In 2012, two California state government reports linked PG&E‘s diversion of safety funds for profits and CEO bonuses to a pipeline explosion in San Bruno. Eight people were killed and 38 homes destroyed in the blast and the resulting fire.

Although this was reported in SFGate more than seven years ago, it bears mentioning again – because the massive West Coast power company has shown little indication that it is changing its behavior. Many consumers and officials believe PG&E has yet to be held accountable in any meaningful way, previous lawsuits and settlements notwithstanding.

What the California PUC Discovered

According to an independent audit carried out in the wake of the San Bruno pipe explosion of September 2010, the explosion resulted in part from the diversion of  more than $100 million over 15 years, money that had been earmarked for safety and maintenance programs. Instead, this money was given to shareholders and company executives in the form of bonuses.

While PG&E reportedly focused on financial performance, pipeline replacement and maintenance programs were cut and safety inspectors were laid off while PG&E cut corners by using less expensive inspection methods.

Investigators concluded that 38 family homes and 8 lives were lost as a result. The company that conducted the independent audit also found that PG&E’s “low priority” on pipeline safety was “well outside industry practice – even during times of corporate austerity programs.”

Criminal Behavior?

At the time, San Bruno’s assemblyman, Jerry Hill, said that the diversion of customer funds amounted to “criminal behavior.” Despite the clear evidence that the PG&E fire was attributable to the transfer of funds away from safety and maintenance programs however, it appears that the company did not violate any state criminal statutes.

According to the state public utilities commission, state law allowed PG&E to spend less than the authorized amount on operations, since the state’s Public Utilities Commission “…is generally precluded from asking for the money back if the company overestimated its revenue requirement.”

The federal government came to a different conclusion, however.

Accountability

In April of 2015, the California PUC ordered PG&E to pay a fine in the amount of $1.6 billion. While there were questions as to whether or not PG&E had committed crimes under state law, a federal grand jury found the company had violated the Natural Gas Pipeline Safety Act of 1968 in connection with its accounting practices and pipeline “integrity management.” PG&E was also charged with obstruction of justice for allegedly lying to the National Transportation Safety Board during its own investigation about its pipeline testing.

In January 2017, a federal judge ordered PG&E to pay a $3 million fine and perform 10,000 hours of community service. In addition, the company put on probation and was required to spend an additional $3 million to “publicize its criminal conduct.”

PG&E Fire Cause Determined in Thomas, Camp Conflagrations

The penalties appear to have had limited effect on PG&E’s corporate behavior. In recent California wildfires, investigations have attributed the fires at least in part to poorly maintained power lines and failure on PG&E’s part to keep flammable vegetation away from its equipment.

Currently, Butte County district attorney Mike Ramsey is conducting an investigation into the Camp Fire and is considering filing new criminal charges against the utility.

This article is not legal advice. It is presented
for informational purposes only.