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California ALJ Proposes Ex Parte Penalty Against SoCal Edison

Alleging a breach of the ethics rules, a California Public Utilities Commission (CPUC) regulatory judge on Monday proposed a $16.7 million penalty for ex parte communications violations against Southern California Edison Co. (SCE).

The proposed penalty follows a disputed finding that the utility violated CPUC ex parte communications rules on 10 occasions between March 26, 2013 and June 17, 2014 regarding SCE's pending case on the closure of its San Onofre Nuclear Generating Station (SONGS).

The CEO of parent utility company Edison International, Ted Craver, on Tuesday attempted "to set the record straight" during a 3Q2015 results conference call.

"Contrary to the many reports, SCE has not engaged in 'improper talks or communications with regulators' related to the SONGS proceedings," he said.

The judge's original ruling last August ordered SCE to show cause as to why it should not be sanctioned and why it should not be found by the CPUC to have violated the rules (see Daily GPIAug. 6).

"The important distinction is that the judge found that we didn't report in a timely manner 'permissible' communications with regulators," Craver said. "The communications themselves were not found to be improper or illegal under the ex parte rules as certain parties have repeatedly and wrongly asserted."

Administrative Law Judge Melanie Darling affirmed eight of the 10 alleged violations stemming from "failure to report, before or after, ex parte communications that occurred between an Edison executive(s) and a CPUC commissioner." In addition, Darling said the utility twice violated the ethics Rule 1.1.

The proposed $16.74 million includes a fine of $16.52 million based on findings of "a continuing Rule 1.1 violation [that] was set in motion by Edison's failure to accurately and timely report ex parte communications that occurred in Warsaw, Poland."

Edison has countered in its response filings to the CPUC that seven of eight communications cited for violations were "either not required, or outright not allowed," for reporting purposes under the ex parte rules.

In the past year, the CPUC has been shaken to its core by revelations of widespread private communications between top regulators and executives at major utilities it oversees. The issue reached a fever pitch surrounding Pacific Gas and Electric Co. (PG&E), which filed an internal investigation report last year admitting a number of inappropriate contacts between utility and state regulatory staff over a five-year period (see Daily GPI, Sept. 16, 2014).

Initial fallout last year cost the jobs of three PG&E executives and a top aide to the state's then-chief regulator, Michael Peevey, who later retired. Investigations continue in that case.

While noting that SCE and the other major utilities operate in an environment of "contentious proceedings under ambiguous rules and conditions," Craver said SCE is "not perfect," and there will be times "when we fail to live up to our own expectations and those of others." Nevertheless, he argued that the utility sets high standards for its employees' behavior.

"We have an obligation to be transparent and open, and we will redouble our efforts to conduct ourselves in this manner."

Edison International reported 3Q2015 profits of $421 million ($1.29/share), compared with $480 million ($1.47) for the same period last year.

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