The San Francisco Chronicle recently reported that the bankrupt PG&E Corp. plans to pay a group of top executives nearly $11 million in performance bonuses this year. The bankruptcy court should disapprove these payments in light of PG&E’s history of misconduct.
Consider that PG&E enjoys a near monopoly over much of Northern and Central California providing natural gas and electric service to approximately 16 million people throughout a 70,000-square-mile service area. PG&E is overseen by the California Public Utilities Commission (CPUC). PG&E asked the CPUC to let it increase shareholder returns from 10.25% to 16%. If the regulators approve that request, the company’s return would be significantly higher than the 10.13% national average for utilities.
Remember PG&E’s 2003 bankruptcy where just weeks after handing out $50 million in bonuses while on the verge of financial collapse, PG&E received the judge’s permission to award $17.5 million in additional payouts to the management team that guided the utility into bankruptcy? PG&E said the bonuses for a “management retention program” were intended to prevent about 226 top executives from departing during the bankruptcy process.
Jump ahead to September 2010, when a PG&E gas pipeline segment exploded in San Bruno, California, killing eight, injuring many others, destroying numerous homes, and damaging numerous others. Regulators had approved PG&E’s request for $4.9 million to repair the South San Francisco segment of the pipeline, but PG&E spent the money elsewhere, and then in 2009 came back with a request for $5 million more to do the job.
In 2017, PG&E was convicted of six felony charges connected to the San Bruno pipeline explosion. PG&E’s sentence included a $3 million fine, a five-year probation period, independent safety monitoring, and 10,000 hours of community service.
Then in 2019, PG&E Corp. announced plans to pay top executives about $11 million in performance bonuses even though PG&E admitted its equipment probably ignited the 2015 Butte Fire killing two people; the devastating 2017 Wine Country fires killing 44 people;, and last year’s Camp Fire, the deadliest and most destructive fire in California history wih 85 deaths, destroying 18,804 structures, covering an area of 153,336 acres, with a total cost of $16.5 billion. Meanwhile, individual victim lawsuits are still pending.
Of course, ratepayers will soon see these costs in their electric and gas bill.
Instead of bonuses, maybe the PG&E executives should be fired for misconduct, and San Francisco officials should consider taking over some or all of the electricity distribution from bankrupt PG&E.
Ralph E. StoneFiled under: Bay Area / California