California regulators on Thursday dropped another hammer on Pacific Gas and Electric Co.(PG&E) for its self-reported communications violations regarding a pending rate case. Separately, the regulators in executive session slapped a $10.85 million staff citation on PG&E for a natural gas explosion at a vacant residence in Carmel, CA, in March.

With a bare quorum of the five-member California Public Utilities Commission (CPUC) voting 3-0, PG&E was fined $1.05 million, ordered to have shareholder-funded consumer reparations and restricted from ex parte contacts with CPUC decision-makers. CPUC President Michael Peevey and Commissioner Mike Florio recused themselves because of their participation in some of the damaging e-mails (see Daily GPI, Oct. 31; Oct. 17).

With Peevey and Florio backing away from pending PG&E proceedings before the commission, including the potential for multi-billion-dollar penalties related to the 2011 San Bruno gas pipeline failure (see Daily GPI, Sept. 2), Commissioner Carla Peterman authored an alternative order attempting to modify an earlier administrative law judge’s (ALJ) ruling that placed restrictions on communications between CPUC staff and the investor-owned utilities they oversee.

Keith Stephens, a spokesperson for PG&E said, “there is no disagreement that the e-mails in question were inappropriate and, as we have acknowledged, we believe that some of them violated the CPUC’s rules.” But he also stressed that the utility “self-reported these violations, held individuals accountable [firing three senior executives involved], and [is] making significant changes designed to prevent this from happening again.”

Regarding the residential explosion and distribution pipeline recordkeeping, the CPUC Safety and Enforcement Division issued the multi-million-dollar citation because of the utility’s failure to take necessary steps to make safe the area in Carmel-by-the-Sea where it had planned work under way. Separately, the CPUC commissioners have opened a formal penalty consideration case related to PG&E’s general distribution system recordkeeping.

CPUC safety staff gave PG&E 10 calendar days to pay or contest the citation, which must be paid with shareholder funds. The utility has had a transmission pipeline recordkeeping case ongoing since February 2011, but the new proceeding will focus on the lower-pressure distribution system. Within 30 days, PG&E must submit a report contesting facts in the safety unit’s incident report on Carmel.

“This issue is very concerning; it’s a strong indication that, while PG&E has been making progress in upgrading its gas system, the progress is still very uneven,” Commissioner Michael Picker said.

During the discussion by the three CPUC members who voted, several staff members came forward with examples of how it “is becoming difficult to get work done” with the communications restrictions and reporting requirements now in place.

The action Thursday did not apply to all of the revelations PG&E has made regarding past e-mail communications with the CPUC, but rather centered on specific communications in January among PG&E executives, Florio and others regarding the assignment of the ALJ in PG&E’s ongoing $1.9 billion natural gas pipeline and storage rate case.

A CPUC spokesperson noted that prior to Thursday’s action the head of the ALJ division reassigned the PG&E case to a new judge, “though no party has suggested that the previously assigned ALJ had been influenced or acted improperly in any way.” Hearings originally scheduled for October have been rescheduled for January and, as part of the CPUC’s action, PG&E shareholders will pay reparations for the added costs.

“Through this decision, we continue to send a signal to PG&E that we expect full compliance and appropriate respect for the CPUC’s processes and its staff, as well as fair treatment to its consumers,” Peterman said.

The Utility Reform Network (TURN), which has been critical of the CPUC and particularly Peevey’s leadership, blasted the regulators’ action Thursday as “an inadequate response,” given the evidence of “serious corruption between the commission’s top brass and PG&E.”

TURN alleges that the CPUC is acting only on evidence submitted by PG&E and not requiring the utility to turn over all of the its e-mails to the regulatory commission.

TURN also criticized the CPUC for past decisions granting incentive energy efficiency rewards to PG&E and the state’s other major private-sector utilities, collectively totaling $68 million. PG&E won the largest award ($39 million).

Given that the San Francisco combination utility’s admitted violations of the ex parte rules, some indicating there may have been a quid pro quo between Peevey and PG&E on the rewards, TURN is calling for the CPUC to rescind the decision going back to 2010.

“The e-mail[s] raise serious doubt about President Peevey’s impartiality, especially considering that he had to ignore the actual evidence in the case to get the result he wanted,” said TURN Legal Director Tom Long.