Kamala Harris and the California Public Utilities Commission

With the likely ascendance of Kamala Harris to the top of the Democratic Party’s ticket this November we will see increased scrutiny of her past record.  As we should.

We’ve already seen some great work on that, including an article in CalMatters that delves into that past.  But those investigations ignore one critical incident – her performance in what was probably the largest case (by dollar value) occurring during her tenure as Attorney General of California.

For those who don’t live here, or perhaps have just forgotten, in 2012 problems were discovered with the steam generators in the Southern California San Onofre Nuclear Generating Station.  Those problems culminated in a need to replace the generators.  The replacements were discovered to have defective tubing.  Rather than make a very large warranty repair claim, utility executives decided to shut down the reactors entirely.

This was projected to cost big money.  Really big money, $4.7 billion dollars big.  Someone was going to have to pay….

In California the “investor-owned utilities” are private for-profit companies given a monopoly over power distribution in their area by our government. The California Public Utilities Commission (CPUC) is supposed to oversee and regulate them, protecting the interests of the people from the rapacious greed of the state-protected monopolies. We can all predict how that works.

At the time the utility management decided to shut down the nuclear plant, utility profits under that oversight typically allowed the majority owner, Sempra Energy, to pay out about $1B/year in dividends. That has now grown to $3.7B in 2024. Of course they also pay their executives well, tens of millions every year.

One might think the people responsible for this chain of events might have to shoulder the cost of their mistakes, and they would in private industry.  But this is, again, a government-protected monopoly, and having to absorb the entire $4.7 billion would wipe out much of the utilities ability to make such large dividend and compensation payments to shareholders and executives.

The utilities proposed the ratepayers should pick up the bulk of the tab.  After all, weren’t the ratepayers responsible for the entire disaster?  Why should shareholders and executives suffer? Right?

Despite its mandate to protect ratepayers, the CPUC approved an agreement that saddled those ratepayers with responsibility to pay most of that cost, saving the utility shareholders $3.3 billion.  All’s well that ends well, at least for the utility ownership.

And then… state investigators discovered something unusual had happened in the process. Or perhaps just unusual in that it was discovered.

Evidence was found that during the negotiations the President of the CPUC Michael Peevey, had flown to Poland for “lunch” with a former utility representative. That meeting, documented in disclosed emails and notes (including a hotel napkin) mapped out the plan to have ratepayers pay most of the cost to cover the mistakes of utility executives.  That plan was nearly identical to the final agreement the CPUC approved.

That meeting was likely illegal – government regulatory bodies are not supposed to meet privately and hammer out deals out of the public view. Enter Kamala Harris, the California Attorney General.

Harris initiated an investigation, as she should. The state had hard evidence – flight and cell phone records, emails, and the actual napkin the deal was sketched out on. It seemed a foregone conclusion at a minimum the  agreement would be reopened, and perhaps sent back for renegotiation. That negotiation, now done in the light of day, would have drawn a lot of scrutiny. Perhaps it would have  resulted in a worse deal for the utility shareholders.

Someone could even have gone to jail, the crime could be considered a felony.

No worries. Kamala Harris, the self-described “Top Cop” of California, and in theory the best legal mind available to the People of our state was on it. Until she conveniently missed the filing deadline for the case, by one day….  An honest mistake, anyone whose job revolved around legal cases in charge of a case worth billions could do it. Right?

As a result shareholders saw the threat to their billions in dividends go away, and utility executives continued to receive millions in compensation.  The utilities profit stream – part of which was used to contribute over $110 million political causes from 2017 to 2022 – was protected.  And anyone involved who would have spent time in prison no longer had that worry.

Ratepayers – seniors, single mothers, low income families, etc, continued on the hook to pay for the majority of the costs in decommissioning the plant. Because it was all their fault, wasn’t it?

With $4.7 billion at stake one might think the Attorney General would have had a very good fix on filing dates. Her staff would have responsibility to file documents clearly defined. Everyone’s calendars would be marked.  The weeks before the filing deadline would be filled with meetings to make sure everything was progressing as planned. It would likely be the most important thing on the Attorney General’s agenda at that time.

But then…. Ooops?  Perhaps someone got hit on the head by a coconut?

The obvious question is whether missing the deadline was evidence of incompetence, or evidence of corruption. It’s hard to understand how the “Top Cop” could miss such a simple thing, but government incompetence tends to be more the rule than exception, so it’s not unimaginable. It’s also terribly convenient to have the case evaporate, given that protected billions of dollars flowing to the utilities and may have kept well connected people out of orange jumpsuits.

But no one knows for sure, it’s all just speculation. Everyone is welcome to make their own judgement,  but neither option seems indicative of someone we want in charge of anything in government.