San Diego attorneys Mike Aguirre and Maria Severson have put together a slide show that reveals how the California Public Utilities Commission courted Wall Street during the 12-year reign of commission president Michael Peevey, a former president of Southern California Edison who is now under criminal investigation.
It is important to know that the commission has no mandate to schmooze Wall Street.
"Its job is to determine if rates are reasonable," says Aguirre.
But I have observed through the years that when a big possible liability arises at one of California's investor-owned utilities — Sempra, Edison International, and Pacific Gas & Electric — the stock does not go down, and Wall Street securities analysts assure potential investors that California enjoys "constructive regulation," which is a euphemism for "pro-utility regulation."
Working with emails provided to them, Aguirre and Severson noted how commissioners visited Wall Street to pitch analysts on how utility-friendly California regulation was at that time. Early on, the slide show reveals an email in which Peevey tells Gavin H. Wolfe, a managing director of investment banking at Bank of America/Merrill Lynch, that the then-newest commissioner, Michael Picker (now the president), was coming to Wall Street in 2014. Peevey asks Wolfe to set up Picker with luncheons and meetings with other Wall Street honchos.
Peevey says he wants Picker to learn Wall Street's views of California regulation. That is misleading. Subsequent slides suggest that Picker will be telling the Wall Street analysts how utility-friendly the CPUC is. The emails indicate that Picker met with dozens of securities analysts from brokerage houses, as well as analysts from hedge funds.
Aguirre suspects that during his 2014 trip, Picker told analysts that the commission decision forcing ratepayers to pick up the tab for 70 percent of the cost of the San Onofre decommissioning would not be reversed.