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Brown Aide Accused Of Influencing PUC Appointments To Bolster PG&E Stock

BAY AREA NEWS GROUP

SAN BRUNO, CA -- Gov. Jerry Brown's top aide - a former PG&E executive - influenced the governor's decisions for appointments to the powerful and tarnished state Public Utilities Commission to prop up PG&E's stock, a consumer group claimed on Monday.

"The governor needs to take this seriously," said Jamie Court, president of Consumer Watchdog. "This is all about corruption on his doorstep."

In March 2011, Brown appointed Mark Ferron as a PUC commissioner. Ferron spent 25 years with big Wall Street finance and investment firms, including executive posts with Bank of America, Salomon Bros. and the global markets division of Deutsche Bank.

Consumer Watchdog cited a late January 2011 email exchange that suggested that Nancy McFadden, the governor's chief of staff, was involved in the decision-making process for the appointment.

In the email, Brian Cherry, former PG&E regulatory executive lobbyist, wrote to former PUC President Michael Peevey that "Nancy asks if you have any names you would recommend. You can call her directly if you like."

Later the same day, Cherry forwarded the biography of a candidate, adding that "FYI, Nancy has it now." The name of the candidate was redacted.

"This filing is riddled with inaccuracies and has no merit," said Evan Westrup, a spokesman for Brown's press office. Regarding Cherry's characterizations of the situation, Westrup said: "Folks inflate their influence on and access to this office every day of the year in this town, and this individual is no different."

McFadden still owned shares of PG&E at the time, according to documents in a complaint that Consumer Watchdog filed with the state Fair Political Practices Commission.

Earlier appointments to the PUC that apparently had raised the hackles of PG&E executives were the namings of Michael Florio and Katherine Sandoval. Cherry noted that PG&E's stock slumped and that Wall Street analysts downgraded the utility's shares in late January 2011, upon revelation of the appointments by Brown of Florio and Sandoval. The two were deemed to be consumer-friendly and were expected to maintain tough stances against PG&E and other big utilities.

McFadden, upon her exit from PG&E, received a $1.04 million severance package for her role as a senior vice president and special adviser. She also had a stock package consisting of thousands of shares.

In a January 2011 email, Peevey suggested that McFadden be involved in the discussion about the utility's concerns regarding the board appointments.

"As I suggested before, this info should go to the governor's office, probably best to Nancy McF (McFadden)," Peevey wrote to Cherry. In an apparent reference to the governor, Peevey added, "Jerry has to be made aware that actions have consequences and the economy is best off with a stable utility sector."

In addition to the Fair Political Practices Commission complaint, Consumer Watchdog also indicated it would press for investigations by the Securities and Exchange Commission and the U.S. Justice Department.

"This is a total revolving-door problem," said Liza Tucker, a consumer advocate with Consumer Watchdog. The group demanded that McFadden provide evidence that she recused herself from the discussions or exit her post.

"It is troubling that a former senior executive of PG&E, a regulated utility, could have so much influence over utility regulators in California," said Loretta Lynch, a former PUC commissioner.

San Francisco-based PG&E, in an email in early January 2011, expressed enthusiasm about the appointment of McFadden as a chief of staff for Brown with responsibility for appointments, legislation and policy.

Timothy Simon, who at the time was a PUC commissioner, wrote on Jan. 5, 2011 to PG&E's Cherry about appointments that had just been announced by Brown: "Note Nancy." Cherry replied, "Yes. Good news!"

Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.