Stop the Cap! today formally declares war on Cox’s usage cap experiment in Cleveland, Ohio and will coordinate several protest actions to educate consumers about the true nature of usage-based billing and how they can effectively fight back against these types of Internet Overcharging schemes.

Time Warner Cable quickly learned it was deeply mistaken telling customers that a 40GB monthly usage allowance was more than 95% of customers would ever need when introducing a similar concept April 1, 2009 in test markets including Rochester, N.Y., Austin and San Antonio, Tex., and Greensboro, N.C. The company repeatedly suggested only about five percent of customers would ever exceed that cap.

Six years later, it is likely 95% of customers would be paying a higher broadband bill to cover applicable overlimit fees or be forced to upgrade to a more expensive plan to avoid them. Before Time Warner realized the errors of its way, it claimed with a straight face it was acceptable to charge customers $150 a month for the same unlimited broadband experience that used to cost $50.

Cox’s talking points for customers and the media frames usage caps as a fairness enforcement tool. It is a tired argument and lacks merit because nobody ever pays less for usage-capped broadband service. At best, you pay at least the same and risk new overlimit charges for exceeding an arbitrary usage allowance created out of thin air. At worst, you are forced by cost issues to downgrade service to a cheaper plan that comes with an even lower allowance and an even bigger risk of facing overlimit fees.

Industry trade journal Multichannel News, which covers the cable industry for the cable industry does not frame usage caps in the context of fairness. It’s all about the money.

“If you’re a cable operator, you might want to strike [with new usage caps] while the iron is hot,” said MoffettNathanson principal and senior analyst Craig Moffett, a Wall Street analyst and major proponent of investing in cable industry stocks.

Multichannel News warned operators they “must tread carefully in how they deliver the usage-based message.” Instead of getting away with punitive caps, Time Warner Cable had to “rethink” its definition of fairness, keeping prices the same for heavy users of bandwidth but offering discounts to customers whose usage was lighter. No money party for them.

So how did Cox frame its message in the pages of an industry trade journal to fellow members of the cable industry? Was it about fairness or collecting more of your money. You decide:

Customers will be notified of their data usage and any potential overages beginning in mid- June but won’t have to pay for overages until the October billing cycle, a Cox spokesman said. That gives customers the chance either to alter their usage or step up to a more data-intensive plan.   The additional charges serve as a temporary step-up plan for certain consumers, the spokesman said — they can keep their current level of service and pay the additional fee during months when usage spikes, like when their kids come home from college.

The Government Accounting Office, charged with studying the issue of data caps, found plenty to be concerned about. Consumers rightfully expressed fears about price increases and confusion over data consumption issues. In short, customers hate the kind of usage-based pricing proposed by Cox. It’s a rate hike wrapped in uncertainty and an important tool to discourage consumers from cutting their cable television package.

It’s also nakedly anti-competitive because Cox has conveniently exempted its television, home phone, and home security products from its usage cap. Subscribe to Cox home phone service? The cap does not apply. Use Ooma or Vonage? The cap does apply so talk fast. If a customer wants to use Cox’s Home Security service to monitor their home while away, they won’t eat away their usage cap. If they use ADT to do the same, Cox steals a portion of your usage allowance. Watch a favorite television show on Cox cable television and your usage allowance is unaffected. Watch it on Netflix and look out, another chunk is gone.

While Cox starts rationing your Internet usage, it isn’t lowering your price. A truly fair usage plan would offer customers a discount if they voluntarily agreed to limit their usage. But nothing about Cox’s rationing plan is fair. It’s compulsory, so customers looking for a worry-free unlimited plan are out of luck. It’s punitive, punishing customers for using a broadband connection they already paid good money to buy. It’s arbitrary — nobody asked customers what they wanted. It doesn’t even make sense. But it will make a lot of dollars for Cox.

Cox claims it only wants usage caps to help customers choose the “right plan.”

The right plan for Cox.

To escape Cox’s $10 overlimit fees, a customer will have to pay at least $10 more to buy a higher allowance plan — turning a service that costs less to offer than ever into an ever-more expensive necessity, with few competitive alternatives. Will Cox ever recommend customers downgrade to a cheaper plan? We don’t think so. Customers could easily pay $78-100+ for broadband service that used to cost $52-66.

Back in 2009, the same arguments against usage caps applied as they do today. Industry expert Dave Burstein made it clear usage caps were about one thing:

“Anybody who thinks that’s not an attempt to raise prices and keep competitive video off the network — I have a bridge to sell them, and it goes to Brooklyn,” Burstein said.

No it isn’t your imagination. While a growing number of cable television subscribers now face a “broadcast programming surcharge” on their cable bill to compensate television stations and networks for cable carriage, those same channels are larding up their programming with ever-increasing advertising. One quarter of every hour of network television is now littered with commercials — an all-time high for broadcast networks seeking to maximize advertising revenue.

Show openings have been cut to seconds, credits roll by at fast-forward speed – usually compressed into illegibility, and some cable networks have returned to the practice of chopping bits of shows and compressing playback of others to accommodate more commercials. That does not include product placement or “in-program” compensated advertising, which appears when a character picks up a can of Pepsi, walks by a Subway outlet, or reaches for a Pop-Tart for breakfast.

As early as 2009, TNS Media Intelligence found at least 36% of today’s network primetime shows were advertising-oriented. That included 7:59 of in-show brand appearances and 13:52 of commercial advertisements, for a combined total of 21:51 of marketing content.

Reality shows, as well as being cheap to produce, are product placement gold. America’s Toughest Jobs contained 44:50 per hour of advertising messages and product placement, The Biggest Loser ran up 40:37. Before the reality show craze, game shows were program-length commercials in disguise. Game show producers received an endless supply of prizes to give away in return for viewers enduring relentless 10-15 second pitches for Rice-a-Roni, crock pots, living room furniture sets, and current model cars and trucks. Viewers did not escape traditional advertisements along the way either.

Through much of the 1970s and early 1980s, an average hour of network television was between 48-52 minutes of programming, 8-12 minutes of network and local commercials. Short news breaks and public service announcements were often included during those breaks. Shows targeting children usually contained less advertising.

In 1984, the Reagan Administration deregulated broadcasters, claiming the free market was best equipped to contain any abusive practices as consumers theoretically could tune out stations and networks that allowed things to get out-of-hand.

In reality, what one network decided, the others usually followed. Outside of watching commercial-free PBS (although those sponsorship messages increasingly began to resemble traditional advertising over the years), viewers didn’t have much choice. For the last 31 years since deregulation, advertising has increased while show length has decreased. In the 1970s and 80s, pieces of rerun television shows created when ad loads were shorter were often cut from shows to make room for an extra ad or two. What was left after a trip to the cutting room was often played slightly sped-up, which made room for even more advertising. By the 1990s, producers created their shows with increasing advertising loads in mind. Short sacrificial 60-90 second end scenes, deemed non-essential to the show’s integrity, were often chopped when a show entered syndication.

In the 2000s, network executives started demanding producers drastically cut the length of show opening and closing themes. If producers didn’t, studios did it for them when a show was resold to a cable network. A rerun of Law & Order now features a 24-second opening, a big difference from the original 1:45 second opening the show had when it originally aired on NBC. End credits were usually squished on-screen to allow a 15-second network promotion to run at the top. Some networks even began their next show in one window while showing end credits of the last program in another.

But nothing affected commercial loads more than the 2008 Great Recession. Advertising revenue tumbled, along with the economy, and advertisers balked at paying traditional ad rates when online advertising was available for much less. The answer? Sell more ads… at a lower price. Once again, program lengths had to be cut to make room for the increasing number of commercials. By 2009, average network ad loads were up to 13:25 per hour. Just four years later in 2013, that number spiked to 14:15. It’s now 15 minutes and up at some networks, depending on the type of program.

As commercials neared comprising 25% of every hour of television, sponsors finally began to rebel. They were reacting to the pervasive growth of the DVR, which allowed consumers to record their favorite shows, if only to fast forward past the dense thicket of commercials. They sought a ceiling on ad loads and more creative ways to reach ad-skipping audiences numbed by relentless advertising. That meant even more product placement.

Although sponsors of expensive NBC, CBS, ABC, and FOX shows may have rebelled at the 15-minute mark, the same isn’t true with cable networks where ad loads are as high as 24 minutes per hour. In 2009, the average cable network aired 14:27 of advertisements an hour. This year, it’s up to 15:18 and still rising. Among the worst offenders:

To keep the money flowing from every direction, both over-the-air and cable networks, including those noted above, continue to seek additional compensation from your provider in the form of retransmission consent and carriage agreements. Whether you watch a channel or not, you are paying for it. Some of these compensation agreements are experiencing rate increases approaching 10% annually.

To the surprise of many industry analysts, some of the worst offenders are networks with declining ratings who risk further alienating viewers with even more advertising just to keep revenue numbers up. While traditional ads actually declined by 2% on most over the air networks this year, FOX more than made up for that with a 15% increase in advertising time. The cable networks with the highest ad increases this year were Viacom-owned channels (Comedy Central, Spike, MTV, Nickelodeon) jumping 13%, A+E Networks (A&E, Crime & Investigation, Lifetime, History) increasing 10%, and 9% at Discovery Networks. Which networks increased ads the least? Those owned by Disney, independent cable networks, and Time Warner (Entertainment).

“Generally speaking, the ratings winners (Disney, 21st Century Fox, Scripps Networks) are increasing investment in original content (and not abusively increasing ad loads), whereas the losers (A+E Networks, Viacom, NBCUniversal) and the neutrals (Discovery, AMC Networks) are decelerating investment in original content and stuffing more ad spots into their shows,” said analyst Todd Juenger of Sanford C. Bernstein.

Michael Nathanson of MoffetNathanson Research worries television is repeating the mistakes commercial radio made post-deregulation, when massive increases in advertising accompanied by decelerating investment in programming repelled many listeners, perhaps for good. Some have permanently abandoned commercial over the air radio in favor of commercial free music services, satellite radio, and streaming services.

“Networks can offset ratings challenges and pricing weakness with more inventory, however, we worry that it is a dangerous long-term game that ultimately devalues the consumer experience and reduces ad efficacy,” Nathanson said. “As we saw with radio, once the increased commercial load genie is out of the bottle, it is nearly impossible to put it back in.”

When Stephen Cox was watching The Wizard of Oz on TBS last November, something didn’t sound quite right to him about the Munchkins, who are near and dear to his heart. He wasn’t imagining things. Time Warner-owned TBS used compression technology to speed up the movie. The purpose: stuffing in more TV commercials.

“Their voices were raised a notch,” Cox, the author of several pop-culture books including one about the classic 1939 film, told the Wall Street Journal. “It was astounding to me.”

The largest telecom companies in the United States, their trade associations, and Ajit Pai, one of two Republican commissioners serving at the Federal Communications Commission routinely claim America has the best broadband in the world. From the perspective of providers running to their respective banks to deposit your monthly payment, they might be right. But on virtually every other metric, the United States has some of the most expensive broadband in the world at speeds that would be a gouging embarrassment in other countries.

Slovakia – A Long, Tough History, But Better Broadband than the United States

Bratislava, the capital city of Slovakia, has existed since the year 907. From the 10th century until just after the end of World War 1, the city (then commonly known by its German name of Pressburg) was part of Hungary and the Austro-Hungarian empire. After the “War to End All Wars,” ethnic Czechs and Slovaks jointly formed a democratic Czechoslovak Republic in 1918 which existed peacefully until the Germans arrived in 1938 and renamed part of Czechoslovakia… Germany.

Unfortunately for the Czechs and Slovaks, life didn’t get much easier after the end of World War II. As Stalin sought to create a buffer zone between Germany (and western Europe) and the Soviet Union, Czechoslovakia, along with most of Eastern Europe, faded behind the Iron Curtain into the Soviet sphere of influence.

After decades of deterioration under autocratic rule, the Czechoslovak Velvet Revolution of 1989 restored multi-party democracy and Communism was was on its way to being fully extirpated across Europe.

By the time the June 1992 election results were announced, it was clear the country’s constituent Czechs and Slovaks had irreconcilable differences and were headed to national divorce court. On one side, the Czech-oriented Civic Democratic Party, headed by Václav Klaus. On the other, Vladimír Mečiar’s Movement for a Democratic Slovakia, whose aims were obvious based on its party name alone. With the writing on the wall, Klaus and Mečiar managed to work out an agreement on how to divide the country and on Jan. 1, 1993 the Czech Republic and the Slovak Republic were born.

Since the separation, Slovakia has prospered, and is now recognized to have a high-income advanced economy with one of the fastest growth rates in both the European Union and the OECD. It joined the EU in 2004 and adopted the Euro as its currency in 2009. Slovakia had to bring its economy up to date after fifty years of Communism. The country had a functioning telecommunications infrastructure, albeit one highly dependent on dilapidated equipment produced in the German Democratic Republic (the former East Germany) and the Soviet Union.

After the Slovak Republic was born, Slovenské Telekomunikácie maintained a monopoly on Slovak telephone lines and telex circuits under the close watch of the Ministry of Transport, Posts and Telecommunications. It took until the year 2000 for economic reforms to allow for the privatization of telecommunications. As was the case in many other central and eastern European countries, Germany’s Deutsche Telekom (T-Mobile) won a majority ownership in the company, which is today still known as Slovak Telecom.

The Slovak Broadband Marketplace Today

The Slovak government insisted that telecommunications networks in the country be competitive and it maintains oversight to make sure monopolies do not develop. It rejected claims that total deregulation and competition alone would spur investment. Slovakia welcomes outside investment, but also makes certain monopoly pricing power cannot develop. As a result, most residents of Bratislava have a choice of up to eight different broadband providers — a mix of cable, telephone, wireless, and satellite providers that all fiercely compete in the consumer and business markets.

Many providers are foreign-owned entities. UPC, Slovakia’s cable operator, is owned by John Malone’s Liberty Global. Slovak Telecom is owned by Germany’s T-Mobile/Deutsche Telekom. Tooway is a French company.

Prices are considerably lower than what American providers charge, although speeds remain somewhat lower than broadband services in Bulgaria, Romania, and the Baltic States. At one address on Kláštorská, a street of modest single family homes (some in disrepair), these companies were ready to install service:

• RadioLAN offers 18/1.5Mbps unlimited wireless service for $21.85 a month;
• UPC offers 300/20Mbps unlimited cable broadband for $30.63 a month;
• Slovanet offers 10/1Mbps DSL with a 240GB usage cap for $18.56 a month;
• Swan offers 10.2Mbps/512kbps unlimited DSL for $24.70 a month;
• Slovak Telecom offers 10/1Mbps DSL with a 240GB usage cap for $21.96 a month;
• Benestra offers 10/1Mbps DSL with a 4GB per day usage cap for $24.24 a month;
• Satro offers 9Mbps/768kbps unlimited wireless service for $29.32 a month;
• Tooway offers 22/6Mbps satellite Internet with a 25GB usage cap for $54.79 a month.

In other parts of the country, two providers are installing competing fiber broadband services. Slovak Telecom is slowly discarding its old copper wire infrastructure in favor of fiber optics, and is already providing 300Mbps service to some residents to better compete with UPC Cable. Some areas can get straight fiber service, others get VDSL, an advanced form of DSL offering higher speeds than traditional DSL. Orange, a provider not available in the immediate area of our sampled home, has already installed its own fiber service to over 100,000 fiber customers and is growing.

In comparison, Comcast sells 105Mbps service in Nashville, Tenn. for $114.95/mo (not including modem fee) with a 300GB monthly usage cap. That is one-third the speed of UPC Cable at nearly four times the cost… if you stay within your allowance. Prices only get higher after that.

It has been 14 months since we heard for the first time Comcast was planning to acquire Time Warner Cable. It was the night of February 12, 2014. I still remember where I was the moment I first learned the news.

Stop the Cap! has maintained a civil relationship with Time Warner Cable for the most part over our seven-year struggle fighting usage caps, lousy broadband, and high prices. We fought one major battle with the company in April of 2009, when Time Warner executives planned a compulsory usage cap experiment on customers in Rochester, N.Y., Austin and San Antonio, Tex., and Greensboro, N.C.

Just as we had done with Frontier Communications a year earlier, we successfully beat down their efforts to impose usage allowances on customers already paying a significant chunk of money for broadband Internet access. After that battle ended, Time Warner Cable changed their position on usage caps and stated emphatically that customers should always have the option of unmetered/unlimited access. They have kept their word. In fact, their optional usage cap experiments have been a spectacular flop, attracting less than 1% of their customer base and delivering the message we’ve tried to get across the industry for years: customer hate usage caps, usage-based billing, and speed throttles.

Comcast is a company that long ago stopped listening to their customers. It applied an arbitrary usage cap on all their customers in retaliation for a FCC decision that disallowed them from running hidden speed throttles on peer-to-peer Internet traffic. Comcast lied about throttling traffic, paid homeless people to stack a hearing on the issue to keep company critics out of the room, and slapped the caps on in the fall of 2008 with the flimsy excuse it represented “fairness” to customers. Only later, we would learn usage caps were never about “fairness” or good traffic management. It’s just a way to deter customers from spending too much time on the Internet, especially if that time is spent watching online videos. Too much time spent watching Netflix might convince you your cable TV package isn’t necessary any longer.

Comcast customer service horror stories reached a level unparalleled by other cable companies when a Comcast predator-installer was convicted of raping and strangling to death 23-year old Comcast customer Urszula Sakowska,  whose lifeless body was found in a bathtub inside her Chicago-area home back in 2006. But Triplett’s violent service calls didn’t stop there. He also faced charges in the death of 39-year old Janice Ordidge, a Comcast customer in Hyde Park. Those two Comcast customers lost their lives. In 2009, another Comcast installer set a Pennsylvania customer’s house on fire. Other installers stole jewelry right out of customers’ homes. Others have exposed themselves in front of female customers or fallen asleep on their couches.

Billing errors are the stuff of legend at Comcast. Offshore call centers with language barriers, inept customer service, and long, long, long lines at cable stores with windows only partially manned by agents sitting behind bullet-proof glass also helped cultivate a customer relationship that can best be described as “perp and victim.”

Comcast isn’t just a bad cable company, it’s a menace. We didn’t have to spend hours proving our case. Fortunately, Comcast’s appalling reputation preceded it. Outside of two executive suites in Philadelphia and New York, nobody was for supersizing Comcast. Just to make sure our regulators knew this, we traveled to Buffalo in June of last year to testify at a Public Service Commission hearing on the subject of the merger. We didn’t mince words.

Sure, there were non-profit groups like the Boys & Girls Club that absolutely sullied their reputation pushing for the merger (Comcast wrote large checks to the organization so you need not give the group a single penny of your money in the future). “Civil Rights” organizations like the Urban League, NAACP, and others that used to defend minority rights now concern themselves with defending the interests of giant cable companies, just as long as they get a nice check in the mail with Comcast’s name on it. Among the worst of all – Shakedown Al Sharpton who will either be your merger deal’s best friend or will go away and leave victims of racism in peace, if you cut his organization a big fat check. (Now that the merger has collapsed, perhaps Comcast-owned MSNBC will end the thinly veiled quid-pro-quo arrangement it has with the man that gives him an hour a night to perform a talent train wreck.)

My own state assemblyman, Joe Morelle, who served as New York’s interim assembly speaker for about five minutes literally plagiarized his letter in support of the Comcast merger (after cashing their check) almost word-for-word from Comcast press releases and congressional testimony. Say it ain’t so, Joe!

N.Y. State Assembly Leader Joe Morelle: “The combination of Comcast and Time Warner Cable will create a world-class communications, media and technology company to help meet the increasing consumer demand for advanced digital services on multiple devices in homes, workplaces and on-the-go.”

 

David Cohen, executive vice-president, Comcast: “The combination of Comcast and TWC will create a world-class communications, media, and technology company to help meet the insatiable consumer demand for advanced digital services on multiple devices in homes, workplaces, and on-the-go.”

 

There was not a doubt in my mind that replacing Time Warner Cable with Comcast would be a disaster for Time Warner Cable customers. Despite promises Comcast would upgrade Time Warner’s network, it would also upgrade customer bills, resorting in higher priced service, higher modem fees, and lousy customer service. Comcast vice president David Cohen also made it clear usage caps would be a part of our life within five years. No amount of protesting or rational argument would stop Comcast from being Comcast. Don’t like it? Just try to cancel.

Time Warner Cable can be bad but it is no Comcast.

Life will be just fine without Comcast, but danger lurks on the horizon. Still interested in the possibility of taking over Time Warner Cable is the smaller Charter Communications, now effectively controlled by cable magnate John Malone (he owns his own castles). Malone has a long history of enriching himself at the expense of customers with no other choices for cable/broadband service. He used to control Tele-Communications, Inc. (TCI), a cable company that literally threatened city officials who didn’t do what TCI wanted.

We remain unsure exactly what will happen next. Charter could bid aggressively to buy Time Warner Cable, Time Warner Cable could go it alone, or Time Warner Cable could start buying other cable companies (like Charter).

What we hope will happen is Time Warner Cable will refocus its energy on expanding its Maxx upgrade program as quickly as possible to reach all Time Warner Cable markets with faster broadband and a better cable TV experience. We also hope the company will stand by its word that compulsory usage caps are off the table.

I’d like to thank all of our readers who took the time to get involved in the fight and helped make a difference. Wall Street and Washington, as well as Comcast CEO Brian Roberts are all shocked the merger deal collapsed after a torrent of criticism from consumers. It also left state regulators cautious about how to proceed. New York’s Public Service Commission delayed making a decision eight times, recognizing the merger as a hot potato.

Our experience demonstrates that ordinary citizens can wield considerable power when unified and involved. We’ve proved that with multiple victories on the usage cap front as well as the AT&T/T-Mobile merger and Net Neutrality.

Let the fight for better broadband continue!

Part One: The Peevey Era (2002-2014)

California’s Public Utilities Commission seems increasingly unable to escape its reputation for backroom dealing, close personal ties to lobbyists working for the utility companies it regulates, and a growing conclusion it could care less about the interests of ordinary California consumers it is supposed to protect. That’s great news if you are an energy or telecommunications company with business before the commission, but bad news for consumers.

In this first part in a series of reports, Stop the Cap! investigates corruption at the highest levels of the California regulator. Search warrants have been executed, documents seized, and top officials of one of the state’s largest utilities have been fired. But it that enough for Californians to finally get a fair shake?

Before a series of scandals reached the front pages of state newspapers last year, many Californians would be hard-pressed to explain what “CPUC” stood for, much less take an active interest in its regulatory and oversight activities. That may have made it easier for the California Public Utilities Commission to escape the close scrutiny other state agencies receive, at least until local news outlets turned their investigative reporters loose on the agency and its president.

The CPUC regulates the state’s energy and telecommunications companies, at least as far as federal and state laws allow these days. Most of the proceedings are conducted in public, but a great deal of the real business takes place behind closed doors in private. Sometimes these “ex parte” meetings and communications are disclosed to the public. But uncomfortably often, the participants look for excuses not to report.

The Michael Peevey Era: Bending Over Backwards for Utilities Who Returned the Favor

For most of the last 12 years, the man who presided over the CPUC was Mr. Michael Peevey.

Then Gov. Gray Davis appointed Peevey to lead the CPUC on New Year’s Eve 2002, replacing its incumbent president Loretta Lynch (no relation to the current Obama Administration’s attorney general nominee). Lynch had been a strong consumer advocate at the commission and tried to hold back utility company rate increases at a time when Enron was manipulating wholesale energy prices in the state. When Peevey and Lynch served together as commissioners at the CPUC, their relationship was clearly strained, with several testy exchanges taking place between the two. In general, they opposed each other. Peevey supported deregulation, Lynch sought to protect consumers from the effects of a manipulated, deregulated marketplace.

Consumer advocates like the Foundation for Taxpayer and Consumer Rights pounced on the nomination, predicting it would be a disaster for California consumers.

”Making Mike Peevey the head of the PUC is like asking [Enron’s CEO] Kenneth Lay to run the [Securities & Exchange Commission],” said FTCR’s senior consumer advocate, Doug Heller in January 2003. ”After what the energy industry did to California, it is shocking that Davis would give an energy company executive such a prominent position. Not only has Davis failed to place an independent consumer voice on the commission, he is letting the energy industry run the agency.”

Peevey was a company man through and through, spending decades working for California utilities, most recently as president of Edison International and its well-known subsidiary, Southern California Edison (SCE). He was also well-connected politically, married to Democratic state senator Carol Liu. He left Edison in 1993 in what a 1997 Wall Street Journal piece called “a less-than-amicable separation” to do consulting work for 18 months.

Peevey Made Millions While Supporting Energy Deregulation That Brought Higher Rates and Rolling Blackouts for California Consumers

In 1995, Peevey launched New Energy Ventures, Inc., luring a former president of the CPUC to the venture, which would take advantage of energy generation deregulation in California to compete with SCE for customers. Peevey was a staunch advocate and lobbied hard for energy deregulation in California.

California’s deregulation plan required the state’s three large investor-owned utilities—Pacific Gas & Electric, Southern California Edison, and San Diego Gas and Electric—to sell part of their generating capacity, making them dependent on a competitive, open power generation market to effectively serve customers. It also discouraged companies from entering into long-term supply contracts with independent power producers to create a hedge against sudden price spikes. As a result, the utilities had to rely on the newly created spot wholesale market for about half of the electricity their customers demanded. Among the largest players in California’s energy market was Enron Energy Services (EES), based in Houston, Tex.

Peevey was a true believer in deregulation and saw enormous money could be made promising deep discounts on energy costs to large businesses in California. At one point, Peevey said he expected to market energy the way others market phone service. Like many of the players in California, Peevey’s NEV was an energy middleman. It bought wholesale power generated by private producers and resold it to large grocery and department store chains, manufacturers, and even the U.S. Dept. of Defense at a profit.

Peevey had the good fortune to sell his venture to AES Corp., the largest U.S. developer of power plants, in 1999 for $90 million in cash and stock. He exited the business just six months before the start of the California Energy Crisis, which caused massive price increases and rolling blackouts across the state between 2000 and 2001. State deregulation, lack of federal oversight, and illegal market manipulation by Enron and others enriched the deregulated energy trading market while causing the bankruptcy of PG&E and the near bankruptcy of SCE in early 2001.

What deregulation advocates promised would be a veritable free fall of energy prices in the free market turned out to be a catastrophe for California and its citizens. The state lost an estimated $45 billion from deregulation and the illegal acts of Enron, as well as the loss of more than 1,300 utility jobs. Enron produced little power itself and owned relatively little in the way of hard assets. Like the big banks and investment firms that created wealth through trading barely tangible assets, securities and debt, Enron was less akin to PG&E and more closely resembled Goldman Sachs. Enron relied on low margin energy trading and energy supply contracts. It existed in a Wall Street-like trading environment, buying power from producers to selling to utilities, taking a cut each time. The more transactions, especially those at a higher price, the better for Enron.

”Every trading company in the country has been feasting on California, and Enron is the shrewdest of them all. They are like sharks in a feeding frenzy,” said Michael Shames, executive director of the Utility Consumers’ Action Network in San Diego in 2001. As he said that, Enron president Jeffery Skilling and family were spending two weeks sailing in the Virgin Islands. Skilling was deeply offended Californians were angry at Enron, which he called one of the great examples of the benefits of deregulation.

”We’re on the side of angels,” Skilling told Bloomberg News at the time. ”We’re taking on the entrenched monopolies. In every business we’ve been in, we’re the good guys.”

Today, Skilling is serving a reduced sentence of 14 years at the Montgomery Federal Prison Camp, Maxwell Air Force Base, Montgomery, Ala., and owes a $45 million fine.

Peevey never stopped advocating for deregulation, and his promise it would save Californians millions instead cost utility companies and the state tens of billions in losses. At the height of Enron’s market manipulation, Californians suffered multiple rolling blackouts while the energy markets made fortunes.

“This was like the perfect storm,” said former EES executive Steve Barth. “First, our traders are able to buy power for $250 in California and sell it to Arizona for $1,200 and then resell it to California for five times that. Then EES was able to go to these large companies and say ‘sign a 10-year contract with us and we’ll save you millions.'”

In a desperate bid to end the blackouts, utilities were eventually paying $1,400 per megawatt-hour for energy they used to produce for themselves for around $45.

[flv]http://www.phillipdampier.com/video/ABC Nightline California Energy Crisis 1-2001.mp4[/flv]

In 2000-2001, California was embroiled in an energy crisis, with rolling blackouts and enormous wholesale rate increases. At the heart of the problem – deregulation, which forced utilities to divest energy production assets and buy and sell power in a “free market” dominated by energy traders like Enron. ABC’s Nightline reported on the crisis in 2001, largely accepting the industry’s premise that the problem was insufficient supply and increased demand.

Vice President Dick Cheney blamed prior administrations for the crisis and believed more deregulation across the country would solve the problem, adding “there has been no significant increase in supply in California for about 10 years, although there’s been a 24 percent increase in the demand for electricity.”

These reports came ten months before the fall of Enron. Investigations would later reveal Cheney was wrong. Deregulation and a lack of oversight allowed Enron to manipulate prices undetected by federal regulators charged with monitoring the energy market. At the height of the crisis, Enron was exporting California-produced power to adjacent states, only to sell it back to increasingly desperate utilities like SCE and PG&E at markups that cost California $1-2 million a day. Despite claims the crisis was caused by a lack of capacity, at the height of the blackouts California had an installed generating capacity of 45GW and faced customer demand of just 28GW. (8:00)

Peevey Wins Presidency of CPUC and Has New Allies in Effort to Help AT&T, Power Companies

Peevey escaped the scorn heaped on energy companies and utilities because he cashed out of NEV just prior to the start of the Energy Crisis. Davis thought putting a former industry guy like Peevey in charge of the CPUC would be an asset because he would understood how legacy utilities like PG&E and SCE worked and would know how the new competitive players operated from his experience at NEV. Davis had previously brought Peevey on board as an unpaid personal consultant, helping him navigate the state’s energy crisis. By March, 2002 he was appointed by the governor to be a CPUC commissioner.

In late December it became clear Loretta Lynch was being forced out and Peevey was in. Davis reappointed Peevey to a full six-year term and designated him president, which pays $117,818 a year. Lynch remained at the CPUC as a commissioner until her term expired.

To further empower Peevey, Davis also appointed his own trusted cabinet secretary, Susan P. Kennedy, to a vacant seat on the commission. Kennedy was closely connected with the California Democratic Party. She was its executive director from 1991 to 1994, then served as communications director for U.S. Sen. Dianne Feinstein of San Francisco from 1995 to 1998 before taking her post with Davis in 1999.

“Gov. Davis is cloning himself at the PUC to make sure he can get whatever he wants out of that agency,” complained Douglas Heller of the Santa Monica-based Foundation for Taxpayer and Consumer Rights Commission.

Both Kennedy and Peevey were regularly accused by consumer groups of turning the CPUC into an advocacy arm of some of the state’s largest utilities, usually at the expense of California’s consumers. When Pacific Gas & Electric (PG&E) got itself into trouble over safety breaches or regulatory violations, Peevey helped run defense and lessened the pain for the utility. Time for a rate increase? Peevey had the utilities’ backs.

Kennedy spent much of her three years at the CPUC (2003-2006) defending the interests of AT&T, the state’s largest telephone company. She helped head off efforts to enforce new consumer protection initiatives, watered down a cellular consumer’s “bill of rights” that would have disadvantaged AT&T and advocated for rate deregulation under the guise of competition. She was given prominent mention and support by the Koch Brothers-funded Heartland Institute after she was suddenly appointed chief of staff to Republican Gov. Arnold Schwarzenegger in December 2005:

Susan Kennedy’s policy positions at the CPUC, on the other hand, were as free-market as one could hope for in California, and there’s no sign she’s giving up on reform. This should delight the technology industry and benefit consumers everywhere. Republicans horrified by Kennedy’s appointment might check their own commitment to reform, smaller government, and a strong business climate.

Consumer groups were glad to see Kennedy out of the CPUC. She resurfaced this year as a key player in the CPUC influence game, but more on her later in the series.

[flv]http://www.phillipdampier.com/video/CBS News Incriminating Enron Tapes 2004.flv[/flv]

About three years after the fall of Enron, audio tapes of phone conversations between Enron’s west coast energy traders revealed illegal market manipulation of electricity rates that went undetected under Michael Peevey. Despite the CPUC’s considerable resources, it took Eric Christiansen, assistant general counsel to the municipally owned Snohomish County Public Utilities District in Washington state to fight for, obtain, and make public the infamous Enron tapes. CBS News summarized in 2004 how Enron traders used California energy deregulation to their advantage, right under the noses of regulators. (3:38)

The Beginning of the End for Michael Peevey

The beginning of the end of Peevey’s reign over the CPUC began at 6:11 pm on September 9, 2010, in the San Francisco suburb of San Bruno, when a 30-inch diameter PG&E natural gas pipeline exploded in the middle of the Crestmoor residential neighborhood. The explosion and resulting fire was so enormous, first responders and the news media initially misreported it as a commercial jet crash. When it was all over, eight people were dead, 35 homes were leveled to the ground, and many others were damaged or uninhabitable.

Ironically, among the victims was Jacqueline Greig, 44. Greig worked for the CPUC, in a small, almost forgotten unit that advocates gas safety issues on behalf of consumers. Part of her job was reviewing PG&E’s plans to replace outdated natural gas pipelines like the one that exploded that early fall evening.

PG&E was implicated in the disaster, accused of operational deficiencies and reckless ignorance of public safety. In January, 2012, an independent audit from the State of California reported PG&E had also illegally diverted over $100 million from a safety operations fund for executive compensation and bonuses.

The federal investigation also accused the CPUC of not doing its job.

The National Transportation Safety Board found the CPUC “placed a blind trust in operators, to the detriment of public safety.”

Over 70 lawsuits were filed after the disaster, and critics accused the CPUC of being de facto members of PG&E’s defense team.

[flv]http://www.phillipdampier.com/video/KNTV San Francisco San Bruno Mayor Verbally Attacked by Peevey 9-10-13.flv[/flv]

On the occasion of the third anniversary of the San Bruno explosion, CPUC president Michael Peevey allegedly verbally abused San Bruno’s mayor and city manager during a private meeting, upset that they used the CPUC offices as a backdrop for several press conferences critical of PG&E and how the CPUC enforced safety regulations. KNTV in San Francisco talked with San Bruno leaders who revealed what was said. Originally aired Sept. 10, 2013. (4:40)

In October 2012, a potentially embarrassing public hearing on the San Bruno pipeline blast to be held by the CPUC was suddenly suspended in favor of backroom negotiations to settle the case. Two months later, the CPUC decided Californians themselves should pay 55% of PG&E’s costs to inspect and upgrade suspect natural gas pipelines — estimated at $229 million.

After successfully getting ratepayers to cover most of the costs for PG&E’s mistakes, executives at the utility quickly pivoted to limiting the potential damage from anticipated fines yet to be levied by the CPUC over the San Bruno disaster. In September, 2014 PG&E learned it was facing an amount that could reach $1.4 billion. PG&E officials quickly called Peevey’s chief of staff – Carol Brown – to get her help moving San Bruno-related litigation to an administrative judge with a track record of being friendly to PG&E, with the hope the fines could be reduced or dropped.

That PG&E would reach out to regulators to discuss matters before the commission was not unusual, although it was improper. Utility executives knew they had plenty of opportunities to discuss whatever was on their mind with Peevey.

The fringe benefits of Peevey’s position seemed to go far beyond the responsibility of a utilities regulator earning a low six-figure salary. Peevey’s travels abroad were far beyond what most state regulators would consider reasonable. Peevey’s financial disclosures revealed he received gifts of $230,000 in international travel since he was appointed president of the CPUC in 2003. In all, Peevey spent 206 days abroad in at least 13 countries. On those trips, he was regularly joined by executives and lobbyists from some of the same companies that have business before the CPUC.

To avoid charges of a direct link between lobbyists and the CPUC president, special interests funneled money into a less obvious non-profit group called the California Foundation on the Environment and the Economy (CFEE). Ostensibly created to help the state move beyond fossil fuels and promote energy efficiency, the group also helps executives and lobbyists move closer to lawmakers and regulators. CFEE plans regular junkets to some of the best vacation spots on the planet, where it holds “conferences” and tours energy-conservation and environmentally friendly projects that happen to be within driving distance.

These were must-attend events for Peevey, who regularly skipped CPUC business, hearings run by the state legislature, and other important events so he wouldn’t miss a flight abroad or a quick drive to an expensive Napa Valley resort.

[flv]http://www.phillipdampier.com/video/KNTV Peevey Priority Senate Hearing or Napa Winery 5-2-13.flv[/flv]

In a hidden camera investigation, KNTV found California Public Utilities Commission president Michael Peevey at a conference in wine country instead of answering tough questions from senators in Sacramento. Chief Investigative Reporter Tony Kovaleski caught up with an irritated Peevey in Napa. This story originally aired on May 2, 2013. (5:37)

While the state remained preoccupied with the San Bruno gas pipeline explosion, Peevey was packing for a flight to Madrid for a 12-day “travel-study excursion” that happened to hit the must-see stops in Sevilla and Barcelona, again sponsored by CFEE. Along for the ride was Peevey’s wife, two other state senators, several members of the state Assembly, CPUC commissioner Nancy Ryan, and executives from Chevron, Mirant (now GenOn, the owner of the Potrero power plant), Covanta Energy Corporation, Shell Energy North America, and engineering giant AECOM. PG&E and SCE executives were also in attendance, with plenty of time for fun and chats about the current priorities of the corporate utility business.

There isn’t much to see at CFEE headquarters at Pier 35 in San Francisco. Most of the activity takes place behind the scenes, where a long list of corporate members cut checks to CFEE to cover travel expenses for public officials. Among them include Verizon, Time Warner Cable, the California Cable & Telecommunications Association, Comcast, Chevron, J.P. Morgan, Goldman Sachs, AT&T, and PG&E. In return, executives often get to tag along on the exclusive junkets.

Although a rare trip to the less exclusive land of Inner Mongolia was a part of CFEE’s list of “travel studies” back in 2001, in recent years the destinations resemble the grand prize on a TV game show. Italy, Brazil, South Africa, Sweden and other destinations are covered, and you can be sure the guests are put up only in the finest hotels available.

“These ostensibly educational trips are essentially lobbying junkets, where utilities … wine and dine legislators,” said consumer group TURN spokeperson Mindy Spatt. The San Francisco Bay Guardian reported in 2011 TURN was raising the issue of these corporate-sponsored junkets several years ago when Peevey joined a CFEE trip attended by a representative of Southern California Edison “just coincidentally at the exact same time that he was penning an alternate decision in Edison’s rate case.” She added: “In TURN’s perspective, the commissioners need to be more in touch with what actual utility customers are experiencing, rather than in touch with the top restaurants in Brazil.”

In April 2013, CFEE paid the price for not keeping all their junkets far out of reach of the California media. KNTV, the NBC affiliate in San Francisco, followed Peevey to an exclusive Napa resort and a private reception at an upscale winery in St. Helena, all captured on hidden camera by the NBC Bay Area Investigative Unit.

Peevey was supposed to appear that day before the California Senate Budget and Fiscal Review subcommittee to discuss his performance after growing revelations showed a conflict of interest between the CPUC and the utilities it regulates. Peevey skipped the hearing and attended the corporate-funded tour instead. His only obligation was to deliver a five-minute speech at the event. The rest of the time was his to hobnob.

The affair got underway at noon with a catered lunch for guests, including a representative from PG&E. More than two dozen Sacramento lawmakers also had ID badges waiting for them on arrival. By early evening, Peevey was on board a luxury tour bus driving through Napa Valley to reach St. Helena’s exclusive Merryvale winery, which was closed to the public that day to keep the curious away. That event lasted more than three hours and included 100 guests — a small number of lawmakers and regulators outnumbered by corporate lobbyists.

Peevey was less than happy to be ambushed by KNTV reporter Tony Kovaleski in the Merryvale parking lot at the end of the evening. Part of the exchange:

Merryvale: Closed to public scrutiny.

Kovaleski: What is the message you sent by coming here to Napa instead of going to speak to the senate?

Peevey: You are very antagonistic you know. You are reading a script.

Kovaleski: Sir, I am not reading a script. I want to give you an opportunity to respond.

Peevey: But your questions are the wrong questions.

Kovaleski: You spent time here with the utilities you are paid to regulate.

Peevey: There’s no utilities here that I know of.

Kovaleski: PG&E was here. We saw them on the list.

Peevey: Oh, there may have been one person, I don’t know. […] You poor son of a b****. You have a job to do. It’s pathetic what you are doing. It’s pathetic.

[flv]http://www.phillipdampier.com/video/KNTV San Francisco Flown Wined and Dined on Lobbyists Dimes 7-31-13.flv[/flv]

In California it’s perfectly legal, but does that make it right? KNTV in San Francisco examines the ongoing free travel CPUC president Michael Peevey has accepted from nonprofits and special interest groups. Chief Investigative Reporter Tony Kovaleski asks, are the trips simply gifts? Or are the gestures buying access to one of the most powerful people in California? This story aired on July 30, 2013. (6:58)

Although Peevey managed to withstand repeated questions about his travel habits and remained president of the commission during the tenure of current Gov. Jerry Brown, he had a lot harder time explaining away disclosed e-mails showing an even closer working relationship between himself and PG&E executives than anyone could have imagined.

65,000 Cringe-Worthy E-Mails Show Peevey as “a Micromanaging, Domineering Leader Who Appears to Have Overstepped His Role.”

A Los Angeles Times story characterized the 65,000 released emails as presenting a “damaging portrait of former PUC President Michael Peevey as a micromanaging, domineering leader who appears to have overstepped his role. Peevey involved himself personally in internal decision-making at Pacific Gas & Electric Co. — the state’s largest utility — including its corporate leadership, political public relations strategy, safety policies and rate-setting cases, affecting billions of customer dollars, documents show.”

San Bruno city manager Connie Jackson was more concise: “I think we need to characterize it as collusion.”

“The bottom line is that I am amazed,” said Robert McCullough, an energy industry consultant and a former longtime manager at Portland General Electric in Oregon, who has analyzed thousands of the emails. “Peevey has passed beyond” improper contacts with PG&E, McCullough told the Times, and took on a “role where he was commenting and recommending promotions at PG&E. In effect, he was acting as a member of senior management” and “had clearly redefined the role of CPUC commissioner into a freewheeling advocate for the firm.”

Some of the most damaging emails involve PG&E vice president Brian Cherry, his immediate boss, and Peevey. Multiple emails show more than a passing interest on Peevey’s part on the management and business policies of PG&E. In one exchange, Peevey sought to arrange a quiet meeting with him and PG&E CEO Peter Darbee at Jardiniere, a French restaurant in San Francisco. On the agenda was the effectiveness of Darbee’s leadership of PG&E. It was seven months after the San Bruno pipeline exploded and San Bruno city officials were still blistering PG&E and others over the explosion and its cause.

Peevey seemed to think he played a role in the sudden decision Darbee took to retire just a few weeks later. In a follow-up email to Cherry, Peevey took some credit for the leadership change.

“The board did the right thing (with a little nudge) this morning,” Peevey wrote. “Maybe the beginning of a new, better leaf.”

Another email concerned a list of tentative personnel promotions at PG&E. Peevey wanted and got a copy of the list and then later replied he was thankful PG&E ran the names of the candidates “by me.”

To help keep an industry-friendly CPUC intact, Peevey privately e-mailed Cherry with tactical advice about how PG&E could effectively lobby Gov. Brown about forthcoming commission appointments.

But Peevey was also willing to use his connection with Cherry to shakedown PG&E for money for his non-profit group and to fight a ballot initiative he didn’t like.

Peevey leaned on Cherry in one email to donate at least $1 million to help fight a measure that would have suspended a California law limiting greenhouse gas emissions. PG&E gave half that, but probably could have saved its money because California voters shot down the measure by themselves in November 2010.

Peevey also wanted a $100,000 contribution from PG&E to throw a 100th anniversary celebration party for the CPUC. Peevey suggested a check on his desk would go a long way as commissioners pondered a PG&E rate hike request already before the commission. After all, Edison and AT&T had already confirmed they will contribute.

Cherry understood what was expected, and wrote his boss, “I told him I got the message.” PG&E also got a table… for $20,000.

“This is nothing less than quid pro quo deal-making with ratepayer dollars,” said Tom Long, an attorney with the The Utility Reform Network. “I honestly have never seen such smoking-gun evidence of corruption at the highest levels of the commission.”

Peevey wasn’t only friendly to giant power utilities. Under his leadership, the CPUC gave AT&T wide latitude and broad deregulation over its cable television and telephone business. The commission has also granted cable system ownership transfers with a virtual rubber stamp, and customers complain the CPUC has an uncanny knack of taking the provider’s side in consumer complaints.

The revelations lead to a scathing editorial in the San Diego Union-Tribune:

Peevey’s arrogance and sense of infallibility led him to conclude that rules were for other people. He didn’t just cross the lines of propriety in his dealings with utilities; he obliterated them. No one will be surprised if state and federal investigators find more scandals in coming weeks and months. Abuse of power is likely to be habitual when powerful people think they’re above the law.

[flv]http://www.phillipdampier.com/video/KNTV San Francisco E-Mail Scandal at PSC 11-12-14.flv[/flv]

The NBC Bay Area Investigative Unit has discovered that CPUC president Michael Peevey failed to file the state-required disclosure form detailing successful requests for money from PG&E. KNTV takes a look at the e-mails exchanged between Peevey and top executives at PG&E. The Fair Political Practices Commission has joined the U.S. Attorney and the California Attorney General in investigating Peevey. Chief Investigative Reporter Tony Kovaleski reports in a story that aired on November 12, 2014. (6:37)

Everyone Wants to Be a PG&E Helper

Peevey was clearly not the only point of contact PG&E had with the CPUC. Released emails show a series of messages between Cherry and Peevey’s chief of staff, Carol Brown. It quickly becomes clear Brown was looking out more for the interests of PG&E than California ratepayers.

Brown told Cherry she would help him whenever possible, and that included advice on how a top PG&E official could effectively obfuscate in a response to an open “public request for information.”

Losing complaints or giving inaccurate answers to consumer inquiries that help steer consumers away from pestering energy and telecom companies appears to be business as usual at the CPUC. An April report from the California State Auditor found the CPUC routinely misclassify almost 40 percent of complaints they receive from the public, leaving the agency ill-equipped to properly address consumer grievances.

“In 17 of the 45 complaints we selected and reviewed for accuracy, we found that the branch did not correctly categorize the complaints,” auditors found. “As a result, the branch’s complaint data do not accurately reflect the complaints it receives, and the branch is providing users with inaccurate data.”

But even more damaging was Cherry’s need for Brown’s help to choose a friendly administrative law judge for a pending PG&E rate case. Cherry got his wish and it appeared PG&E’s $1.3 billion rate case was on its way to fast approval, at least until the email exchange went public and accusations of judge shopping emerged. The case has now been reassigned.

“I’m Not Here to Answer Your Goddamn Questions. Now Shut Up — Shut Up!”

Occasionally, Peevey’s domineering temper emerged in public and in May 2014, Mike Aguirre, former San Diego City Attorney got to see it on full display.

He appeared at a hearing representing a ratepayer who was upset about a proposed settlement between utility companies and consumer advocacy groups that required ratepayers to cover $3.3 billion of the $4.7 billion bill to decommission one of the state’s nuclear plants. Like many other disputes taken before the CPUC, this one was settled in a secret meeting.

Aguierre wanted Peevey to go on record that SCE, his former employer, did not have any contact with Peevey.

“I’m not here to answer your goddamn questions. Now shut up — shut up!” yelled Peevey in response.

Despite the slow motion public relations train wreck, Gov. Brown continued to stand by Peevey. Peevey stood by business as usual.

[flv]http://www.phillipdampier.com/video/KGTV San Diego CPUC president curses out San Diego attorney Mike Aguirre 5-22-14.mp4[/flv]

KGTV in San Diego covered a May 2014 hearing that deteriorated after a San Diego attorney asked Peevey some questions about a secret meeting held between the CPUC and Peevey’s former employer that left San Diego ratepayers holding the bag — paying the bulk of the costs to decommission one of the state’s nuclear power plants. Peevey let loose. (2:23)

The CPUC’s Non-Neutral Net Neutrality Hearings

In the telecom sector, the most visible evidence that backroom dealings were underway at the CPUC occurred during the debate on Net Neutrality. The most awkward moment for the CPUC was at a September 11, 2014 meeting dominated by discussions about the open Internet.

The very sparsely attended public meeting ran several hours before the CPUC finally decided to vote on a resolution urging the FCC to adopt strong Net Neutrality regulations and impose Title II reclassification of broadband as a common carrier public utility.

The uneventful vote began with “Yes” votes from Commissioners Carla Peterman, Mike Florio, and Catherine Sandoval. Peevey and Commissioner Michael Picker both voted “No” and it would seem to the half-dazed audience soaking in an afternoon of arcane procedural matters that there was a clear 3-2 vote in favor of strong Net Neutrality.

But then something curious happened. Peevey declared, “That’s what’s adopted. All the other pieces go with that. There is no need for any other vote on any other matters.” It all seemed jovial enough until Peevey leaned to his right and stared down Peterman, adding, “unless anyone wants to reconsider their vote… rather quickly.”

Peterman seemed to think the chairman was joking and quickly declared, “No,” suggesting she was completely satisfied with her vote and the meeting plodded on.

[flv]http://www.phillipdampier.com/video/CPUC Net Neutrality Hearing Vote 9-11-14.flv[/flv]

The CPUC seemed to be holding a routine vote on a resolution supporting strong Net Neutrality, including reclassification of broadband as a telecommunications service under Title II. But moments after the 9/11/14 vote, Peevey seemed to jovially stare down a commissioner who appeared to vote in a way he didn’t approve or expect. (2:32)

At the end of the agenda, just when the audience was certain the meeting was coming to an end, Peevey suddenly called for a five-minute “rest break.” Observers suggested that was odd because with no more business before the commission, calling the proceeding to a close seemed like a more logical idea. The five-minute break stretched into 10, 15, and eventually more than 20 minutes. As Peevey reconvened the meeting, he immediately prompted Peterman to her microphone.

“I want to ask Carla, commissioner Peterman, to say something here,” Peevey said.

For several minutes, Peterman verbally stumbled her way trying to backtrack her earlier strong support for Net Neutrality, now seeking to abstain from the vote altogether. Peevey’s tenor suggested he well understood Peterman’s intentions in advance and helped shepherd a new vote past the commission’s legal advisers.

Peterman seemed to suggest that because the commission was closely divided on the matter, more time should be taken to develop a statement of unanimity that all five commissioners could agree on. But the end effect of a 2-2 vote with one abstention would leave a final statement advocating Net Neutrality under Title II in the gutter.

Peterman, Peevey, and the commission’s legal advisers tried to navigate through the confusing vote changing procedure for several minutes. Commissioner Sandoval spoke up to make sure that statements of unanimity were not a new precedent at the commission, but seemed to resign herself that it would be the case for this particular resolution.

To any observer, it seemed clear Peterman was strongly lobbied during the “five-minute break” to change her vote, perhaps by telecom lobbyists or by Peevey himself. The end effect was neutralizing the state of California’s participation in the Net Neutrality debate with a virtual abstention. Although Peevey promised to return to the matter of Net Neutality two weeks after the Sept. 11 meeting, Peterman, who initially seemed concerned about moving forward with the discussion, later asked it be postponed for an extra two weeks. On Oct. 16, it was abruptly dropped from the meeting agenda altogether.

[flv]http://www.phillipdampier.com/video/CPUC Net Neutrality Hearing Vote Change 9-11-14.flv[/flv]

After nearly three hours of the hearing had passed, watch as Peevey declares a five-minute “rest break” that stretched beyond 20 minutes. When the commission reconvened, Commissioner Peterman suddenly wanted to change her vote, neutering the resolution the commission voted to support an hour earlier in support of Net Neutrality. Despite Peterman’s claims of urgency regarding the issue of Net Neutrality, Peevey dropped the issue from the agenda a month later. (11:30)

Tracy Rosenberg, the executive director of Oakland-based Media Alliance, complained that the CPUC ignored more than 3,000 Californians that wrote comments to the CPUC about Net Neutrality.

“What’s going on here, folks?” Rosenberg asked.

“I got it,” came a terse response from Peevey, who offered no other comment.

[flv]http://www.phillipdampier.com/video/CPUC Tracy Rosenberg Media Alliance Comments on Net Neutrality 10-16-14.flv[/flv]

Tracy Rosenberg from Media Alliance rose to protest the CPUC’s sudden drop of Net Neutrality from the agenda. Peevey dismissed her remarks, saying “got it” before quickly moving on to another speaker. (2:17)

Out With the Old, In With the New, But the Same Lobbyists Are Still There

In October 2014, Peevey relieved the governor from being pushed to take action to finally get rid of him. Peevey read a brief statement announcing he was headed for retirement.

“I will not seek reappointment to the CPUC when my term expires at the end of the year,” Peevey said. “Twelve years as president is enough.”

It was more than enough for San Bruno mayor Jim Ruane who said he was “extremely happy” Peevey was leaving. “It’s a tremendous victory, not just for the City of San Bruno, but for all citizens in the State of California. Under Peevey’s leadership, the CPUC has served as a pawn of state utilities and an agency marked by collusion, dysfunction and, we learned this week, possible corruption.”

[flv]http://www.phillipdampier.com/video/KNTV San Francisco Michael Peevey Last Day at CPUC 12-18-14.flv[/flv]

He’s going. Colleagues compared Michael Peevey to President Franklin Roosevelt and the Pope in their farewell addresses to the longest-serving CPUC president in agency history. Detractors thought he could get away with anything. KNTV continues its series about the California Public Utilities Commission in a story that aired on Dec. 18, 2014. (4:20)

Today, Peevey is out of office, replaced by former commissioner-turned-president Michael Picker. But that may prove to be a distinction without much difference, according to a series of revelations published in the San Diego Union-Tribune that suggest Picker is being groomed by the same industry lobbyists that surrounded Peevey. More details about that and where the CPUC is headed next coming in the next part of our series.