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Rewarding state $300M for helping kill 8 people
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PG&E is paying $300 million too much for the 2,425 violations of federal and state safety rules in connection with an investigation following the 2010 gas pipeline explosion in San Bruno that killed eight people and destroyed more than three dozen homes.

It is part of a $1.6 billion fine plus $635 million in mandated credits for ratepayers levied Thursday by the California Public Utilities Commission board. PG&E Chief Executive Officer Tony Earley to his credit, said the utility would not appeal the CPUC decision. It is a smart move on Earley’s part as appealing the decision would keep the blast and PG&E’s sins in the limelight for years.

However, it is a travesty of justice for the State of California to get $300 million from PG&E that will be deposited in the state’s general fund given the culpability of the state in the San Bruno tragedy and the shaking down of ratepayers for rate increases to perform pipeline safety improvement work that was never done.

The CPUC is the state agency that was supposed to be serving as a watchdog for the public when it comes to PG&E other monopolistic private utilities.

The $635 million in ratepayer credits reflects money that the CPUC authorized PG&E to collect for pipeline safety improvements.  PG&E never spent it and instead found ways to pocket the money. The state through the CPUC is charged with oversight to make sure rate increases are spent for what they were approved to cover.

And this is not just an isolated case nor does it apply only to PG&E’s gas division. The South San Joaquin Irrigation District a few years back spent hundreds of thousands of dollars hiring specialists to comb through a PG&E rate hike increase request that was in excess of $1 billion. Among the information unearthed was how PG&E was requesting part of the rate hike to replace 30,000 aging power poles that they have already had gotten a rate hike to replace but failed to do so. That is what the CPUC is supposed to be doing. 

The end result was the SSJID investment ending up helping knock more than $400 million off the rate hike before it was approved by the CPUC. That $400 million savings, by the way, grows with each passing year. Thanks to SSJID the 9.7 million customers of PG&E have saved $1.6 billion so far and counting from what the CPUC would have essentially rubber stamped for PG&E to take from them.

The fine also requires PG&E shareholders to pay $850 million toward gas transmission safety improvements. Another $400 million will be reflected in customer bill credits with an additional $50 million ordered for other remedies.

Don’t worry. The $1.6 billion fine won’t hurt PG&E. The company netted $1.4 billion in 2014 for a year that wasn’t the best for the San Francisco-based for-profit utility. They also are quite capable of using the tax code to reduce their federal income tax liability. PG&E, thanks to special treatment from friends in high places and having a small army of accountants coupled with a legion of lawyers was able to forgo paying $1.7 billion in federal taxes on profits of $4.8 billion between 2008 and 2010. It means you paid more federal taxes during those three years since PG&E didn’t even pay a penny.

PG&E defenders will tell you that some of that represents taxes deferred for 30 years. Ask yourself this question: Wouldn’t you like to defer taxes you owe to Uncle Sam for 30 years from now and then pay him in inflation-ravaged 2045 dollars plus not have to pay any interest?

Supposedly this was done so PG&E could invest in infrastructure including pipelines and power poles they already fleeced ratepayers for with the blessing of the CPUC but then opted not to replace so the money could be used to line the pockets of corporate executives.

The there is the issue that hardcore cynics of PG&E like to point out: Did the CPUC get tough with PG&E only because the San Bruno dead included  a CPUC staffer and her 13-year-old daughter? The staffer worked in a CPUC unit that dealt with consumer rights pertaining to natural gas regulations.

The killing of customers by pipeline explosions in San Bruno wasn’t the first rodeo for PG&E. A year prior they killed a Sacramento man on Christmas Eve yet the CPUC reacted to that incident with barely a yawn.

And making the $300 million bonus the state is getting at the cost of eight lives even more appalling is PG&E is continuing to rack up safety violations left and right.

To the credit of at least one CPUC commissioner, a study is finally being done to see if PG&E is too big to be trusted with public safety.

That gets closer to the right track, the forced sale of PG&E. The utility has demonstrated that upper echelon management — call it corporate culture — can’t be trusted with the best financial interests of the public or their safety. 

The problem isn’t with the hard working and honest front-line PG&E employees as the federal government discovered. It’s with the people pocketing $1 million in bonuses while bringing the company to the edge of bankruptcy while flying around in a new corporate jet and devising fatter stock options.

Rewarding the state with $300 million for what they allowed PG&E to do is a criminal act in itself.


This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA.  He can be contacted at or 209.249.3519.