David vs. Goliath. Vista’s Mary Hoffman is suing the California Public Utilities Commission in federal court.
The state’s major utilities — San Diego Gas & Electric, Pacific Gas & Electric, and Southern California Edison — realize that renewable energy represents the future. So, in defiance of federal law, these big utilities want to monopolize solar, wind, geothermal, and other renewable energy forms. And like a wrestling referee deliberately ignoring a blatant illegality, the California Public Utilities Commission (CPUC), the supposed regulator, is helping the big companies maintain their stranglehold.
Mary Hoffman of Vista is fighting a lonely battle against this juggernaut. Her company, Solutions for Utilities, is suing the commission in federal court in Los Angeles. Her case has survived a motion to dismiss and goes to a jury trial February 5. The suit charges that the commission has undermined the federal Public Utility Regulatory Policies Act of 1978 that aims to promote the viability of small energy-generating companies and protect them from monopolistic practices.
Today, Hoffman’s company exists only to fight this suit. She formed the company in 2008 to build two solar farms and sell the electricity to Southern California Edison under a 20-year contract. “It soon became apparent that the price that the utilities commission had authorized that Edison would have to pay was a nonstarter. My company would not have made any money for 14 years,” she says. Edison was permitted to charge exorbitant fees, such as for interconnections, “that would make the deal non-doable.”
Her original suit included Edison as a defendant, but that company and a second plaintiff were dropped on technicalities. If she wins, San Diego Gas & Electric, Edison, and Pacific Gas & Electric will be compelled to adopt at least one program compliant with the 1978 act, and the CPUC will have to “compel the regulated utilities to comply with [the 1978 act] by making it truly available for small suppliers,” says Meir Westreich, Hoffman’s Pasadena-based lawyer.
She never built the two solar farms, “and there was no point in trying to build another,” she says. She knew she was up against a rigged system overseen by a corrupt regulatory body.
And that is a key part of her lawsuit. It alludes to the “politically incestuous relationships between regulator and regulated.” The CPUC and Edison “routinely engage in joint and collaborative tasks, functions and decision making, with mobility between respective staffs, that render them generally indistinguishable.”
So true. Hoffman points out that Michael Peevey, president of the CPUC, is the former president of Southern California Edison. (San Diegans will remember Peevey. He was an executive vice president of Edison in the early 1990s, when it tried to take over San Diego Gas & Electric. Peevey was in charge of the raid. He was as effective as General Custer. Edison lost a bundle on the failed takeover attempt — and then promoted Peevey to president, albeit for a short time.)
I have written both columns and blog items this year on the junketeering and posh living — paid for by utilities — of Peevey and another commissioner, Timothy Simon. Hoffman focuses on Peevey, noting that a May 24, 2011, column in the San Francisco Bay Guardian, “The Secret Life of Michael Peevey,” told the sordid story best.
The Guardian article told how Peevey and his wife, a state senator, flew on overseas junkets sponsored by major energy companies. Of course, these companies’ executives had access to Peevey, as well as to Simon on trips that he took. The Utility Reform Network (TURN), a watchdog group, said these trips are “lobbying junkets.” San Diego’s Sempra Energy, parent of San Diego Gas, was represented on a 2010 Peevey junket to Germany.
Pacific Gas & Electric went bankrupt in 2001 and emerged in 2004. As the Guardian pointed out, Peevey bragged that the CPUC, on approving the emergence, required that PG&E create a $30 million Clean Energy Fund. And who became chairman of that fund? Peevey.
Loretta Lynch, former president of the utility commission, questions the commission’s authority to create such a nonprofit venture capital fund. “It is a fundamental distortion of the [commission’s] authority — all in service of Peevey’s ambitions,” she told the Guardian.
I called Lynch. “I think it is absolutely improper for commissioners to be wined and dined and sent on foreign junkets by utility money,” she says. Nor is it proper for a CPUC commissioner to head an organization taking money from companies the commission regulates. A conflict or the appearance of one “undermines the confidence in the integrity of the regulatory body.”
Bill Powers, principal of Powers Engineering, a San Diego–based energy consulting firm, says that Hoffman’s suit “is definitely a David-Goliath type of thing.” Dealing with the commissioners “requires grease and pressure,” and the small energy providers don’t have the financial muscle for this kind of competition. He admires her toughness: “You have to fight at the [CPUC]. If you don’t, the utilities are unfettered.”
Local energy industry consultant Bill Powers says, “The [commission] is institutionally wedded at the hip to the Big Three” — San Diego Gas & Electric, Pacific Gas & Electric, and Edison.
He is fearful that Hoffman’s suit could be a rugged climb. “When it comes to rates and [the Public Utility Regulatory Policies Act] and all that, courts are really reticent to get into it. What’s admirable is that someone had the gumption to take this to court. But there is still a long way to go.”
Notes Powers, “The [commission] is institutionally wedded at the hip to the big three [San Diego Gas & Electric, Pacific Gas & Electric, and Edison]. There are some great people at the [commission] — dedicated, idealistic — but until they remove the king dealmaker, King Peevey, the commission will operate as it has operated for the last decade. The utilities will have veto power over who the next president of the [CPUC] will be. [Governor] Jerry Brown is hard to read. The most dramatic statement he could make is appoint a new president of the [commission], but he has left Peevey there.”
Possible good news: Powers and others say that three new Brown-appointed commissioners are fed up and may do something about the Peevey-Simon lovemaking with utilities.