Chino Hills/Edison Postscript: Window On Privileged Entitlement & Corruption

By Mark Gutglueck
Moving toward three years after a group of persistent Chino Hills residents wrung from the California Public Utilities Commission an unlikely and almost unheard-of reversal of a previous decision which had the effect of requiring Southern California Edison to underground high-voltage power lines for 3.5 miles of the five miles they are to run through the city at San Bernardino County’s southwestern extreme, the same group is once again defying the electrical utility behemoth.
This time, the grass roots group that spontaneously formed after the California Public Utility Commission in 2009 approved that portion of Southern California Edison’s Tehachapi Renewable Energy Project which gave Edison go-ahead to string 500 kilovolt cables from 197-foot high towers running through the heart of upscale Chino Hills wants the city to be allowed to establish a pathway over the underground utility corridor at the park created to memorialize that victory.
The saga of Chino Hills’ long-fought victory over Edison has an involved back story, one rife with favoritism, intrigue, misdirection, high level political influence and corruption, including a criminal investigation and pending prosecution.
Depending how close or distant one is from Chino Hills, the success a determined group of its residents had in getting the company to spend some $450 million more to convey electricity intended for use in the Los Angeles basin across its expanse than it originally intended is perceived differently.
To locals, that is, the residents of Chino Hills, the battle to prevent their community from being marred with the nearly 200-foot tall towers is perceived as a noble, indeed heroic, David-versus-Goliath struggle. To residents of other less affluent communities where Edison has already erected such towers or is in the process of establishing them, the chapter is seen as an object demonstration of the lack of balance and justice inherent in the legal and administrative processes of the State of California in which the wealthy can trade on their wealth and status to obtain from the government’s decision-makers a favorable outcome the less well-heeled and downtrodden could never hope to achieve. For others, those with a window on the tawdry backroom dealing and double-dealing, the corruption, cronyism and manipulative and exploitative political horse trading that inhabit our governmental institutions and regulatory processes, the favorable treatment Chino Hills and its residents were able to get from the California Public Utilities Commission is recognized as something different still. To them, Chino Hill’s fortune is perceived as the mask behind which the commission, or at least its president, was able to hide their or his complicity in Edison’s shirking of the lion’s share of its corporate culpability in its $4 billion mismanagement of its premier nuclear generating facility and its ploy to saddle its customers rather than its stockholders with the financial liability that mismanagement represented.
Having once achieved a $450 million special accommodation from Edison to which few others outside their own circle believe they were entitled, Chino Hills residents are again looking to force the issue with the electrical utility, and have Edison make that accommodation on their terms. Having forced the high intensity power lines from overhead to underground, Chino Hills residents are now insisting that they be allowed to freely pass over the ground where those cables are buried.
A key portion of the basis of Chino Hills’ residents collective belief that they hold the upper hand in their dealings with Edison is the career trajectory of Michael Peevey.
Peevey was a senior executive and eventual president of Edison International and Southern California Edison Company. During his time with the company, the San Onofre Nuclear Power Plant in Orange County became a major source of electricity provided to Southern California Edison’s customers. In 1995, Peevey left Edison to become the president of New Energy Inc. He left New Energy in 2000. In 2002, he was appointed by then governor Gray Davis to the California Public Utilities Commission. By the end of that year, he acceded to the position of chairman of the commission. In December 2008 Governor Arnold Schwarzenegger re-appointed Peevey to another six-year term on the California Public Utility Commission.
As early as 2004, Southern California Edison, in response to state mandates that it move toward the goal of deriving at least 15 percent of its energy from renewable sources, began contemplation of the concept of creating what was to be the world’s largest windfarm, consisting of hundreds of electricity-producing windmills in Kern County. As plans for that system became more tangible, they grew to include the 173-mile Tehachapi line, which is intended to connect the windfarm with the Los Angeles metropolitan basin, where the lion’s share of the electricity is to be used.
Southern California Edison completed plans for the undertaking and sought project approval from the California Public Utilities Agency. In 2009, over the city of Chino Hills’ protest, the commission, headed by Peevey, granted Southern California Edison clearance to erect high-tension power transmission towers through the 44.7-square mile city at the extreme southwest corner of San Bernardino County along a long-existing power corridor easement owned by the utility.
Shortly thereafter, Chino Hills residents banned together into two groups, which were functioning on parallel tracks, to challenge the project approval, in particular the erection of the towers in Chino Hills. Those groups, one of which underwent a name change, eventually merged under the title Hope for the Hills. They pressured the City of Chino Hills to take up a legal challenge of the project. That effort initially garnered little success, however. The City of Chino Hills expended $4.4 million to employ attorneys and make other efforts to contest the Public Utility Commission’s action, including filing suit against Southern California Edison, alleging the company had “overburdened” the 150-foot wide power line easements. That legal effort failed when West Valley Superior Court Judge Keith D. Davis ruled the California Public Utilities Commission has exclusive jurisdiction regarding the route used by Edison, and the suit was thrown out. An appeal of Davis’s ruling was denied by the 4th District Court of Appeal.
Southern California Edison forged ahead with its plans. In 2011, the plans became reality and it began erecting the 197-foot high transmission towers within the Chino Hills city limits. As summer gave way to fall that year, Edison had completed the erection of 18 of those towers.
Nestled against northeast Orange and southwest Los Angeles counties, Chino Hills is the most upscale of all of San Bernardino County’s 24 incorporated municipalities, with per capita and per household incomes that exceed those of every other city in San Bernardino County. Earnestly, the Chino Hills community’s activists propounded their insistence that the towers from which the electrical lines were to be suspended were quite simply incompatible with the affluent community in that they clashed unacceptably with the aesthetics and character of neighborhoods wherein the least expensive homes were going for over $400,000 on the open market. This was met with Southern California Edison’s stern response that the company simply could not afford any alternative to stringing the high voltage lines from tower to tower and that burying the cables across the five mile long span of the Tehachapi line through the city would increase the project’s cost by at least $631 million and as much as $828 million. According to Edison, the cost of undergrounding a double-circuit line would run anywhere from $703 million to $1 billion. Edison claimed it could erect the towers along the same span and string the cables between them for an estimated $172 million.
Seething with outrage but poised on the verge of accepting the inevitable, Hope For The Hills made the desperate last ditch effort to appeal to Peevey directly and personally, inviting him to Chino Hills to see for himself how the 197-foot high eyesores were blighting the splendid community. As much or more than anyone, the Hope For The Hills activists were astounded when Peevey accepted the invitation. After touring the city and observing the towers from various perspectives, Peevey called for the suspension of the erection of further towers beyond the 18 already in place.
Simultaneously, beyond the parochial concerns over Chino Hills’ visual presentation to its corner of the world, far more powerful forces and considerations involving Edison were tugging and shoving Peevey.
Designed by Westinghouse and constructed by the Bechtel Corporation, the San Onofre Nuclear Power Generation Plant’s first unit was commissioned in 1968, its second in 1983 and its third in 1984. It had structural and operational problems throughout its existence, including Bechtel’s infamous 1977 assemblage/installation of a 420-ton nuclear-reactor vessel backwards. In 1992 the first unit was decommissioned and by 2010, the useful life of the two remaining units was approaching expiration. Southern California Edison had a 78.2 percent stake in the plant’s ownership and operation, with San Diego Gas & Electric controlling 20 percent and the City of Riverside Utilities Department holding the remaining 1.8 percent. Looking forward to the decommissioning of the entire plant, Edison was looking to reduce to the extent possible the cost of closure the company’s stockholders would need to bear and maximize to the extent possible the transfer of the closing costs to Edison’s, San Diego Gas & Electric’s and Riverside’s ratepayers. Such discussions, ones carried out in secret, were ongoing as early as 2010 between Peevey, then serving in his capacity as California Public Utility Commission chairman, and the company he had formerly headed as its president. The matter was given even greater urgency in January 2012, when Unit 3 suffered, during what was said to be a routine refueling and replacement of the reactor vessel head, a small radioactive leak largely inside the containment shell and the reactor was shut down per standard procedure. A subsequent examination found both units 2 and 3 were showing premature wear on over 3,000 tubes and in 15,000 places in the replacement steam generators installed in 2010 and 2011. Plant officials, pledging not to restart the units until the causes of the tube leak and tube degradation were understood, intensified the inspection of the facility. Further problems were discovered. Consequently, neither unit was ever restarted.
Hope For The Hills’ timing had been impeccable.
As it would turn out after much investigation, Peevey was at that point colluding with Edison corporate officers to ensure that the cost of the San Onofre plant closure would be transferred to the company’s customers. During 2012 and 2013, in secret dialogues between Peevey and Stephen Pickett, Edison’s executive vice president, as well as with other Edison corporate officers, the shape of a plan evolved. The deal was sealed, essentially, on March 26, 2013, not in Southern California but at the Bristol Hotel in Warsaw, Poland, where Peevey met with Pickett and hammered out a deal by which utility customers are to pay more than $3.3 billion of the $4.7 billion in costs for the full shuttering of the plant. The meeting between Peevey and Pickett was a secret one, and so it remained until a private investigator working for a public interest lawyer was able to unearth evidence of the meeting almost two years later.
For both Peevey and Edison, it was imperative that no connection between them be made while the pending approval of the plant closure funding agreement hung in the balance. Throughout 2012, the Chino Hills community sought to build on the momentum Peevey’s suspension of the further erection of the electrical towers in the city had provided, most of which consisted of a series of motions and requests by the City of Chino Hills that went before Public Utilities Commission Administrative Law Judge Jean Veith in 2012 and early 2013. Veith consistently denied those motions, which were aimed at forcing Southern California Edison to underground the 500 kilovolt electrical lines. At last, the city loaded all of its eggs into a single basket, a petition for rehearing before the five member commission that ultimately was heard in July 2013. At that hearing, a bare minimum three votes emerged – those cast by Peevey and commissioners Mark Ferron and Catherine Sandoval – to effectively undo the then-four-year standing vote of the Public Utilities Commission that gave Edison go-ahead to erect the towers. That 3-2 vote, with commissioners Michel Florio and Carla Peterman dissenting, endorsed Peevey’s proposed decision calling for the 3.5 mile undergrounding of the line through the heart of Chino Hills.
Peevey’s championing of Chino Hills’ cause against Edison effectively shrouded in total obscurity his machinations on behalf of the San Onofre closure deal in favor of Edison.
Lost in the shuffle was the consideration that both of the intrigue-filled Edison decisions Peevey involved himself in – San Onofre and Chino Hills – redounded to the detriment of the totality of Edison’s customers, as they would be saddled with higher rates to cover both expenses. Previously, it had been widely suggested that if Chino Hills and its residents insisted that Edison be forced to adhere to a standard applied nowhere else – namely the undergrounding of the power lines through that city, then the city and its taxpayers should pay for that undergrounding. Cited as a concern at that time was that if the California Public Utilities Commission was to accommodate Chino Hills in its request, it would establish a precedent whereby every other city and community in California where there are substantial above-ground power lines would be able demand that the electrical towers they hosted be taken down and the power lines buried.
Immediately after the July 2013 decision in Chino Hills’ favor was rendered, the first such demand came in. In neighboring Ontario, the southern end of that city features a power line easement that is likewise being used for the Tehachapi Line. Edison stonewalled that request. Then on October 31, 2014, Ontario filed a petition for modification of the Tehachapi Line design in its jurisdiction with the public utility commission. Administrative law judge Vieth, who routinely considers matters brought before the utilities commission prior to that panel making its decisions, refused to accede to Ontario’s request that Southern California Edison be enjoined from proceeding with the project as previously approved. And the full California Public Utilities Commission, which by that point no longer numbered Peevey as one of its members, has not deigned to take up Ontario’s request, a tacit indication that Chino Hills was indeed the beneficiary of Peevey’s machinations as the favorable ruling it received in 2013 provided the perfect, and perfectly-timed, smokescreen to allow him to commit Southern California Edison’s customers to a $3.3 billion subsidization of that company’s operating costs, ones that more properly should have been defrayed by the company itself and its shareholders.
Unofficial indications are that the cost of doing the undergrounding in Chino Hills will cost Edison $623 million, which is roughly $451 million more than the $172 million the company had slated to spend in erecting the towers and suspending the electrical lines to convey the electricity originating in Tehachapi across Chino Hills.
Now, in 2016, comes a postscript.
In complying with the mandate to underground the power lines in Chino Hills, Edison is laying the high voltage lines into a linear underground vault running across the city. A three-sixteenths of a mile span of this vault transits in an underground swath pretty close to the middle of Hope For The Hills Park, which was named in honor of the grass-roots movement that brought down the 197-foot high towers. To one side of the underground utility corridor is the park’s picnic area, playground and some other recreational amenities. On the other side of the park are tennis courts. Edison at this point is insisting that no pathway be built over the underground easement, such that a walkway between one side of the park and the other cannot be laid down. This would necessitate that park patrons walk on Avenida Cabrillo, fronting the park, to reach the tennis courts.
This has the created a throwback to three, four, five and six years ago, with Chino Hills residents screaming foul and again demonizing Southern California Edison. Edison, some city residents maintain, is refusing to allow the park walkway to be completed out of spite over the company’s lingering ire with the community growing out of the undergrounding issue. Edison’s vituperation, some say, is evident in the refusal to allow the walkway to traverse the underground electrical vault beneath the park. Edison is pointedly rubbing it in, some have suggested, because the park itself is named for the group that waged the long twilight battle against Edison.
Hope For The Hills members and other city residents are pressing the city to lodge an administrative petition with the California Public Utilities Commission with regard to the walkway and, if that fails to achieve the desired end, file yet another lawsuit. Publicly last week city attorney Mark Hensley appeared to be summarizing points and authorities for just such a lawsuit, which is rumored to be under preparation. Hensley said Edison’s intransigence with regard to allowing the pathway to traverse that portion of the park lying above the underground easement will effectively bifurcate the park and limit pedestrian access to the tennis courts. Hensley said Edison’s was being inconsistent in that it had made no objection to pathways or usages over other parts of the underground vault at various points between Pipeline Avenue to Carbon Canyon. Hensley’s office has reviewed the various communications and documents submitted with regard to the easements, property purchases, exchanges and transfers relating to the right-of-way arrangements for the undergrounding project. No specific indication of Edison’s intent to prevent passage over the vault at the park was expressed, Hensley maintains, though the agreement does indicate that there would be limitations, imposed for safety concerns, on above-ground crossing points. Nevertheless, Hensley has indicated he is prepared to “challenge this in front of the CPUC [California Public Utility Commission] and the court system.”
What is going on in Chino Hills with regard to the park pathway dispute is of little note or interest to those outside of the city, a post script, and an obscure post script at that, to what occurred nearly three years ago. Among at least some outsiders who are aware of the contretemps, however, there is wonderment at the boldness with which Chino Hills residents continue to hammer at Edison over issues relating to the Tehachapi Line, now that the community has achieved the central objective relating to the issue, which is having the towers taken down and the 500-kilovolt capacity lines buried below ground. Indeed, among those who are knowledgeable about the back story against which Chino Hills achieved that victory – the serendipity and the timing of Peevey’s machinations to do Edison a $3.3 billion favor that could be camouflaged with the $450 million concession to Chino Hills on the undergrounding issue – there is a feeling that Chino Hills wants to have its cake and eat it, too. After demanding that Edison bring down the towers and somehow achieving such an unlikely accommodation, Chino Hills residents are now insisting that the towers’ replacement – the underground vault corridor – be built to their, rather than Edison’s, standards and specifications. Some see in this a community-wide sense of entitlement on Chino Hills’ part, a feeling that the wealthy community need not play by the same rules imposed on other cities throughout the state which must simply accept that they must host with grace and equanimity, in the interest of the state as a whole, regional infrastructure necessary for the state’s utility companies to serve the entirety of California’s population.
At the same time, there is the perception that by threatening to take its current beef with Edison before the forum of the California Public Utilities Commission or into a court of law, Chino Hills could well be pushing its luck, as these venues could create opportunities for closer and deeper scrutiny of the city’s entanglement with Peevey, whose militating on behalf of Edison relating to the San Onofre closure is currently under close examination by the California Attorney General’s Office for its criminal implications.
Hope for the Hills President Bob Goodwin told the Sentinel that the community’s effort to pressure Edison to allow the pathway to be constructed over the underground electrical corridor at Hope For The Hills Park is a logical and defensible one. Pointing out that Edison is permitting other uses to be placed over the vault at several other points, Goodwin said the ball is now in Edison’s court to demonstrate why things should be any different at the park.
“The right of way dissects the park,” Goodwin said. “The initial design of what Edison was going to allow was a pathway between the recreational and picnicking area and where the tennis courts are. Without that walkway, people will have to go out of their way to get to the tennis courts. Now Edison is saying, to use their terms, it is ‘not safe’ for people in the park to pass over. Yet they are not saying it is not safe for people to walk over the line at Pipeline [Avenue] or on Chino Hills Parkway. We have asked why there is a difference and have not heard back. It makes no sense why they are saying now it is not safe at that spot. They have not really said they cannot construct the walkway over that spot but they have said they will not construct the walkway there. They have said that maybe in another year or another two years, the pathway can go in there. What is going to change in a year? They say there is a safety consideration and it is not safe to cross there. Maybe there is a safety issue, but the community wants facts. I don’t know what that safety issue is and neither does anyone else. We want them to answer us as to why it is not safe.”
Goodwin said he saw no problem in having the issue taken up by the California Public Utilities Commission.
That the favorable outcome Chino Hill’s obtained with regard to the Tehachapi Line undergrounding through the city involved entanglement with Peevey during the critical period of what some people believe were depredations relating to the San Onofre closure did not undo Chino Hill’s victory, Goodwin said.
“I am aware of some of the issues involving him since he left his job as PUC president,” Goodwin said of Peevey. “He did some wonderful things for the community of Chino Hills. He is not without his detractors and he is not without controversy. What he did for us in Chino Hills does not blind people to the policy decisions and tactics he involved himself in at the PUC while he was president.”
Conceding that what Peevey did entailed “possible” violations of the public trust, Goodwin suggested that Peevey was functioning in an environment in Sacramento and San Francisco that was corrupt.
“The problem goes beyond him,” Goodwin said. “State legislators have taken this seriously enough to pass a law which bans ex parte communications on the part of state commissioners and the entities they are regulating. The word is that Governor [Jerry] Brown will probably veto that legislation. The governor apparently believes confidential communications back and forth between these public officials and the folks they are regulating are somehow necessary. These commissioners are sworn to protect the interest of the public and it is very difficult to understand why they should have the privilege of secret communications on some issues that have tremendous bearing on the public and its welfare. The governor’s sister sits on the board of Sempra Energy. Something like that should not excuse the commissioners from their duty.”

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