deal that on its face is bad for ratepayers,” the analysis said.

The report singles out two San Diego-specific projects as costly for ratepayers but beneficial to Sempra — the failed San Onofre nuclear plant and a natural gas pipeline proposed to be built generally along Interstate 15.

“The PUC is allowing the utilities to charge ratepayers more than $10 billion over a decade to cover the cost of flawed steam generators, decommissioning and replacement electricity” at San Onofre, the report said. “Sempra will charge ratepayers $2 billion of that sum, which comes to $1,495 per customer.”

Like the Aliso Canyon case, state regulators in the Brown Administration never completed an investigation into the 2012 failure of the nuclear plant just north of Oceanside.

The Consumer Watchdog report also questions whether the $600 million natural gas pipeline proposed from Rainbow south to Miramar would benefit SDG&E customers or the parent company’s liquefied gas projects in Mexico.

It cites testimony from Bill Powers of the Protect our Communities Foundation: “SDG&E ratepayers should not be paying for pipeline infrastructure that is primarily or exclusively intended to support speculative (liquefied natural gas) export by an unregulated affiliate of SDG&E/SoCalGas,” he wrote.

SDG&E said the project is needed to ensure reliability for decades to come because the existing line is nearly 100 years old and subject to failure.


[email protected] (619) 293-1708 @sdutMcDonald

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