Something sinister in Warsaw?

On March 26, 2013, Michael Peevey, then president of the California Public Utilities Commission, and Stephen Pickett, then an executive vice president of Southern California Edison, had a secret huddle at the Bristol Hotel in Warsaw, Poland. Two years later, in February of this year, Edison filed an extremely late notice of this ex parte meeting acknowledging that at the covert session, Peevey, a former president of Edison, "initiated a communication on a framework for a possible resolution" of how ratepayers and utilities would split the bill for the failure of power generators at the San Onofre nuclear station.

Today (April 10), those notes were made public in a suit that San Diego attorneys Mike Aguirre and Mia Severson have filed against Edison and the utilities commission. The hearing on the suit is April 16. The notes clearly show how Peevey and Pickett were plotting to force ratepayers to pick up a huge portion of the expenses for the failure.

The notes appear to be mostly Pickett's, who was sketching out Edison's plans to have the ratepayers pick up $5 billion of the tab. At the end of the notes are Peevey's thoughts, apparently in his handwriting. Aguirre and Severson say Edison stockholders, not ratepayers, should pick up the tab, because the San Onofre failure was clearly a result of management blunders, which should not be shouldered by ratepayers.

The company that did the engineering, Mitsubishi Heavy Industries, is battling Edison over who is to blame. In the Warsaw notes, Pickett appears to be saying that in any settlement between Edison and Mitsubishi, Edison's desires should be be considered first and customers' second. The notes also state that customers should have responsibility for replacement power but should get certain insurance recoveries.

According to the notes, decommissioning costs should "remain in rates through time of decommissioning." That means customers would be stuck with the costs until the decommissioning task was completed. Later, the commission's Office of Ratepayer Advocates and the Utility Reform Network (TURN) proposed this, along with Edison and San Diego Gas & Electric. It is remarkable how the Warsaw pact outline is almost exactly what was eventually decided, purportedly after consultation with the Office of Ratepayer Advocates and TURN.

Basically, the deal sketched out between Peevey and Pickett was what was foisted on ratepayers. Commissioner Mike Florio made some minor tweaks but generally followed the Warsaw pact. Peevey is now under both state and federal investigation for this secret meeting, among other things.