State hits PG&E with millions of dollars in penalties.
California utility regulators on Thursday penalized Pacific Gas and Electric Co. $97.5 million over improper back-channel communications with their own agency following the deadly 2010 San Bruno pipeline blast.
The penalty, unanimously approved by the California Public Utilities Commission, will require PG&E to pay $6 million each to the cities of San Bruno and San Carlos, as well as $12 million to the state’s general fund.
In addition, PG&E will forgo $63.5 million in revenue it would otherwise have collected from its customers in 2018 and 2019. The company will also forgo another $10 million, spread out over three years, the next time the commission sets PG&E’s rates.
PG&E, California’s largest utility, will not be able to pass on to its customers the costs of paying the fines, nor can it deduct those penalties from its taxes.
PG&E spokesman Paul Doherty said the company was committed to making sure its communications with government regulators followed all relevant rules.
California regulations allow private communications between utility executives and commission officials during some regulatory
proceedings, but they ban it in others and generally require that the communications be reported to the public.
“If we fall short of that commitment, we’ll hold ourselves accountable,” Doherty said.
The commission already fined PG&E $1.6 billion over the Sept. 9, 2010, explosion of a PG&E natural gas pipeline beneath San Bruno. Eight people died in the blast. In 2016, a federal court jury convicted PG&E of five felony charges of failing to properly inspect and repair its aging pipelines and a sixth charge of interfering with the federal investigation of the blast, a verdict that led to a $3 million penalty.
PG&E agreed last year to the basic outline of Thursday’s penalty, hammered out with the cities of San Bruno and San Carlos, commission staff and The Utility Reform Network consumer group. The company will also be required to train its staff on the regulations governing communications between utilities and their state regulators.
Investigations into the explosion revealed improper private talks and emails between PG&E executives and two former commissioners, as well as their staff. The city of San Bruno, in court, forced PG&E to disclose thousands of emails between its executives and the commission, and some messages showed a close relationship between the company and its government regulators.
In one exchange, for example, a high-ranking commission staff member advised a PG&E executive on ways to evade a public records request related to San Bruno. The PG&E executive replied, “Love you.”
Another exchange described former commission President Michael Peevey discussing business with PG&E’s vice president of regulatory affairs at the time over some “good pinot” at a Sonoma County resort.
Several PG&E executives lost their jobs as a result. Peevey stepped down when his term expired at the end of 2014. The Legislature pushed through a series of bills to reform the commission, including shifting some of its responsibilities to other agencies.
The commission’s vote on Thursday did not entirely put to rest the issue of PG&E’s backchannel communications.
In September, while discussions on the penalty were under way, PG&E disclosed to the commission a new set of emails, from 2013 and 2014, that might violate the rules. Rather than delay the entire proceeding, the commission decided to look at those emails separately. As a result, the commission’s decision Thursday warned that PG&E could still face further fines over improper emails.