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State Energy Consultant Is on Edison Payroll

Ethics: The firm paid a retainer of $100,000 or more last year to former executive who helped negotiate power pacts.

April 15, 2002|NANCY VOGEL | TIMES STAFF WRITER

SACRAMENTO -- The parent company of Southern California Edison paid $100,000 or more last year to a former executive who has done no work for the company but has helped negotiate long-term electricity contracts for California power buyers, according to state records and Edison officials.

The former executive, Vikram Budhraja, said Edison International agreed to pay him a retainer of at least $100,000 a year when he resigned as a Southern California Edison senior vice president in January 2000. The money gives the company the right to consult with him, Budhraja said.

"That's the arrangement I worked out with Edison," he said.

It is not clear exactly how much Edison is paying Budhraja. As a consultant to state power buyers, he is required to disclose his sources of income. The state forms ask a filer to mark off boxes that indicate broad ranges of income. In Budhraja's case, he checked the box indicating gross income of more than $100,000.

Budhraja and Edison officials refused to release copies of his current or past contracts.

"Like most major corporations," said Brian Bennett, Edison international vice president of external affairs, "we retain the services of specialists so that, when needed, their expertise is immediately available."

Bennett said Budhraja has done no work for the Rosemead-based utility since the third quarter of 2000, when he was asked to assist with litigation over a 1996 power outage. The contract was renewed for 2002, Bennett said.

Budhraja said he would recuse himself from any consulting work for state power buyers that directly involved Edison. While on retainer to Edison, Budhraja has a $6.2-million contract with power buyers.

Since January 2001, the state has been buying electricity to fill in the gap between what the customers of Edison, Pacific Gas & Electric and San Diego Gas & Electric use and what the utilities can generate themselves with nuclear and hydroelectric plants. Secretary of State Bill Jones, who last summer called for investigations of possible conflicts of interest among Gov. Gray Davis' energy advisors, said he was outraged to learn that Budhraja was still taking money from Edison while advising state electricity buyers.

"How in the world in the last 18 months," Jones said, "can he possibly make the case that he's been working for the state and not come in contact or had a conflict with the second-largest energy company in California?"

Jones, an unsuccessful contender for the Republican nomination for governor in last month's primary election, said he hoped that the Fair Political Practices Commission, the Securities Exchange Commission and the state attorney general's office would step up their probes of Budhraja and others hired by Davis, a Democrat, during the electricity crisis.

"It just shows you the arrogance of power in this administration," Jones said. "They've ignored the ethics of this."

Michael Shames, executive director of the Utility Consumers Action Network in San Diego, said retainers are common in the utility business. Sometimes companies pay experts to prevent them from working for competitors, he said.

"The outsider has legitimate reason to be unnerved by these arrangements," he said, "but it gives a sense of the degree to which there's a lot of incestuous relations."

Budhraja's arrangement with Edison and the Department of Water Resources is "more condemnatory of the business than it is condemnatory of the man," Shames said.

An engineer whose colleagues praise him as a technical wizard on many aspects of the electric utility business, Budhraja left Southern California Edison in January 2000 to join a consulting company he helped found, called Electric Power Group. Many employees of the firm are former Edison employees.

In January 2001, the Davis administration gave Electric Power Group a $6.2-million contract to help the state Department of Water Resources take over the power-buying role of utilities that had been drained of cash and good credit by seven months of exorbitant electricity prices.

The department used its new authority to sign long-term power contracts at prices lower than the spot market. Budhraja helped negotiate many of the biggest of 56 agreements with energy companies. Valued at a combined $43 billion, those contracts ultimately will be paid for by utility customers through their monthly bills.

Although the contracts helped spare the state from extraordinarily high market prices last spring, a range of critics now call them too expensive and ill-matched to California's power consumption patterns.

Budhraja said his company's current work for the water resources department includes forecasting power needs and managing the long-term power contracts. He said he told both the department and Edison that he would recuse himself from any consulting work at the department that directly involved Edison. He also said Department of Water Resources officials knew of his relationship with the utility before they hired him.

Budhraja's consulting work has raised questions of conflicts of interest in the past. The SEC inquired into his stock ownership last summer at the behest of Jones.

Budhraja's personal financial disclosure forms from July show that he bought multiple blocks of Edison International stock in January 2001, just before going to work as a consultant for the state. He sold the stock within 12 days.

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