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Ex Parte Scandal Expands, Continues to Plague PG&E

More concerns about ongoing relationships between regulators and the companies they oversee continue to swirl in California where some state energy officials increasingly are being criticized for being too cozy with the energy industry. Regulators and Pacific Gas and Electric Co. (PG&E) still can't silence the critics, and the issue is spreading to other utilities and the oil/natural gas sector in the state.

A case in point is the call Monday by a state lawmaker from San Bruno for PG&E to turn over more internal documents. The combination utility has already released some 65,000 email communications dating back five years to the California Public Utilities Commission (CPUC) as of the end of January (see Daily GPI, Jan. 14).

During an earnings conference call Tuesday, PG&E senior executives said they think they have turned over all relevant communications with the CPUC that may have violated ex-parte rules. They contend that the regulators should have all they need to proceed with an investigation, but they acknowledged there may be more revelations and requests for documents.

PG&E executives already knew that on Monday state Sen. Jerry Hill wrote PG&E CEO Tony Earley seeking more documents and disclosures.

Hill's letter alleged that the 65,000 released emails are "not the full disclosure" of the communications between PG&E and the CPUC. Hill contends that they may represent all the written communications, but not all the oral communications between the two entities. He is alleging there is more to be revealed.

In responding to an analyst's question on Tuesday, Earley said  the utility's internal investigation "disclosed every incidence that we are aware of that could have been a communication violation." However, he added that "there are multiple proceedings going on [state and federal criminal investigations], and there are lots of requests for more access to company records and emails."

The consensus among PG&E executives is that the utility is far from being done with dealing with the email scandal's fallout.

Also on Monday, Southern California Edison Co. (SCE) joined the email discussions by notifying the CPUC that two years ago -- before SCE's nuclear plant was closed -- a now-retired senior executive with the utility had an ex parte conversation in Warsaw, Poland with former CPUC President Michael Peevey that the regulator allegedly initiated regarding the then-idle San Onofre Nuclear Generating Station (SONGS).

Similar to what PG&E has faced since it first self-reported the damaging emails last September, utility consumer activists jumped on the SCE revelation as a sign the regulatory structure is broken and needs a complete overhaul now that Peevey is gone, and inappropriate communications keep emerging. One critic wants the CPUC's decision on SONGS last year to be nullified.

In the early days of February another controversy emerged regarding the regulation of oil/gas wells whose underground injection control (UIC) program for monitoring injection of flowback fluids (see Daily GPI, Feb. 9) has come under increased scrutiny from the U.S. Environmental Protection Agency (EPA) and state officials, causing environmental groups, elected officials and others to question whether state officials have become too close to oil/gas operators over the years, allowing the UIC to become shoddy.

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