FPPC Probe Targets Democratic “Laundry Machines”

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SACRAMENTO >> The state’s Fair Political Practices Commission has launched a formal probe into allegations of corruption and the tangle of close ties involving Gov. Jerry Brown, a top aide, the state Democratic Party, the scandal-scarred state Public Utilities Commission and power behemoths such as PG&E and Southern California Edison, the state watchdog agency disclosed Friday.

“The Enforcement Division of the Fair Political Practices Commission will investigate the California Democratic Party for alleged violations,” the FPPC wrote in a letter, dated Friday, to Consumer Watchdog, a Santa Monica-based group that has published an extensive report titled “Brown’s Dirty Hands” that investigated what the group claims is a web of connections and influence involving state officials, Democratic operatives, government regulators and California’s biggest utilities.

Word of the investigation raises questions about Brown’s connection to what is now a well-documented set of cozy arrangements between the PUC and big utilities. It comes amid allegations that the PUC provided lazy oversight of the state’s power companies and fostered a culture of lax supervision that federal investigators have concluded contributed to a fatal gas pipeline explosion in San Bruno in 2010.

“We are pleased that the FPPC has launched an investigation into the troubling pattern of contributions to the California Democratic Party by oil, utility and energy companies uncovered in ‘Brown’s Dirty Hands,’” said Jamie Court, president of Consumer Watchdog. “Political parties shouldn’t be used as laundry machines for money from unpopular companies or for campaign contributions in excess of candidate-permitted limits.”

Major power and energy companies provided $9.9 million in contributions to the governor’s political campaigns, ballot measures, the California Democratic Party and some of Brown’s pet projects such as the Oakland Military Institute and the Oakland School for the Arts, the consumer group’s report alleged.

Roughly $6 million of that amount came from contributions provided by San Francisco-based PG&E, Rosemead-based Southern California Edison and San Diego-based Sempra Energy, the group claimed.

“We have received the letter” from the FPPC, said Michael Soller, a spokesman for the California Democratic Party. “We have been cooperating with the FPPC’s inquiry and will continue to do so.”

Consumer Watchdog said in its report: “In the governor’s pay-to-play environment, ratepayers got the short end of the stick. Under Brown, the PUC has granted the three biggest investor-owned utilities in the state more than a combined $130 billion in rate hikes approved from 2011 through 2015, according to PUC annual reports.”

Emails between PG&E executives that referenced conversations with former PUC President Michael Peevey suggested that Brown personally intervened with former PUC Commissioner Mark Ferron, urging Ferron to support approval of a controversial natural gas power plant that would have been operated by PG&E in Oakley.

“Jerry’s direct plea to Ferron was decisive,” Cherry said in a January 2013 email.

In the same email, Cherry described a celebratory dinner at Peevey’s coastal residence at the posh Sea Ranch resort on New Year’s Eve 2012 that was capped with “a dram or two of Johnnie Walker Blue Label.”

In March 2013, a top Southern California Edison executive met with Peevey in a hotel room in Poland to cut a deal in which ratepayers, not shareholders, would pay for 70 percent of the $4.7 billion cost to close the San Onofre nuclear power plant in San Diego County, according to official disclosure documents from Southern California Edison and the consumer group. Southern California Edison donated $130,000 to the Democrats in California on the date of that secret meeting, which wasn’t disclosed for two years — and only after the PUC approved the settlement on the nuclear plant.

In October 2014, the besieged Peevey announced that he wouldn’t seek reappointment to another six-year term after 12 years on the commission.

Brown’s office, through spokesman Evan Westrup, referred inquiries to the California Democratic Party.

“I do not expect we will be commenting,” Westrup said in an email sent to this newspaper Friday.

The consumer group also alleged questionable actions associated with Brown’s appointment of Nancy McFadden, a PG&E vice president, as his executive secretary beginning in January 2011. McFadden is still Brown’s top aide today.

McFadden and Peevey were seen as key figures behind Brown’s appointment in February 2011 of former Wall Street executive Ferron as a PUC commissioner. At the time, Wall Street deemed Ferron to be a regulator who would favor utilities in his decisions. PG&E contributed at least $126,500 to the California Democratic Party during 2011, Ferron’s first year as commissioner.

In an August 2014 meeting with the editorial board of this newspaper, Brown described Peevey as “a very effective leader.”

Added the governor, “He gets things done.”

Consumer Watchdog
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