San Jose Mercury: PG&E leniency demands explanation

PG&E had taken money from ratepayers for gas pipeline maintenance and instead used it for shareholder dividends and executive bonuses. These are facts.

San Jose Mercury News
August 2, 2016

The federal attorneys who so effectively prosecuted the criminal case against PG&E owe the public, particularly San Bruno residents, an explanation for suddenly recommending leniency if the utility is convicted.

The U.S. attorney’s office is declining to comment on why it decided to drop 99 percent of the possible fines the utility faced for its role in the September 2010 explosion. This would take the potential penalty down to $6 million. For a company the size of PG&E — which recorded an $888 million profit last year — that’s petty cash.

Eight people died in San Bruno. Thirty-eight homes were destroyed. PG&E had taken money from ratepayers for gas pipeline maintenance and instead used it for shareholder dividends and executive bonuses. These are facts.

The jury is now deliberating. If PG&E is convicted of the charges, it deserves the maximum fine of $562 million.

Speculation is that federal prosecutors want to cut short the penalty phase of the trial, which would follow a conviction. With $562 million at stake, it would eat up enormous amounts of their time and money as well as PG&E’s. Making the fine inconsequential would cut things short for sure.

But a slap on the wrist after all this time would not discourage utilities from taking shortcuts at the expense of public safety. Did we mention PG&E’s $888 million profit last year?

PG&E was charged with 12 felony violations of laws that required it to identify risks to its pipeline operations and keep accurate records on conditions of the lines. It also was charged with obstructing the federal investigation.

PG&E’s history of record-keeping is horrible. For example, a key point of contention at the trial was whether the utility had adopted a policy of allowing gas pipeline pressure to go 10 percent above the legal maximum. Federal law requires utilities to classify this as high-risk. PG&E originally produced a memo saying it had adopted the policy, then said that was a only a draft of a policy that had not been implemented. Who knows what’s true?

A supervising engineer in pipeline risk management for PG&E, Calvin Lui, testified that the utility was aware of wide-ranging threats to its pipelines but failed to tell state regulators about manufacturing defects.

He also said “the pipeline codes tended to conflict and confused us.” But the rules seem clear that pressure tests or inspections are required on any pipes in which the maximum pressure has been exceeded. That didn’t happen.

Prosecutors argued that PG&E committed felony violations of the law in one of the worst utility disasters in American history. Backing off on the penalty is confusing to survivors, the public and to utilities watching for signals of accountability.

The U.S. attorney’s office should restore the full penalty request. If it doesn’t, at least tell us why.

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