When criminal investigators with the California Attorney General's Office searched the home of a former top utility regulator early last year, they uncovered evidence that upended a story state officials and a major electric utility had been telling consumers about the deal to pay for the shutdown of the San Onofre Nuclear Generating Station.
This was big. And Attorney General Kamala Harris, now a candidate for U.S. Senate, was hailed by consumer activists for her aggressive investigation.
The California Public Utilities Commission and Southern California Edison had claimed a settlement that left ratepayers with the $3.3 billion bill for the San Onofre Nuclear Generating Station’s closure was the product of hard-fought negotiations between ratepayer advocates and the power company.
But when Harris' investigators went through the La Cañada Flintridge home of former CPUC President Michael Peevey after obtaining a search warrant, a different story emerged.
Investigators found handwritten notes that showed Peevey had met secretly with an Edison executive in Poland after the nuclear power plant sprang a radioactive leak and had to be closed. There, they came up with a framework for a San Onofre settlement that closely resembled the final public deal.
“That was the most remarkable piece of investigative work that I’ve ever seen in the last 40 years,” said San Diego consumer attorney Mike Aguirre.
It was the kind of work, Aguirre said, that makes people fall in love with their leaders. But now he contends Harris is jilting her constituents.
“There was no follow up,” he said.
Aguirre and other consumer activists contend Harris is failing to police state regulators and Edison. While her office's criminal probe launched with a punch when Peevey’s home was searched, the investigation is now dragging on without result, they said.
Harris declined to be interviewed for this story. Her office also declined to answer any questions about the inquiry into the San Onofre settlement. A statement released by her spokesman said, "Criminal investigations are very serious. To protect the integrity of our investigations, we can’t comment on potential ongoing investigations."
More search warrants issued
Six months after Harris’ investigators searched Peevey’s house, the attorney general obtained more search warrants. This time they were for the centers of power in the San Onofre case — Edison and the offices of state regulators.
But the attorney general's investigators never went in, according to court documents. Instead, they served the search warrants to Edison and the CPUC 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,’" said Aguirre, a former federal prosecutor and San Diego city attorney. “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.”
He said using the full power of the search warrant is essential if the public is ever to get the truth from state regulators and Edison over how the San Onofre settlement was reached.
“There’s so much momentum behind the unlawful conduct, the search warrant is the only device you can use, unless you can have some sort of wiretap,” Aguirre said.
CPUC slow to turn over records
Edison has turned over some records to the Attorney General's Office. The CPUC, however, has withheld many of the documents on grounds they don’t have enough resources to work on producing the documents. The agency also is claiming some of the records are privileged.
Harris hasn’t challenged the CPUC’s privilege assertion. Jason Forge, a former San Diego federal prosecutor, said the attorney general would likely prevail if she did.
“The PUC is the state, and so if the PUC is the state and the state is the client, that’s who controls the privilege. The person at the top of the state is Gov. (Jerry) Brown, and he could waive the privilege,” Forge said.
Brown’s own office has exchanged emails about San Onofre with the CPUC. The CPUC is refusing to release those emails as well.
Only Aguirre has demanded the CPUC make the communications public, not Harris.
He also successfully sought the removal of appeals court Justice J. Anthony Kline from the case because Kline had gone to law school with Brown.
Aguirre said it’s puzzling that Harris hasn’t made the same efforts he has.
“She has no presence,” Aguirre said. “She has no involvement. She has no leadership. You have no sense of her being out there on the front saying we’re charging forward to do what’s right.”
Harris has also remained silent on another part of the case. The CPUC’s law firm, DLA Piper, is representing the agency and its employees. Forge said the practice is frowned upon by prosecutors because it intimidates potential whistle-blowers.
“What happens is the individual employees do not have anyone to whom they can truly turn for legal advice, because they know the same person who is representing them is representing their supervisor, and their supervisor’s supervisor,” Forge said.
Harris could ask a court to require the CPUC to retain separate counsel. So far, she hasn’t.
Democratic politics could be at play
Consumer advocate Charles Langley said Harris may not want to pursue the San Onofre investigation to its end because the state’s Democratic hierarchy could be touched by it and that could affect her U.S. Senate bid.
“This is a scandal that will very likely implicate Gov. Jerry Brown, a powerful Democrat, and Michael Peevey, a powerful Democrat, and his wife, an elected powerful Democrat,” Langley said. “I think it’s very distressing to her when she’s running for U.S. Senate and going up against the Democratic Party structure.”
Peevey’s wife is state Sen. Carol Liu.
As attorney general, Harris has established a record for fighting white-collar crime. She set up a mortgage fraud task force, and she obtained $18 billion from the nation’s biggest banks for their role in the foreclosure crisis.
She is also investigating whether Exxon Mobil misled the public and shareholders on what it knew about climate change and whether that amounts to securities fraud.
So far, the questions surrounding Harris' handling of the San Onofre settlement investigation have not affected her standing with voters expected to cast ballots in the June primary. Harris has been the front-runner since she announced in January 2015 that she would run to replace Democratic Sen. Barbara Boxer, who is retiring.
In last month's USC Dornsife/Los Angeles Times poll, Harris was leading her closest rival, Orange County Congresswoman Loretta Sanchez, 28 percent to 19 percent. Both are Democrats. The top two vote-getters in June will compete in the November election, regardless of party. The poll showed about a third of those surveyed have yet to decide who they will vote for.
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