(Susan Crabtree) Some voices on the left argue that the Democratic leaders in California, including Kamala Harris, failed to hold utilities accountable as they spread vast sums of money in political-pay-to-play schemes around the state.
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by Susan Crabtree, October, 10th, 2020
LOS ANGELES, Calif. — It’s an all too familiar refrain to Californians. Federal officials are investigating whether a failure of a power company’s equipment sparked the Bobcat Fire, the largest in Los Angeles County history. The fire has raged for a month, scorching more than 115,000 acres, damaging 83 homes.
The Bobcat Fire is just one of 27 major blazes continuing to burn throughout the state. More than 30 people have died in California from the flames and smoke, more than 7,000 structures have been destroyed, and millions of residents have been forced to breathe ash and endure orange-tinted skies filled with a haze so dense it blocks out the sun. Scientists estimate that the fires this year have pumped far more greenhouse gases into the air than the carbon dioxide emissions produced from providing power to the entire state.
Although fire season in California and across the West has become sadly inevitable, it’s clear that some of those deadly infernos could have been prevented. A different utility company, Pacific Gas & Electric, was found to have caused the 2018 Camp Fire, the deadliest and most destructive fire in state history, a blaze that took 85 lives and razed nearly 18,900 buildings. PG&E’s equipment is responsible for sparking more than 1,500 fires from June 2014 to 2017, according to an investigation by the Wall Street Journal.
PG&E filed for bankruptcy after pleading guilty to 84 counts of manslaughter in the deaths resulting from the Camp Fire after it was found to have repeatedly failed to maintain a transmission line that broke from a nearly 100-year-old tower, even though the line cut through a forested and mountainous area known to experience high winds. The company was forced to pay $13.5 billion to people who lost homes and businesses from the fire.
But how did it get to this point – why was a state-regulated business allowed to operate with such little fire-management oversight?
Prominent Democrats, including California Gov. Gavin Newsom and House Speaker Nancy Pelosi, have pointed to climate change as the main culprit behind the fires. But other voices on the left, including several consumer rights groups, argue that the Democratic leaders in the state, including Kamala Harris in her capacity as former attorney general, for years failed to hold PG&E and other utilities accountable as they spread vast sums of money in campaign contributions, lobbying, and other political-pay-to-play schemes around the state.
A Problem Years in the Making
PG&E recently went through bankruptcy over its fire liability losses but still has a monopoly on providing electricity and natural gas to large segments of the state. It also has far more work to do to upgrade its aging network of power lines and pipelines to reduce safety hazards.
Over the last months, amid record-setting heat, PG&E repeatedly cut off power to hundreds of thousands of customers in fire-prone areas in advance of high winds. The company says its customers should expect this type of preemptive service interruptions for another decade.
All this while Californians pay the highest electricity rates in the contiguous United States, outside New England, and by far the highest of any western state. A portion of those charges come from rate increases PG&E and other utilities have passed on to consumers to cover the billions of dollars in losses and liability.
Newsom, who inherited a legacy of utility company neglect, has started to condemn the electric utilities and their role in the fires and demand changes, while conceding there’s no quick fix.
“It took us decades to get here,” he said during a press conference last fall. “Make no mistake. We will get out of this mess, and when we do, we will hold PG&E accountable to a degree they have not been held to before.”
Consumer groups for years have criticized former California Gov. Jerry Brown and his appointees for failing to adequately regulate the public utilities to prevent the downed power wires and exploding transformers from igniting the blazes. PG&E and other utilities are notorious for spreading political donations around the state and cutting checks for millions in lobbying and public relations even while going through bankruptcy.
For several years when Brown was in office, his sister Kathleen sat on the board of directors of Sempra, the parent company of Southern California Edison and San Diego Gas & Electric. She made more than $1 million in cash and stock.
Brown kept Michael Peevey, a former Southern California Edison executive and longtime family friend, as the head of the Public Utilities Commission, the agency charged with regulating it and other utilities. Peevey, whose wife Carol Liu was a Democratic state senator at the time, was eventually forced out in 2014 after a scandal involving inappropriate communications with PG&E while soliciting $1 million in political donations from the utility. Peevey retired amid the controversy.
State AG ‘AWOL,’ Argues One Consumer Advocate
Consumer groups for years have faulted Kamala Harris, Joe Biden’s 2020 running mate, for failing to prosecute the state’s biggest utilities and the Public Utility Commission officials who the groups say let the companies skate for years.
“She was absent, she was AWOL, she didn’t file any charges whatsoever,” Jamie Court told RealClearPolitics. Court is the president of Consumer Watchdog, a nonprofit progressive organization that advocates for consumer and taxpayer interests with offices in Los Angeles and Washington, D.C.
“She was the first line, and she should have stepped in, and she didn’t because of political concerns,” he charged.
While Harris was still attorney general (she left in 2017 after winning a U.S. Senate seat), Consumer Watchdog was so incensed about Harris’s decision not to prosecute two high-profile utility cases that it issued a one-page paper on what it deemed “public utility corruption and Kamala Harris’s failure to act for the public.”
Harris’s campaign declined to respond to the criticism when contacted by RealClearPolitics. But Court, who nonetheless supports the Biden-Harris ticket because the idea of Trump in office for another four years is “unthinkable” for him, is hardly alone in the criticism. Several California newspapers and other media outlets have raised similar complaints while Harris remained attorney general and even in the years afterward.
The issue surfaced during Harris’s Senate run in 2016, though it didn’t prove a major problem for her in defeating former Rep. Loretta Sanchez in the Democratic primary and sailing to victory. It popped up again in early 2018 when the San Jose Mercury News ran an editorial board piece pressing current Attorney General Xavier Becerra to pursue the case against Peevey and asking whether it had been “swept under the rug.”
“It would be a travesty if current Attorney General Xavier Becerra let the statute of limitations run out and did not both complete the investigation and announce the result,” the paper argued.
A Becerra spokesman in 2018 told the paper that the attorney general couldn’t comment because the investigation, which began in 2015, was ongoing.
Court and other critics cite two investigations when they take aim at Harris for failing to prosecute the Public Utilities Commission and PG&E. The first involves a 2010 gas line explosion in the city of San Bruno, south of San Francisco, that killed eight people, injured 66, and destroyed 38 homes. Harris opened a criminal probe into the explosion but never prosecuted the case.
The U.S. attorney’s office eventually took it up and brought criminal charges. In 2016 a federal jury found PG&E guilty of six felony charges – five counts of violating pipeline safety standards and one count of obstructing the investigation into the San Bruno explosion. That investigation turned up evidence that Peevey was so aligned with PG&E he allegedly helped his former employer go judge-shopping for someone who would be sympathetic to the utility in deciding the $1.3-billion penalty phase.
In explaining her decision not to prosecute the San Bruno case, Harris said at the time that her office had become part of a joint task force with federal investigators. Court counters that it was state Democratic politics and a major conflict of interest within Brown’s administration that kept her from pursuing the case.
“Clearly there were prosecutable issues with Mike Peevey and San Onofre, and PG&E, and she let it all go … and it was not good for the public interest,” Court argues. “It’s all public record, and it was all documented. It’s about the political class and not wanting to make trouble for the other members of the class, and I find that appalling when the crimes rise to the level of the facts that we saw.”
The alleged judge-shopping led the San Jose Mercury News to opine that “Peevey’s relationship with PG&E should have gotten him fired in the wake of the 2010 San Bruno explosion. But Gov. Brown inexplicably kept him on the job.”
Even after the scrutiny, Brown continued to protect the Public Utilities Commission from bills that tried to push it to act more aggressively. In 2016, he vetoed several fire-prevention measures, arguing that the state Public Utilities Commission and the California Department of Forestry and Fire Protection had a perfectly good process in place.
One bill passed in 2016 would have required the commission to identify and map high-risk wildfire hotspots due to overhead utility lines, taking into consideration local governments’ concerns so that utilities would have to step up their mitigation efforts in those areas. The Public Utilities Commission took nine years to create a map of the most fire-prone areas, and Brown vetoed a bill, passed unanimously in the legislature, aimed at getting the agency off the dime.
State Regulators Accused of Favoritism
Brown was defending the Public Utilities Commission even though the agency was plagued with scandals involving back-channel deals and favoritism between the regulators and the utilities they are supposed to keep in line. In 2013, Peevey held a secret meeting with a Southern California Edison executive at a luxury hotel in Warsaw, Poland. The Public Utilities Commission was in the middle of negotiations about how to handle the costs of closing the San Onofre nuclear power plant in San Diego County when reports surfaced that Peevey had gotten involved inappropriately.
The Public Utilities Commission and Southern California Edison had claimed a settlement that left consumers with a $3.3-billion bill for San Onofre’s closure, when Southern California Edison and San Diego Gas & Electric would foot only $1.4 billion. Ratepayer advocates wanted to make sure it was negotiated properly.
At first, Harris appeared to be investigating that case aggressively: The attorney general’s office issued a search warrant of Peevey’s home. It was that search that uncovered handwritten notes showing Peevey had a secret meeting with an Edison executive in Warsaw after the nuclear power plant sprang a radioactive leak and had to be closed.
That’s where the deal was cut that left ratepayers footing a big portion of the bill. Documents uncovered during the investigation also showed that Peevey tried to get Southern California Edison and San Diego Gas & Utility to give $25 million to a pet project at the University of California at Los Angeles. Democratic state Sen. Jerry Hill, who represents San Bruno, called the payment an obvious quid pro quo arrangement.
Harris’s investigative team laid out part of the case it was building in court papers filed in the fall of 2015. Investigators argued that they could have charged Peevey and the utility companies with obstruction of justice and conspiracy to obstruct justice — felonies — for the secret meeting in Warsaw. But several news outlets, including KPBS, reported that during her Senate run Harris let the three-year statute of limitations run out on the secret Poland meeting and never pursued prosecution.
“We should have seen some state charges,” Hill told KPBS in April 2016. “The state of California certainly is proud of its judicial system, and I think it would have been a great statement that California would take the lead in prosecuting these cases.” Hill has since authored legislation demanding greater transparency from the Public Utilities Commission.
A spokesman for the California Attorney General’s Office at the time argued that the statute of limitations actually hadn’t passed in the San Onofre case — that the journalists were getting that part of the story wrong. “This is a comprehensive investigation, and the law does not foreclose our pursuit of charges if charges are appropriate and justified,” the spokesman told reporters at the time.
A source familiar with the investigation told RealClearPolitics that the statute of limitations in the case had definitely not run out when Harris left the attorney general’s office. The source also argued that the legal time limits can be renewed if a new piece of evidence is discovered but did not know if Becerra was actively pursuing the investigation or if it had gone dormant.
“I will say candidly that the investigation took a long time because the [Public Utilities Commission] continued to push back and push back on document requests,” the source told RealClearPolitics. “[S]ometimes these investigations when folks are in a non-cooperative mode take some time.”
Lawyer Accused Harris of ‘Malpractice’
San Diego consumer lawyer Mike Aguirre, a Democrat who served as city attorney from 2004 to 2008 and was representing ratepayer interests in the San Onofre case, repeatedly blasted Harris for failing to bring criminal charges in that case. In early 2016, Aguirre accused Harris of stalling the San Onofre probe until her U.S. Senate campaign wrapped up because it could hurt powerful fellow Democrats, including Brown, who endorsed her in the race.
“For her to let the statute go is malpractice,” Aguirre told the San Diego Reader in April 2016.
Aguirre specifically questioned a decision by the attorney general’s office not to act on a search warrant of the offices of Southern California Edison’s parent company and the Public Utilities Commission.
Instead of allowing investigators to search those offices, they served the search warrants to Edison and the Public Utilities Commission and asked them to turn over all documents and communications related to the San Onofre settlement.
“You don’t drop it off at the front door and say, ‘Hey, gee, send me your records,’” Aguirre, a former federal prosecutor, told KPBS. “That’s the whole point of a search warrant. … You go in and you execute the search warrant and you seize the records, because you’re concerned they’re going to disappear.”
While Edison turned over some records to the attorney general’s office, the Public Utilities Commission withheld many on the grounds that they didn’t have enough resources to produce them while claiming some were privileged. The privilege claim, they argued, covered some emails about San Onofre exchanged with Brown’s office. Harris never challenged the agency’s privilege claim, another bone of contention for critics who argue as a representative of the state demanding documents from a state agency, she would have easily prevailed.
In November 2018, federal judges dismissed the case Aguirre brought over the costs passed onto consumers for the San Onofre shutdown, but they forced Southern California Edison to pay the $5.4-million bill to his firm for its legal work.
Aguirre had previously won a deal with the utilities that lowered customers’ bill for the plant’s closing from $3.3 billion to $775 million.
Aguirre’s office declined to comment on his past criticism of Harris. Hill’s office did not return two requests for comment. Court and other sources speculate that Democrats aren’t talking right now because they want to see President Trump defeated and don’t want to bring additional scrutiny to Harris in the final weeks of the campaign.
Early in her own presidential campaign last year, Harris sponsored a bill seemingly designed to inoculate her from critics who could bring up the controversy over her decisions not to bring charges in the two utility cases.
As the Democratic presidential primary kicked into gear, Harris introduced a measure that would ban utilities under bankruptcy, such as PG&E, from paying bonuses to executives. Titled the “Accountability for Utility Executives Act,” Harris touted the bill amid growing frustration with the company and its role in sparking the wildfires. In doing so, she also mentioned a media report that PG&E wined and dined employees days before planned power outages and amid the company’s plan to pay $11 million in performance bonuses to its executives.
It attracted no co-sponsors and didn’t gain traction in the GOP-controlled upper chamber. By then, another fire season was underway in the West.
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