Criticized CPUC figure given reform role
A central figure in revelations of back-channel dealings with utilities that embarrassed the California Public Utilities Commission and prompted federal and state criminal investigations assumed a controversial new role Wednesday — leader of reform efforts at the state agency.
Mike Florio, a former lawyer for a customer-advocacy group who was appointed to the regulatory commission in 2011, has endured months of criticism — some of it from his former allies — since the disclosure last year that he offered to work with a Pacific Gas and Electric Co. vice president to secure a judge the executive wanted for a major rate-setting case.
Florio’s e-mail communications with the executive appeared to violate commission rules against talking with utilities without telling other interested parties — such as groups representing the customers who pay PG&E’s rates. Federal prosecutors and the state attorney general’s office opened investigations late last year into whether
anyone at the commission had violated state laws by engaging in the back-channel talks with PG&E and the state’s other utilities.
The commission, meanwhile, decided to convene hearings into how it could toughen rules about when top regulators can talk with utilities — and commission President Michael Picker made Florio co-chairman of the effort.
On Wednesday, before the start of the first hearing in San Francisco, officials from San Bruno called on Florio to recuse himself from the reform process.
City officials’ relations with PG&E and the state commission remain tense nearly five years after a gas-pipeline explosion leveled a neighborhood in the city and killed eight people. After last year’s e-mail revelations, Florio recused himself from voting on whether to levy a $1.6 billion penalty against PG&E for the explosion.
Mayor Jim Ruane, in a statement, called Florio’s lead role in the reform effort “dumbfounding” and said it amounted to the “fox watching the henhouse.” Florio’s talks with PG&E, Ruane said, were part of the “collusion and corruption” between state regulators and the utility.
Florio did not directly address such criticism at Wednesday’s meeting, which was attended by all five members of the commission. The comissioners heard about a proposed pilot project that would ban one-sided contacts — known as ex parte communications — in certain rate-setting cases.
At the end of the meeting, Florio indirectly responded to his critics, saying the culture at the commission had already changed “in light of everything that’s happened.”
He said the number of ex parte meetings he has had with interested parties has dropped dramatically amid the recent controversy. “It isn’t as common anymore,” he said.
“For people who are concerned about a lack of fairness, I think a very bright spotlight has been shined on it. Changes have occurred — and that’s a good thing,” Florio said. “It certainly hasn’t been fun to go through, but we’re developing different sensitivities that may have been engrained from the prior period.”
E-mails released last year showed that Florio told then PG&E Vice President Brian Cherry that he would try to replace an administrative judge scheduled to oversee the company’s request for a $1.3 billion rate increase, to pay for gas-system improvements that stemmed from the San Bruno disaster. Florio apologized when the e-mails came out, saying he hadn’t understood that the communications violated commission rules against back-channel talks.
Florio was also present at two meetings last year when the agency’s then-president, Michael Peevey, pressured Southern California utilities to funnel $25 million to a pet political cause as part of what became a $4.7 billion deal to close the troubled San Onofre nuclear plant in San Diego County, according to a utility executive’s sworn account.
In the end, the utilities commission approved a settlement that saddled customers in Southern California with the bulk of the closure costs. Florio voted for the deal.
When details of the negotiations were made public, two major groups withdrew their support for the settlement — the Office of Ratepayer Advocates, the utilities commission’s consumer watchdog agency, and The Utility Reform Network — the advocacy group for which Florio spent 30 years as an attorney.
The commission has so far left the deal intact.