Pacific Graft & Extortion

According to recent news reports, PG&E may seek bankruptcy protection to avoid liability for its negligence in causing the Camp Fire. To understand how nauseating this is, and what should be done about it, a little history and background is in order.

In 1997, PG&E was convicted of 739 misdemeanors for causing the Trauner fire in Nevada County that burned twelve homes and a schoolhouse. That number—739–isn’t a typo. The fire was caused by a tree limb brushing against a power line. PG&E is supposed keep trees trimmed near its lines—but instead, it diverted $77 million over seven years from its tree maintenance program in order to prop up profits for investors. So it was convicted of 739 crimes.

Did PG&E learn? Nah. In 2010, a PG&E gas pipeline in San Bruno exploded, killing eight people and injuring many more. Thirty five houses were destroyed; three more had to be torn down because of extensive damage. The cause of the explosion was determined to be a combination of excessive pressure in the pipeline, faulty welds, and poor maintenance practices. The State of California determined that PG&E had illegally diverted $100 million from a fund dedicated to safety operations, and had instead used the money for executive compensation and bonuses. As a result, PG&E was convicted of six felonies, paid a fine of $3 million, and was put on five years probation. The Public Utilities Commission fined the utility $1.6 billion.

But they learned that time, right? Nope. In 2015–just as their probation was ending—a wildfire swept through Amador and Calaveras Counties, burning 70,00 acres, killing two people, and destroying over 900 structures. Cal Fire determined that the cause of the fire was poor tree maintenance by PG&E that led to a tree falling on a power line near Jackson. PG&E paid an $8.3 million dollar fine, and estimated that its total losses for that fire, including payments to individual homeowners, exceeded $750 million.

That must be the end of it, right? You would think. But you would be wrong. Cal Fire, the state’s fire management agency, has so far reported that PG&E’s electric equipment started 12 fires in October 2017. The fires ultimately killed 18 people. The agency’s research indicated that the utility violated state law governing vegetation management in eight of those wildfires.

Now PG&E may have to declare bankruptcy to avoid its liability for the Camp Fire.

It’s pretty clear that PG&E doesn’t care whether you die because of its negligence. How can they get away with it again and again? Well, guess who’s paying PG&E’s fines and settlements? Ratepayers. You and me. They blow up our families and burn down our homes, and we pay the tab.

Executives aren’t hurt. The San Jose Mercury News reports, “In 2017, Geisha Williams, PG&E’s chief executive officer, was awarded $8.6 million in total direct compensation, according to a PG&E filing with the Securities and Exchange Commission. Her 2017 pay package was 106 percent higher than the $4.2 million in total pay she received in 2016.” Got that? She got a 106% raise for presiding over a year of negligence that killed 18 people. Why should she care?

Also according to the Mercury News, Anthony Earley, PG&E’s former CEO and Williams’ predecessor, saw a gain of $15 million from the sale of stock according to the same SEC filing. Earley officially retired at the end of 2017. So he made $15 million for guiding his company into negligent homicide and possible bankruptcy.

These disasters keep happening because there are no consequences. When PG&E is fined or sued, ratepayers pay the bill. When the utility is convicted criminally, no one goes to prison. Executives are given bonuses that reflect complete indifference to their negligent homicides.

There are many smart people who believe that public utilities should never be public corporations precisely because it encourages companies to put shareholders and executives before ratepayers. I haven’t researched the issue in sufficient depth to know what the alternatives are, or whether they would be any better. But you don’t have to be a business or utility expert to know that people are predictable creatures. They react to carrots and sticks in predictable ways. Reward them for negligence, and they will be negligent. Insulate them from the consequences of their actions, and they will be indifferent to those consequences.

When utilities display a pattern and practice of negligence, as PG&E has, they need to be held accountable. They should not be allowed to raise rates to pay the costs of their negligence. Executives should not be rewarded with bonuses or stock options, or able to realize profits on the sale of options, when those executives have presided over catastrophic negligence—regardless of whether the company has been otherwise profitable. And if PG&E is allowed to discharge its obligations to the Camp Fire victims in bankruptcy court—and remember, “discharge” is legalese for “skip out on”—then all parties must understand that justice must still be done. Top executives, including Geisha Williams, need to go to prison.

If this sounds harsh, it shouldn’t. Under California law, involuntary (negligent) manslaughter is a felony carrying a prison term of two, three, or four years in state prison. If you think PG&E executives should be able to skip out on their obligation to compensate their victims and avoid prison for their deadly acts and omissions, tell me: Is that because the law shouldn’t apply to wealthy, successful people, or because the victims of the Camp Fire are unworthy of justice?