California utility regulators meet Thursday to consider fining PG&E over backroom dealings

State regulators are set to consider whether to fine Pacific Gas & Electric Co. and require its shareholders to cover as much as $200 million of a gas rate increase because of backroom negotiations between the utility and regulators.

Recently released emails show a PG&E executive and California Public Utilities Commission officials discussing which judge to appoint to a case over gas rates, with the executive objecting to one judge for having a history of being hard on the utility. The emails are the latest in a series released by the utility and others that allegedly show PG&E executives privately negotiating with CPUC officials.

The CPUC could decide at its meeting Thursday whether to fine PG&E $1 million for the emails about the judge and whether to require PG&E shareholders to cover a portion of the proposed rate increase instead of utility customers.

Shareholders could be on the hook for as much as an estimated $200 million, though ratepayer advocates say the commission has discretion to require a much lower figure.

They are demanding that the commission release tens of thousands of additional emails that they say may also show illegal contact between the CPUC and the state's largest utility.

"This decision is in many respects a farce," said Tom Long, legal director for The Utility Reform Network. "Because it's not based on any effort to find out what really happened."

An administrative law judge Wednesday ordered PG&E to search for and turn over additional emails to commissioners related to the gas rate hike or its gas lines, and to disclose any oral communications as well. Long said the order was a step in the right direction.

An alternative proposal before the commission does not call for a fine or any shareholder contribution. Both proposals would ban all back-channel contact between commission members and the state's largest utility for at least a year.

The commission can adopt either one of the proposals, amend them, or reject them and come up with its own plan.

PG&E spokesman Keith Stephens said in a statement that the emails in question were inappropriate and some violated the CPUC's rules. But he said PG&E reported them, held people accountable and was "making significant and voluntary changes designed to prevent this from happening again."

Commission member Mike Florio, who was involved in an email exchange over the assignment of judges, recused himself from the ongoing rate case. Commission President Michael Peevey also has been under fire. He received a copy of at least one of those emails and has announced he will not seek reappointment when his term ends at the end of the year.