UTILITY EXECS WARNED: THEY MIGHT PAY FOR IRRESPONSIBLE, NEGLIGENT DECISIONS

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, FEBRUARY 10, 1923, OR THEREAFTER

BY THOMAS D. ELIAS
        “UTILITY EXECS WARNED: THEY MIGHT PAY FOR IRRESPONSIBLE, NEGLIGENT DECISIONS”

 

        Until a short time ago, top executives of California’s privately owned utility companies had nothing personal to fear from any decision they made, even if it cost dozens of human lives.

 

        That’s how it went when Pacific Gas & Electric Co. officials neglected to maintain gas pipelines adequately in the San Francisco suburb of San Bruno, which led to an explosion that killed eight persons in 2010. And when PG&E executives neglected to trim vegetation near power lines, causing a manslaughter conviction for the company when almost 100 died in fires during 2017 and 2018. And when negligent corporate decisions caused billions of dollars in damage over the last 15 years in areas served by Southern California Edison and San Diego Gas & Electric.

 

        But notice has now been served: Corporate utility executives whose decisions cost lives and burn homes and other buildings may eventually be forced to pay, and not mere nickels and dimes.

 

        The hope is this will lead to more responsible decision making by the companies, but that remains to be seen. For sure, the new climate may become much more cautious, causing inconvenient public safety power shutoffs in fire-prone areas when weather turns hot and extremely dry.

 

        Those are some implications of a $117 million settlement reached in a lawsuit late last fall against 20 former PG&E officers and directors. The suit was filed by the Fire Victims Trust, which received $13.5 billion from PG&E and its bankers when the utility evaded bankruptcy after the North Bay, Camp and other fires burned thousands of acres in Northern California between 2015 and 2018. All were ignited by arcing power lines that set ablaze untrimmed, dry plants and trees.

 

        The deliberate pace of the victims’ trust in distributing funds has drawn criticism from many fire victims forced to fend for themselves after losing their homes, often moving in with relatives or being otherwise compelled to leave their blackened home areas. As of last Sept. 30, the trust says, it had passed out more than $5 billion to victims, including more than $300 million each in August and September.

 

        Because of a ruling by the federal bankruptcy court that helped set up the trust, the newest cash from utility decision-makers must be used to pay off federal government agencies with outstanding claims against PG&E, a pittance compared with the trust’s total funding. But lawyer Frank Pitre, a trust board member who led the lawsuit, said the “vast majority” of federal claims are now satisfied, so the trust “is close” to being able to use proceeds from future lawsuits against other utility officials to benefit fire victims.

 

        This represents a huge change in lines of responsibility. Over the last 10 years, utility companies have been convicted of or “taken responsibility” for many billions of dollars  in wildfire damage, but even now, not one of their executives has served a day in jail – even when their choices caused multiple deaths. Now, at least, some executives have actually had to pay for their misdeeds. Also until recently, utilities charged customers for maintenance, but actually used for that purpose only a tiny part of the $65 billion they’d collected since the mid-1950s for that purpose. Most went toward executive bonuses and other optional expenses.

 

        Utilities have long paid fines when they caused fires, but recouped the money soon after in their next round of rate increases granted by the ever utility-friendly state Public Utilities Commission.

 

        The new lawsuit settlement does not make way for others to sue right now. It was based on a claim by PG&E against its own highest former officials (including two former CEOs and its top electric managers). A bankruptcy judge handed that claim to the trust, which quickly sued the individuals. Most fire victims not involved in the trust probably won’t be able to sue, said Pitre, the Burlingame-based lead lawyer for the trust, because of an expired three-year statute of limitations from the dates of fatal decisions.

 

        But the climate of the utility world has changed. From now on, utility executives will know they are watched and that their corporations won’t protect them, may in fact sue them. This could lead to improved decisions. For potential financial ruin figures to become a major motivator among utility executives.

 

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Elias is author of the current book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It,” now available in an updated third edition. His email address is tdelias@aol.com