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Second California Regulator Drops Out of PG&E Penalty Case

A second California regulator mixed up in the email communications violations tied to Pacific Gas and Electric Co. (PG&E) has excused himself from a pending review of two regulatory judges' proposed $1.4 billion in penalties for PG&E's negligence in a fatal natural gas transmission pipeline rupture and explosion four years ago.

In a court filing Wednesday, Commissioner Mike Florio said he will drop out of the deliberations by the five-member California Public Utilities Commission (CPUC), joining CPUC President Michael Peevey, who earlier did the same since PG&E divulged a series of email communications between the two regulators and now fired utility executives (see Daily GPI, Sept. 16).

The regulators have removed themselves from reviewing the presiding officer decisions (see Daily GPI, Sept. 2) by two CPUC administrative law judges' (ALJ) proposing to fine PG&E the billion-dollar-plus amount for its culpability in the September 2010 pipeline rupture and explosion that killed eight people, injured 66 more and destroyed 38 homes in a residential section of San Bruno, about 10 miles south of San Francisco.

Three members of the regulatory commission are considered a quorum and can transact business, so the penalty case can be reviewed by the remaining members.

Peevey recused himself in mid-September when PG&E first made public the emails that have exposed a series of inappropriate contacts between the CPUC and the San Francisco-based combination utility that has a number of major multi-billion-dollar cases awaiting regulatory decisions.

Florio made his declaration as part of a filing in a legal case brought by the city of San Bruno (see Daily GPI, Feb. 5). "The city of San Bruno has requested such action, and I will honor that request," Florio wrote in the court document.

"After careful reflection, I have decided that it is in the best interests of the commission -- and more importantly of the public we serve -- to recuse myself from further participation in both the three San Bruno-related investigations and the PG&E gas transmission/storage rate case," Florio said.

San Bruno City Manager Connie Jackson said the city "welcomed" Florio's action but continued to urge he be removed or resign from the CPUC, a report in the Los Angeles Times said.

San Bruno officials, along with state lawmakers in the area and the utility consumer watchdog group The Utility Reform Network (TURN) have alleged misconduct by the CPUC and PG&E in the ongoing pipeline cases for months (see Daily GPI, Aug. 14).

As the LA Times reported, the flap over the email communications has now drawn investigations from federal prosecutors in the U.S. Attorneys Office in San Francisco, and more recently from the state Attorney General's Office. Regarding the latter, in response to an inquiry by NGI last Tuesday, a spokesperson for the California AG Office would not confirm or deny that an investigation has been started.

Separately on Thursday, the CPUC issued a regulatory judge's sanctions against PG&E for its ex parte communications violations as previously reported and an alternate commissioner's proposal for penalizing PG&E shareholders $1.05 million.

ALJ Hallie Yacknin issued a proposed decision affirming her ruling that PG&E must be banned from ex parte communications with commissioners or their advisers other than in public meetings and other restrictions for one year or until PG&E's pending gas rate case has ended. In addition, the assigned commissioner for that case, Carla Peterman, issued an alternate proposed decision on the monetary penalty. The CPUC will consider the proposals at its Nov. 20 meeting.

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