Accident Waiting to Happen
California Utility Company Too Big Not To Fail
A California official says that, after a $1.6 billion fine for a pipeline explosion that killed eight people, Pacific Gas and Electric is bound to repeat its dangerous mistakes.
Bank of America and their ilk may be deemed too big to fail, but a giant in another industry—oil and gas utilities—is being deemed too big to not to. Reacting to Pacific Gas and Electric Company, California’s largest energy utility boasting nearly 10 million customers, California Public Utilities Commission President Michael Picker has judged the behemoth unfit to safely operate.
The utility company made headlines this week when it was levied with a $1.6 billion fine for the 2010 explosion of a PG&E pipeline in Bay Area suburb San Bruno, which decimated a surrounding neighborhood and killed eight people. While this represents the largest penalty ever brought against a public utility, Picker alleged PG&E has a history of simply using its deep pockets–they showed $1.4 billion in profits last year–to pay its way and continue “failing to establish a safety culture.”
For what it’s worth, investors seem to agree with the utility’s invulnerability. PG&E’s stock price has held steady—and even gone up slightly—in the past month, despite news of a fine that would essentially wipe out the last year’s income.
For its part, PG&E claims to have intensified safety training, replaced many top tier managers and executives, and implemented nine of the 12 recommended improvements from the federal government with work continuing on the final three, according to spokesman Keith Stephens.
That doesn’t, of course, undo the past. While the 2010 explosion was without a doubt an exclamation point, it was merely the most visible moment in the utility’s sordid history.
PG&E is currently under federal investigation for a 28-count criminal indictment stemming from leaked emails that allege the utility had the CPUC on the take, with prosecutors looking for evidence of bribery, obstruction of justice, and worse, even searching the homes of utility executives and PUC head Michael Peevey, who stepped down in 2014 and was replaced by Picker. The utility managed to walk away from a number of safety violations over the years by simply paying whatever fine was levied and seeming to continue with business as usual.
"We failed," Picker told the San Jose Mercury News in an interview following the CPUC’s 4-0 vote to bring the record judgment against the utility, acknowledging his agency’s lax oversight, even with some seven further serious safety violations by the energy giant since the 2010 incident. "PG&E violated its public trust. But we weren't vigilant enough."
Pacific Gas and Electric was has been charged with violating 2,425 total safety rules leading up to the explosion, and still may face and additional $1.13 billion in criminal fines. It has voluntarily pledged $2.8 billion to improving pipeline safety.
The National Transportation Safety Bureau found the a mix of poor maintenance, poor oversight by regulatory officials from the CPUC, and poor record keeping by PG&E were the main factors in the San Bruno explosion.
The new CPUC head questions the viability of the utility—one of the largest in the United States—to continue without further endangering the public, suggesting he believes the internal safety lapses are endemic.
“Is the organization simply too large—spread across a sizeable portion of a large state, and encompassing diverse functions such as both gas transmission and gas distribution, as well as electric service—to succeed at safety?” He asked in a statement.
It’s unclear what steps the CPUC would or could take if they found the utility was indeed too large to continue operating safely, though a state official who was quoted under the condition of anonymity, said the CPUC staff would study whether the commission could split PG&E’s gas and electric operations.