Federal criminal indictment of PG&E doesn't go far enough

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How can PG&E executives pocket money intended to prevent the deadly gas explosion in San Bruno and not face punishment? Amazing
Examiner file photo

  A federal grand jury in San Francisco yesterday issued a criminal indictment against Pacific Gas & Electric for negligence in the 2010 gas pipeline explosion in San Bruno that killed eight people and destroyed an entire neighborhood. That’s significant and serious, but it also falls far short of what this rapacious company and its conniving executives -- none of whom face personal criminal charges -- should be facing.

The indictment and media reports on it omit key details of what happened leading up this tragic and entirely preventable explosion, buying into the fiction that there is a meaningful difference between PG&E Co., the regulated utility, and PG&E Corp., the wealthy and powerful Wall Street corporation. This is a stark example of how corporations are given all the rights of individuals, but accept few of the responsibilities, with the complicity of the political and economic systems.

The 12-count indictment focused on violation of the Pipeline Safety Act, which requires companies to maintain their potentially dangerous pipelines, including keeping detailed records and doing safety inspections that would detect flaws like the faulty weld that caused the San Bruno explosion on Sept. 9, 2010 – work the company negligently failed to perform.

But PG&E’s wanton disregard for public safety, combined with the greed and shameless self-interest of then-CEO Peter Darbee and other executives, goes far deeper than that. A report by the California Public Utilities Commission released in January 2012 found that $100 million in ratepayer funds that had been earmarked for pipeline maintenance and replacement, including this section in San Bruno, was instead diverted to executive bonuses and shareholder profits.

“PG&E chose to use the surplus revenues for general corporate purposes,” the audit said, noting that the company was flush with cash at the time and there was no good reason to neglect this required maintenance.

And in 2010, those questionable corporate purposes included spending more than $45 million to write and promote Prop. 16, a June 2010 ballot measure that would have required approval by two-thirds of voters whenever cities wanted to start community choice aggregation programs such as San Francisco’s proposed CleanPowerSF. California voters rejected that outrageous ruse by more than a 2-1 margin – so Mayor Ed Lee and his appointees were forced to kill CleanPowerSF on their own last year.

PG&E maintains the explosion was just an accident.

"San Bruno was a tragic accident. We've taken accountability and are deeply sorry. We have worked hard to do the right thing for victims, their families and the community, and we will continue to do so,” PG&E CEO Tony Early, who was hired after the explosion, said in a prepared statement. "We want all of our customers and their families to know that nothing will distract us from our mission of transforming this 100-plus-year-old system into the safest and most reliable natural gas system in the country."

But this “tragic accident” was foreseeable and preventable, particularly if PG&E was spending our ratepayer money on the system maintenance it was allocated for, instead of trying to fool us with a deceptive and myopic political campaign. Those were decisions made by real people, including Darbee and others, decisions that killed innocent people – and they should be held accountable. Neither this indictment nor a previous civil settlement go far enough.

PG&E’s employee union, IBEW Local 1245, continues to act as an apologist for the company executives, issuing a statement that in part says, “The federal indictment filed April 1st against the company says that PG&E willfully failed to identify and evaluate threats to its transmission pipelines. We know of nothing that would rise to the level of willful. It is possible there are things we don’t know. But based on what we do know, the company failures that led to the San Bruno explosion were not willful.”

Meanwhile, even some PG&E shareholders are siding with the company’s federal prosecution while bringing a shareholder lawsuit seeking to recover some of the diverted funds. Their high-powered attorney, Joe Cotchett, issued a statement today that said, “We welcome yesterday’s indictment by the federal grand jury of PG&E on criminal charges that it violated federal pipeline regulations. It is clear the federal government agrees with us that PG&E chose profits over safety. The indictment comes as no surprise, as it closely mirrors the detailed complaint we filed months ago against PG&E’s officers and directors, after our own extensive investigation.  The indictment states that PG&E ignored and failed to properly identify potential threats to gas pipelines, failed to gather relevant data, maintained flawed records, and as a result, was unable to accurately assess the dangers related to its lines that could have prevented the explosion. On behalf of the shareholders of PG&E, we intend to amend our complaint to add some additional facts stated in the indictment.”

“Our complaint alleges that PG&E’s executives dropped the ball and failed to implement safety measures despite numerous red flags raised by Company insiders with risk management responsibilities. We allege PG&E has already incurred charges of about $1.83 billion related to the San Bruno accident and natural gas matters. In its annual report, PG&E admitted that this criminal investigation could expose the Company to even greater losses. Our complaint also alleges that PG&E’s Board sponsored reviews of its risk management practices revealing that PG&E was in ‘crisis’ mode prior to the accident, and that, in 2007, PG&E’s newly-hired Senior Vice President of Engineering and Operations determined that the Company’s Enterprise Risk Management program ‘seems unactionable because almost everything is broken.’”

This is the company that Mayor Lee praises as a "great company that gets it," supporting its continued monopoly control of San Francisco’s energy system and subverting a city proposal to provide renewable energy to city residents, even as the threats posed by global warming increase, as this week’s report by the United Nations Intergovernmental Panel on Climate Change warns.

This is a sick system, and something needs to change.

Comments

SFBG has never gotten over losing every ballot initiative on public power, even though Bruce and Tim are long gone, and Steven wasn't here at the time.

It's just in SFBG's genes to hate PG&E, I guess, even though the people have no view on the subject.

Posted by Guest on Apr. 02, 2014 @ 5:08 pm

Claims from other commenters further below are simply false. Marin Clean Energy rates for its 50% green plan are -lower- than PG&E's, not higher.

To verify this go to: https://mcecleanenergy.com/rates-res

And Steven, I beg to differ.

CleanPowerSF has been hamstrung and delayed by the Mayor, but it is has certainly not been 'killed'.

Community advocates and Board Supervisors working to launch CleanPowerSF are still doing our jobs, and the San Francisco Local Agency Formation Commission is continuing work on the plans for installing program's local clean energy infrastructure, which is planned to get us to 50% local clean electricity in the next decade.

The program will likely launch in 2015 or 2016. (This is good timing because 2015 is when the City will be signing a new interconnect agreement with PG&E, and launching an energy generation program which competes with PG&E will give us more leverage in negotiations.)

And if Mayor Lee continues to interfere with CleanPowerSF, I'd say it's time to throw him out of office and elect a Mayor who will stand up and do what is necessary for San Francisco to begin reversing the now extremely alarming climate crisis.

To send a message to Mayor Lee and tell him you are fed up with him being the PG&E Mayor, go to:

http://tinyurl.com/LaunchCleanPowerSF

Posted by Eric Brooks on Apr. 04, 2014 @ 5:31 pm

Sonoma Clean Power is also now launching and with lower rates than PG&E.

See: http://sonomacleanpower.org/for-my-home/rates

Posted by Eric Brooks on Apr. 04, 2014 @ 5:44 pm

Every month I pay 50% more on my bill for it. It blows.

Posted by Guest on Apr. 02, 2014 @ 6:10 pm

Because we know it will be much more expensive.

Meanwhile PG&E is now 2/3 sustainable anyway.

Posted by Guest on Apr. 02, 2014 @ 6:23 pm

PG&E is not anywhere close to 2/3 renewable.

Posted by Steven T. Jones on Apr. 03, 2014 @ 8:53 am

as over 60%, so if it is not 2/3, it's not too far off either.

Perhaps you are relying on a subtle distinction between "sustainable" and renewable"?

Posted by Guest on Apr. 03, 2014 @ 9:05 am

No, PG&E is at 19.04 percent,  the lowest of the state's three largest utilities: http://www.cpuc.ca.gov/PUC/energy/Renewables/

Posted by steven on Apr. 03, 2014 @ 1:20 pm

Or are you arbitrarily excluding sources like nuclear from your definition of renewables?

They claim 65% or so.

Posted by Guest on Apr. 03, 2014 @ 1:45 pm

I cited my source, the state agency that regulates utilities, you're free to follow the link, research its criteria, and draw your own conclusions about PG&E's credibility. 

Posted by steven on Apr. 03, 2014 @ 2:48 pm

I see nothing wrong or dubious about it. Why can you not refute their data directly? What specific aspects of it are false?

Posted by Guest on Apr. 03, 2014 @ 3:10 pm

It's not renewable, technically, but it is sustainable for all practical purposes

Posted by Guest on Apr. 04, 2014 @ 7:31 am

same type of power plant...

Posted by anonymous on Apr. 05, 2014 @ 2:38 pm
Posted by Guest on Apr. 05, 2014 @ 2:53 pm

Let me get this straight.

Here in California:

Same type of power plant as Fukushima.

And also in a dangerous earthquake zone, just like Fukushima.

And you think think that this reality is not relevant in California?

Wow...

Posted by anonymous on Apr. 05, 2014 @ 7:56 pm

Different cultural approach.

We haven't had a major nuclear problem since Three-Mile and that was decades ago. It's safer and cleaner than any other form of energy.

Posted by Guest on Apr. 06, 2014 @ 6:06 am

what you just wrote

is exactly what the Japanese said

about Fukushima

before it blew up

Posted by anonymous on Apr. 06, 2014 @ 2:12 pm

Power generation and distribution is not without some risks but they are minimal and we accept them because the alternative is worse.

Posted by Guest on Apr. 06, 2014 @ 4:23 pm

there have been a multitude of accidents and near accidents since 3 Mile Island

look it up

Posted by anonymous on Apr. 07, 2014 @ 2:54 am

per month? Can the poor afford a 50% increase in their power bill? What about the poor? Will no one think of the poor?

Posted by Guest on Apr. 03, 2014 @ 2:56 pm

know it will be because if clean were cheaper everyone would be producing that over fossil fuel.

Steven sees clean energy as a possible backdoor way of getting out of PG&E being here, and he hates PG&E for reasons that he was told by Bruce and Tim, and that he doesn't question.

It's an obsession and asking for a rational explanation is pointless with people who are obsessed.

Posted by Guest on Apr. 03, 2014 @ 3:12 pm

and that's added on as a percentage of your total - there's no way of avoiding it. These types of fees are highly regressive.

Posted by Guest on Apr. 03, 2014 @ 4:36 pm

Marin Clean Energy costs less than PG&E. See my post above.

Posted by Eric Brooks on Apr. 05, 2014 @ 2:36 pm

Good thing the executives didn't take photos of a politician in a public restroom.

Posted by Guest on Apr. 02, 2014 @ 11:31 pm

All they did was murder people and blow up a neighborhood. Give 'em a break already. Don't the feds have a marijuana dispensary to shut down somewhere?

Posted by Greg on Apr. 03, 2014 @ 8:00 am

will happen from time to time.

You want the guys who run Muni in charge?

Posted by Guest on Apr. 03, 2014 @ 8:45 am

They have admitted they were wrong and the pipeline should have been inspected earlier. Your "shit happens" defense is absurd - you're arguing a point even the company isn't arguing in its defense.

Posted by Guest on Apr. 03, 2014 @ 3:40 pm

It just means that they didn't so it deliberately.

Posted by Guest on Apr. 03, 2014 @ 3:57 pm

Public utilities do not blow up neighborhoods. I haven't heard of a single case of that happening with a public utility.

Posted by Guest on Apr. 03, 2014 @ 7:22 pm

accident?

How many have been killed by muni drivers?

Posted by Guest on Apr. 05, 2014 @ 8:38 am

less than

Posted by anonymous on Apr. 05, 2014 @ 2:38 pm

even though driving a bus is a lot less risky then delivering gas.

I don't trust the city to run anything safely.

Posted by Guest on Apr. 05, 2014 @ 2:52 pm

let's compare apples to apples shall we

why don't you show us some proof that municipal gas systems are somehow more dangerous than PG&E's massively failed and deadly system

there are plenty of municipal gas systems so if what you're saying is true, it should be easy for you to prove it

we will eagerly await your damning link citations

and by the way

municipal power in San Francisco would be delivering electricity, not gas

so even if you were to prove your case (you can't because it is bogus)

you would still be wrong

Posted by anonymous on Apr. 05, 2014 @ 8:03 pm

let alone delivering my gas.

I trust the experts not the bureaucrats

Posted by Guest on Apr. 06, 2014 @ 6:07 am

a public power system would deliver electricity, not gas

and you have failed to post the proof that you were challenged to post

instead you have stupidly alienated virtually every Guardian reader by bashing one of the most important and well liked unions in San Francisco with baseless attacks

again

post your facts

Posted by anonymous on Apr. 06, 2014 @ 2:16 pm

SEIU is one of the most "well liked" unions in San Francisco??? You don't live here do you?

Posted by Guest on Apr. 06, 2014 @ 3:20 pm

a very broad cross-section of the community, and by most voters.

Our taxes would be much lower but for those parasites.

Posted by Guest on Apr. 06, 2014 @ 4:21 pm

you are projecting your own fantasies on 'most voters'

most voters in San Francisco are pro union

Posted by anonymous on Apr. 07, 2014 @ 2:59 am

Most voters are not in a union

Posted by Guest on Apr. 07, 2014 @ 6:58 am

most voters are not puppies either, but that does not mean that most voters are anti puppy

Posted by anonymous on Apr. 07, 2014 @ 9:54 am
Posted by Guest on Apr. 07, 2014 @ 10:08 am

that when this particular 'Guest' is backed into a corner he immediately changes the subject

do you yourself vote anti puppy Guest?

Posted by anonymous on Apr. 07, 2014 @ 11:49 am

anonymous and yet he claims to know who he is.

Hilarious.

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Posted by smslån on Apr. 16, 2014 @ 6:43 pm

and you are still ducking my insistence that you actually prove your claims

Posted by anonymous on Apr. 07, 2014 @ 2:56 am

It's assumed to be false unless you do.

Posted by Guest on Apr. 07, 2014 @ 6:59 am
hmm

you were called out to show some proof that public gas would be more dangerous than PG&E gas and you have simply failed to do so

instead, you tried to start a side argument about another subject so that you didn't have to answer the question

if there was proof, you definitely would have posted it by now, so you are clearly wrong

Posted by anonymous on Apr. 07, 2014 @ 10:03 am

justify it. I'm happy with what we have now and so do not have to justify that

Posted by Guest on Apr. 07, 2014 @ 10:10 am

never said i want or don't want change

i simply asked you to prove your laughable bullshit claim that PG&E is safer

to which your response was to gutlessly crawl under a rock and refuse to do so (because you know you can't)

Posted by anonymous on Apr. 07, 2014 @ 11:43 am

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