As much as $11.4 million in Southern California Edison ratepayers' money has been misspent or fraudulently billed by an outside consultant with little or no experience in the utility industry, the company acknowledged Tuesday.
The money was spent or billed by six marketing and consulting firms affiliated with the Salt Lake City consultant for electricity conservation-related projects, including brochures, market research and planning, and such promotional items as a desk calendar for restaurant chefs.
Edison has withheld payment of the final $2 million billed, pending the outcome of its own investigation as well as probes being conducted by the state Public Utilities Commission and the Los Angeles County district attorney.
"We still don't know" how much money has been lost, Edison spokesman Kevin Kelley said Tuesday in response to a report in the San Diego Union-Tribune.
R. Quinn Gardner, the consultant named in documents that Edison recently released to the state PUC in response to the agency's investigation, owns Salt Lake City-based Integrated Energy Group, or IEG, and interests in Integrated Data Group and Equitibuilders Consulting Group.
He has also been affiliated in consulting deals with Integrated Consulting Group, Triangle Marketing Enterprises and Jim Levanger and Associates. All were hired by the utility at various times from 1988 to 1991.
Steve LaBarbera of Triangle Marketing was also identified in the Edison documents as allegedly submitting improper bills for expenses and altering time sheets charged to the utility.
"We worked our hearts out to provide senior-level consulting," Gardner said Tuesday in response to news of the investigation. "The clients we worked for in the company as far as I know were more than satisfied with our work product."
LaBarbera could not be reached for comment.
Gardner was previously managing director of welfare services for the Church of Jesus Christ of Latter-day Saints. He later was CEO of Mormon Church-owned U&I Inc., a commercial farming company, and opened the consulting firms in the mid-1980s.
Critics have questioned how Gardner was hired when he lacked experience in the utility business. Edison's Kelley said that was a "prime component" of its investigation.
The PUC began its inquiry into Gardner and LaBarbera after Edison fired two mid-level managers at its Long Beach field office last September. The company said Floyd Younkin and Gary Morishita had each falsified $10,000 to $15,000 in expenses.
Edison has hired the Los Angeles law firm of Munger, Tolles and Olson to conduct its investigation. In a letter to PUC President Daniel W. Fessler, Edison Vice President John R. Fielder promised to "place our customers in the same position they would have been in had Edison not incurred any IEG costs."
The PUC's Department of Ratepayer Advocates has also asked the commission to make Edison's current rate negotiations subject to refund, pending the outcome of the investigation.
But Toward Utility Rate Normalization, or TURN, a frequent critic of the utility, wonders whether ratepayers will end up bearing the burden of any misuse of funds.
"There is a question in my mind about how ratepayers are going to be made whole," said TURN staff attorney K. Justin Reidhead on Tuesday. Reidhead called for a public hearing on the charges.