Utilities commission says call was appropriate, critics say regulator is compromised

As criticism mounted last year of a settlement deal that billed utility customers for 70 percent of the $4.7 billion cost of failure at the San Onofre nuclear plant, the state judge assigned to the case reached out to plant owner Southern California Edison.

The California Public Utilities Commission, which employs Administrative Law Judge Melanie Darling, says the call was appropriate, and even an efficient way to oversee the plant’s shutdown.

Critics say it’s more evidence of improper backchannel dealings that have sparked numerous legal actions and criminal investigations.

Edison disclosed the June 2014 consultation this week as part of 31 pages detailing its communications with regulators. The documents show the judge lauding Edison public relations efforts and Edison expressing shock at the behavior of its adversaries.

According to the company, Judge Melanie Darling talked to executive Russ Worden about whether the settlement pact needed more work. He “responded that, to his understanding, SCE did not believe the record needed to be reopened."

Or, as Worden put it in handwritten notes the company also released, “Emphatically No.”

The judge endorsed the settlement, which was approved later by the California Public Utilities Commission in November 2014. The deal has since come under fire — even from consumer groups that approved it — because of a constant stream of recent revelations about potentially improper communications that helped shape it.

The latest disclosure rings an increasingly familiar tone of friendliness between the judge and the company. The judge congratulated the company for its public-relations approach to the proposed settlement for the San Onofre Nuclear Generating Station, which closed amid a radiation leak in January 2012.

“Yesterday, Judge Darling called me to discuss plans for the SONGS meeting on Monday in Costa Mesa,” Worden wrote to coworkers, also in June 2014. “She went out of her way to compliment SCE on our outreach and media publicity to notify outlets about the meeting. She said, ‘I like your plan of action.’”

Edison’s filing includes 16 new emails and four pages of Worden’s notes recounting his conversations with the judge. Utilities commission spokeswoman Terrie Prosper said the communications by an administrative law judge are allowed and appropriate.

“There is nothing impermissible about an ALJ engaging in procedural communications with parties, not just utilities, in order to achieve procedural results,” she wrote in an email. “This is part of the ALJ’s duty to efficiently administer the proceeding.”

The disclosures brought criticism as well. Liza Tucker of the Santa Monica advocacy group Consumer Watchdog said Darling has no business rendering decisions in the San Onofre case, based on her private communications with Edison.

“It is totally inappropriate for ALJ Darling to be adjudicating this matter,” Tucker said. “Obviously more facts need to be brought to light but the perception of her is tarnished. She was very much in touch with the company and that does not instill a lot of trust in her ability to make an objective decision in this case.”

The utilities commission is unique among state agencies in that it employs judges who serve as arbiters, even when people have a beef with the agency itself. Members of the public cannot take action in Superior Court to challenge a utilities commission decision, but must appear before a commission employee.

Darling has been assigned as a judge over several matters involving San Onofre, which sits idle on San Diego County’s north coast.

One of the issues Darling is deciding is whether Edison should be sanctioned for its chats and emails with commission employees such as herself. Darling has denied motions asking her to recuse herself, given that conflict.

Darling’s own emails are also the subject of subpoenas by the state criminal investigators who are probing whether commission officials and regulators are too cozy.

As part of the commission’s own review of Edison’s private communications with regulators, Darling asked the company to hand over emails, which it did in April. Darling reviewed 72 exchanges that Edison documented after reviewing 2 million pages of records. The judge identified 10 violations of the disclosure rules.

This week, Edison released the additional documents, saying it was not legally required but was a show of transparency. The company said there was nothing improper about the communications.

Commission proceedings are required to take place in public. Certain behind-the-scenes dealings are allowed, with public notice of any substantive talks within three days. The idea is that opposing parties could also chime in, but only if they know about the private conversations.

The commission tasked an outside attorney to review its record on such private dealings, and the firm in June reported that violations are common and tilt the process in favor of utility companies. Legislators passed a slate of reform bills, which were vetoed earlier this month by Gov. Jerry Brown, who said they contained conflicting provisions that made them unworkable.

One provision would have allowed the public to sue the commission for public records in Superior Court. Another would have more clearly defined the kinds of “procedural” communications that are allowed without disclosure.

Mindy Spatt, spokeswoman for The Utility Reform Network in the Bay Area, said Wednesday that some of the newly revealed communications appear to have been more than procedural, and as such should have been reported.

“The CPUC should increase the penalties that will be applied to SCE for violations of ex parte rules,” Spatt said. “The CPUC should also reopen the entire proceeding, set aside the settlement, and resolve the SONGS debacle based on the evidence presented and the applicable legal standards.”

Last year, The San Diego Union-Tribune reported on a December 2012 phone call Darling made to Worden, which the utilities commission considered procedural.

The subject was the just-opened investigation into the San Onofre failure. Days later, the judge decided the investigation would take place in phases, as suggested by Edison, with the last phase set aside for assigning blame.

Once the San Onofre settlement was approved in November 2014, the last phase of the investigation was dropped. Critics say Darling’s private consultation with Edison set the stage for that outcome.

San Diego consumer attorney Michael Aguirre, one of the most vocal critics of the San Onofre settlement, is referenced in the Worden notes.

“‘Pretty shocked by Aguirre,” the notes say. “He can’t act like that.”

The notation came after Aguirre challenged then-President Michael Peevey of the utilities commission at a May 2014 hearing called to discuss the San Onofre closure. Peevey exploded when Aguirre asked if he had any private discussions with Edison.

“I’m not here to answer your goddamned questions,” Peevey told Aguirre. “Now shut up! Shut up!”

Worden’s notes also say “Ring Tone,” with a box drawn around the words and an arrow pointing to Aguirre’s name. The scrawl is an apparent reference to several critics of the San Onofre deal who made use of Peevey’s outburst on their cell phones.

Aguirre said the new Edison disclosure reinforces his claim that Darling should be recused from the proceeding.

“This is so improper, it’s mind-boggling,” Aguirre said. “This shows there’s a very tight alignment between the judge and the Edison officials. This is much worse than I thought. I underestimated the depth of the wrongdoing.”

Darling is set to decide within the next week or two whether the utility should be sanctioned for the 10 violations. It’s not clear to what extent the new disclosures will affect her ruling.