trending Market Intelligence /marketintelligence/en/news-insights/trending/NFgrvgGq_w0gZ9ALVg8dFg2 content esgSubNav
Log in to other products

 /


Looking for more?

Contact Us
In This List

PG&E under siege

Blog

COVID-19 Impact & Recovery: Energy Outlook for H2 2021

Blog

US utility commissioners: Who they are and how they impact regulation

Video

Climate Credit Analytics: Linking climate scenarios to financial impacts

Blog

Essential Energy Insights, April 2021


PG&E under siege

Pacific Gas and Electric Co. has been accused of falsifying tens of thousands of gas safety records after the deadly San Bruno explosion, adding to its list of woes that include an ongoing probation violation inquiry and the parent company's foundering stock price.

To avoid damage to underground infrastructure such as pipelines, utilities — including Pacific Gas and Electric — have to timely respond to excavator requests to locate and mark where underground systems are. Over 2012-2017, the utility did not have enough staff to keep up with these requests, and to avoid the appearance of being late in complying with local rules, it falsified records to make it seem that the company was meeting its requirements, CPUC staff alleged.

Failing to locate infrastructure on time and falsifying records are "serious" violations of the law, the CPUC said in an order opening an investigation into the issue.

The CPUC announced Dec. 14 that it had opened an investigation into Pacific Gas and Electric's alleged violations, noting that the 2012-2017 block under scrutiny "is the period immediately following the 2010 San Bruno gas explosion and fire that resulted in eight fatalities, numerous injuries and damage to property."

According to a report from a consultant PG&E hired, the utility and its management placed "inherent pressure" on locators to complete the work and it was "common knowledge" among supervisors that locators put in false notes to prevent locate tickets from appearing late. A CPUC staff inquiry had similar findings.

The allegations come at a perilous time for the PG&E Corp. utility, which is already on probation after receiving six felony criminal convictions — for violating pipeline safety laws and obstructing a related investigation — related to the company's deadly 2010 gas pipeline explosion in San Bruno, Calif. In sentencing the utility in 2017, the U.S. District Court for the Northern District of California said that as a condition of that five-year probation, "PG&E shall not commit another federal, state, or local crime."

"It's shocking to realize that in the wake of the San Bruno explosion, in which PG&E needlessly caused eight deaths, PG&E simply continued lying to authorities about pipeline safety practices, especially considering that PG&E, a convicted felon, is on probation for that same crime," Mindy Spatt of The Utility Reform Network said in a Dec. 17 email.

"We're committed to accurate and thorough reporting and record-keeping, and we didn't live up to that commitment in this case," PG&E said in an emailed statement Dec. 15.

The stock of the utility's parent company suffered on the heels of the CPUC's investigation announcement. Having closed Dec. 14 at $26.01, the shares finished the day Dec. 17 at $24.44, a drop of 6%. PG&E Corp.'s shares were already struggling to recover from investor concerns that the utility's infrastructure was at fault in the Camp Fire. As recently as Nov. 7, PG&E Corp.'s shares were at $48.80, but the stock price slid Nov. 15 to $17.74.

PG&E said it changed corporate leadership in response to internal concerns about complying with key gas safety rules and keeping accurate related records before the CPUC probe, although the utility has not elaborated on the nature of those personnel changes.

The CPUC staff inquiry into PG&E's alleged infrastructure location and record-keeping failures included interviews under oath with multiple upper-level staff members, including Jesus Soto, the utility's senior vice president of gas operations, and Nick Stavropoulos, who at the time was the company's president and COO. Soto and Stavropoulos were the only executives the CPUC's order opening the investigation mentioned by name.

In July, PG&E announced Stavropoulos' plans to leave his job with the company and his board of directors position at the end of September. The company did not give a reason for Stavropoulos' retirement and did not announce a management succession plan at the time.

In August, the parent company gave Soto additional cybersecurity, physical security and supply chain responsibilities, among other changes to executive roles within the company. That same month, the utility also moved its vice president of power generation to vice president of safety and health.