San Onofre dealmaker fueled by state funds (2024)

The biggest beneficiary of a state program aimed at leveling the playing field between utilities and their customers is a Bay Area consumer group that privately negotiated the deal assigning customers 70 percent of the costs for the failure of the San Onofre nuclear plant.

The Utility Reform Network, or TURN, collects millions of dollars a year in so-called intervenor compensation – almost half of all the money handed out by the California Public Utilities Commission since 2013.

TURN said its success is driven by the number of proceedings in which it participates, advocating for the public. For every dollar it receives in intervenor compensation, ratepayers save $1,000 or more on their utility bills, it said.

“Because CPUC proceedings are lengthy and highly technical, the costs of participation in even a single proceeding can be significant,” Executive Director Mark Toney said. “Without intervenor compensation, it would be extremely difficult for residential customer interests to be well represented given the large ratepayer-funded budgets for legal and regulatory staff employed by the electric, gas, telecommunications and water utilities.”

Critics say the system is flawed because regulators decide who gets the intervenor money, and regulators have become too close to the utility companies they are overseeing. Therefore, the critics argue, intervenor funds go to groups that toe the line with commission officials and utility executives – not those who fight the status quo.

TURN receives as much as 90 percent of its operating income from commission awards, so it’s highly dependent on regulators for its livelihood. Whether consciously or not, the group might allow that dependency to shape its advocacy, critics say.

“The public really doesn’t have anyone at the commission looking out for them,” said San Diego lawyer Michael Aguirre, who is suing to overturn the San Onofre settlement as an undue burden on utility customers. “They are being charged for advocacy that really is not being performed. The same people always get paid.”

Commission officials dispute those allegations, saying the intervenor compensation program provides consumer groups and others an avenue to participate in complicated proceedings they might otherwise not be able to contribute to.

The payments, which are covered by utilities and eventually charged to ratepayers, allow advocates to influence debate and create better outcomes for customers by funding the time and expertise it takes to counterbalance arguments from water, power and communications companies, officials say.

“It ensures that individuals and groups that represent the interests of utility ratepayers have the financial resources to bring their concerns and interests to the CPUC in the course of its proceedings,” spokeswoman Terrie Prosper said. “These intervenors advocate for a variety of ratepayers, including residential and small-business customers, minority groups and the disabled.”

The program was initiated in 1981. To become eligible for compensation, groups must apply and detail what concerns they have about a specific proceeding and how they would contribute to the discussion over whether it should be approved.

In the past three years, about 70 such groups have been approved for intervenor status before the commission, including Trout Unlimited, the Center for Accessible Technology, Ecological Options Network and Backcountry Against Dumps.

Once applicants are approved to participate, they offer suggestions and expert testimony to influence the outcome. After an application has been decided, regulators determine the monetary value of the contribution each intervenor made to the process.

In 2013, state auditors said the program generally performs well but chided the commission for failing to pay the majority of claims within the 75-day limit. They also noted that 10 intervenors collected 84 percent of the money paid out between 2008 and 2012. Top among those was TURN, followed by San Diego’s Utility Consumers’ Action Network.

Allegations that regulators reward those who go along more than those who get adversarial have dogged the commission for years.

The claims are difficult to prove because payouts are subjective, based on judgments by the assigned administrative law judge or commissioner as to what value an intervenor’s input had for a particular proceeding.

The commission approved 312 claims worth $25.6 million between January 2013 and August 2015, an average of 10 awards per month at $82,000 each.

That’s more money handed out faster than any time over the previous five years. Between 2008 and 2012, the commission approved 337 claims totaling $25.5 million – an average of 5.6 claims per month worth about $75,000 each.

TURN has received more than $11.7 million since 2013, about 45 percent of the money awarded. Between 2008 and 2012, TURN received $12.7 million, almost half of the payments approved by the commission.

Even though the San Francisco nonprofit relies on the funding to pay operating costs, its lawyers would never capitulate to regulators in order to collect intervenor fees, Toney said.

“TURN strives to achieve the best outcomes for ratepayers and does not modify its testimony or litigation strategies based on any risks associated with intervenor compensation,” Toney said. “TURN does not make any agreements relating to intervenor compensation with any other parties in the course of litigation or settlements.”

TURN’s role in the settlement of costs for the January 2012 failure of the San Onofre power plant north of Oceanside has received less attention than players such as the CPUC and majority plant owner Southern California Edison.

A framework for the agreement was set at an undisclosed meeting in Warsaw, Poland, in March 2013, involving former commission President Michael Peevey and an Edison executive.

After that meeting, TURN was the consumer group that Edison approached to negotiate a settlement of costs related to the premature closure. Ten months later, the parties announced a deal that closely resembled the Warsaw pact.

A month after the deal was announced, in April 2014, TURN learned of the undisclosed meeting in Poland but did not inform the public. TURN defended the negotiated settlement throughout a months-long review process, culminating in commission approval in November 2014. The deal assigned utility customers to cover $3.3 billion of the $4.7 billion in premature shutdown costs.

The Warsaw meeting was revealed this past January, after The San Diego Union-Tribune reported that notes about San Onofre on Hotel Bristol Warsaw stationery were seized by investigators probing utilities commission relationships with utility executives.

In light of the Warsaw revelation and other backchannel meetings since revealed, TURN formally withdrew its support for the settlement deal in June.

The group is seeking almost $290,000 for its work on the San Onofre case.

Friends of the Earth, another intervenor that signed onto the settlement, requested $483,000 in compensation. The National Asian American Coalition is seeking $172,000; the World Business Academy requested $425,000; the Alliance for Nuclear Responsibility is seeking $794,000; and Women’s Energy Matters requested $247,000.

None of the requests have been paid because the case remains active.

Despite his high-profile opposition to the San Onofre settlement, Aguirre said he did not apply for intervenor compensation in that case because the commission has a track record of denying his applications even when he influences proceeding outcomes.

“The rewards meted out by the PUC go to the people who are most loyal and faithful to the commitment to keep rates as high as possible,” Aguirre said.

Aguirre intervened in an application from the state’s investor-owned utilities – Edison, SDG&E, Southern California Gas and Pacific Gas & Electric – when they wanted to charge customers in advance for future wildfire damages that would not be covered by insurance companies.

The application was rejected after a groundswell of opposition. Three of the four intervenors in the case received funds; Aguirre’s claim for $224,000 was rejected.

“It was a big victory,” Aguirre said. “I put in for my money and they gave me zilch.”

Last year, a group called the California Environmental Justice Alliance sought $155,000 from state utility regulators to pay for its time and effort opposing power contracts SDG&E wanted to sign with two proposed power plants in San Diego County.

Despite adopting some of the alliance’s points in its decision, state regulators rejected the alliance’s compensation request, finding that the activists had made no significant contribution to the proceeding.

“The commission itself is judge and jury of the value of your participation,” said Bill Powers, an engineer and expert witness who testified in the SDG&E case. “In a just world, they would have been fully compensated. Instead, they got sent a message: You get zero dollars.”

The group appealed and the commission reversed course a few months later, awarding the alliance almost $100,000 for its work.

Don Kelly is the executive director of the Utility Consumers’ Action Network, the San Diego nonprofit that also collects a significant amount of intervenor funds. UCAN received $1.4 million in compensation since 2013.

Kelly defends says the commission program promotes inclusion and benefits ratepayers. He said organizations are free to appeal when denied compensation and pointed to a reversal UCAN won in the same SDG&E power-purchasing proceeding that initially denied the CEJA request.

“This case is an example of how the system worked well,” Kelly said.

The system did not work so well for Martin Homec, who spent 24 years as a commission analyst before opening his own law firm and intervening in utility cases. He said the process is skewed in favor of those who support what regulators want.

“If they (intervenors) agree with the PUC staff and don’t embarrass them by suggesting things contrary to what the staff suggests, then they get paid,” Homec said.

Homec represented the anti-smart meter group Center for Electrosmog Prevention in a recent rate-setting case involving PG&E, the Northern California utility whose gas line exploded in San Bruno five years ago and killed eight people.

The Davis lawyer requested that regulators investigate all of PG&E’s equipment following the San Bruno accident – not just the company’s gas lines. The suggestion went nowhere. In June, his client was denied the $50,000 in intervenor fees Homec requested, determining he made no significant contribution to the case.

The request to evaluate all of PG&E’s equipment following the San Bruno disaster may have been more apt than regulators gave him credit for. A PG&E transmission line has been identified as one possible cause of the Butte Fire now burning thousands of acres in the Sierra Foothills.

“They should have done better,” Homec said of the regulators. “They should have looked at all of the records, not just the gas system.”

TURN requested $1.5 million for its contribution to the PG&E case and collected all but about $40,000.

The National Asian American Coalition requested $192,000 in the same proceeding for working with PG&E to address issues of marketing, outreach, community engagement, auditing and diversity. Regulators awarded the coalition $155,000.