Regulator's wife gets campaign help from regulated

Companies with business before the PUC are contributing to the Senate campaign of Carol Liu. Her husband heads the commission.

By Jordan Rau
Los Angeles Times August 10, 2007

SACRAMENTO -- Phone and energy companies and officials with business before the California Public Utilities Commission and its chairman, Michael Peevey, are helping underwrite the state Senate campaign of Peevey's wife, Carol Liu.

Industries regulated by the commission have given $88,783 to assist Liu's 2008 bid to represent a district stretching from the San Gabriel to the San Fernando valleys. The donations, made by companies, executives, trade and employee groups, subcontractors and lawyers, make up 26% of the money Liu has raised so far.

A number of Liu's utility contributors have received favorable decisions from the body that regulates them during Peevey's tenure. Others have pending business.

Sempra Energy executive Edwin Guiles has given Liu $2,000, his only donation to a state legislative candidate this decade. The money was donated in 2005 and 2006, when Guiles was chairman of Southern California Gas Co., which Sempra owns.

The PUC is currently deciding whether to grant the Gas Co. an 11% rate increase for residential customers.

Calpine Corp., an energy supplier based in San Jose, gave Liu $2,000 this year even though the company is in bankruptcy. In 2004, Peevey helped negotiate a pact in which San Diego Gas & Electric bought power from a Calpine plant in Otay Mesa. He has also led the PUC's reconsideration of electricity deregulation, which could benefit Calpine and several other energy producers that contribute to Liu.

"It is quite apparent that Ms. Liu's connection to Mike Peevey has opened a large number of fundraising doors," said Michael Shames, executive director of Utility Consumers' Action Network, a San Diego-based advocacy group. "My concern is that the regulated companies' eagerness to give money to Ms. Liu may be based upon those companies' efforts to gain access to and favoritism from her husband."

Liu, Peevey and several donors who agreed to be interviewed said her financial support from utilities stems from relationships the former state assemblywoman forged in public office, not because of Peevey's position.

Liu, a Democrat from La Cañada Flintridge who served in the Assembly from 2000 until last year, said that since her husband was appointed to the PUC in 2002, "we have made it a pact to be very careful about conflicts of interest." She said, "He's been very careful not to solicit money" from those he regulates.

She dismissed the suggestion that the donations to her campaign might sway Peevey: "Not if you know my husband. He does things independently, and he does what he feels is right."

Some of Liu's backers have not donated to any other legislative candidate in this decade. A Sempra spokeswoman said Guiles has known Liu for years and "was just making his own personal contribution."

Liu has received a combined $20,325 from AT&T, its employee public action committee and five of its executives. The company has benefited from Peevey's successful effort to free phone companies from most rate regulation. Peevey also led the effort to repeal strict consumer protection rules for cellphone users that would have made it harder for telecommunications companies to lock customers into contracts and obscure the terms of the deals.

One AT&T donor to Liu is Cynthia Marshall, who was in charge of regulatory affairs for SBC Communications before AT&T acquired the company. Marshall, who now works for AT&T in North Carolina, donated $3,600, the maximum individual amount allowed under California law.

AT&T declined to discuss its corporate donations or make its executives available for interviews. One AT&T executive reached by The Times is Anita Gabrillien, vice president for external affairs, who said her $125 donation to Liu was motivated by their shared interest in higher education, which Liu focused on while in the Assembly.

Liu said her relationship with AT&T "precedes ever being in office," going back to the company's participation in breast cancer awareness campaigns she organized.

Executives at Southern California Edison, where Peevey was president until 1993, have also helped Liu's campaign. Executives at the electricity company and its parent corporation, along with one of their wives, have given Liu $10,950.

Attorneys and law firms that appear before the PUC have given Liu $18,458. Some, such as the Los Angeles firm of Nossaman, Guthner, Knox and Elliott, which gave Liu $4,600, have practice areas devoted to public utility regulation. According to the firm's website, its clients include AT&T Wireless, MCI Communications, Woodside Natural Gas and Sprint.

A San Francisco firm, Hallisey and Johnson, that has represented Calpine and the Hopi Indian tribe before the PUC, donated $1,000 to Liu and spent $1,258 throwing a fundraiser for her in June, records show.

Firm partner Jeremiah Hallisey said he has been "personal friends of her and Mike for 30 years." He said Liu has "been a good friend of higher education," and the fundraiser was one of hundreds he has given for politicians.

Liu is running for the 21st Senate District seat being vacated by Jack Scott of Altadena. It is considered a safe Democratic seat, so the contest will probably be decided in the June statewide primary.

Several politicians, including Dario Frommer, a former Assembly majority leader, are considering entering the race, but Liu is the only one so far to declare her candidacy. She has raised $346,433 and put $105,000 of her own money into her campaign account.

Peevey said he stays clear of his wife's fundraising and said that many of the utility donors to Liu routinely give to politicians. He said he has had a "negative influence" on her fundraising because she has refused to take money from energy political action committees to avoid the appearance of a conflict of interest.

"If we really wanted to raise the money, don't you think she would have more?" he said. "My god, man, think it through."

He challenged The Times to compare Liu's utility donations now with what she received before he joined the PUC.

A review of Liu's campaign records in 2000 shows that about 10% of her donations came from utility interests -- less than half the proportion that make up her Senate fund.

jordan.rau@latimes.com

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(BEGIN TEXT OF INFOBOX)

Utility contributions

More than a quarter of the money Carol Liu has raised for her state Senate race has come from industries regulated by the California Public Utilities Commission, which is chaired by Liu's husband, Michael Peevey. Those donations* include:

AT&T...$20,325

Southern California Edison...$10,950

Nossaman, Guthner,

Knox and Elliott...$4,600

BNSF Railway Co....$3,300

Southern California Gas

(Sempra Energy)...$3,000

Union Pacific Railroad...$3,000

Hallisey and Johnson...$2,258

California Cable & Telecommunications Assn....$2,000

Constellation Energy Group...$2,000

California Water Assn....$1,500

Caithness Energy LLC...$1,000

San Jose Water Co....$250

* Donations include money from companies, executives and employee political action committees.

Source: California Secretary of State