PG&E Shareholder Files Lawsuit Against Utility’s Executives

September 23, 2013 20:04 pm · 21 comments

A PG&E shareholder today filed a lawsuit against the utility’s management alleging that they diverted money for pipeline safety and used it for other corporate uses, including giving themselves hefty bonuses.

The lawsuit, filed in San Mateo County Superior Court by shareholder Hind Bou-Salman, argues that PG&E’s executives created a “profits over safety” corporate culture that led to tragedies like the 2010 pipeline explosion in San Bruno that killed eight people and destroyed 38 homes.

PG&E officials said earlier this month that the utility has settled nearly 500 confidential claims totaling more than $565 million related to the San Bruno explosion.

The California Public Utilities Commission is also currently considering a financial penalty against PG&E that could exceed $2 billion.

“Had PG&E’s management required that corporate funds be used for maintenance and repairs when it should have, the cost to PG&E would have been minimal in comparison to the significant financial injury the company now faces and will face in the future,” the lawsuit states.

Instead, the lawsuit states that PG&E executives “promoted an atmosphere and culture in which short-term profits, cost cutting and personal profiteering was put ahead of the proper management of the company.”

Bou-Salman, a Millbrae resident and PG&E stockholder for 23 years, is seeking changes in the utility’s management policies and for the return of executive bonuses approved by PG&E’s board of directors.

“PG&E and its shareholders are bearing the financial brunt of decisions made by the company’s executives,” Mark Molumphy, the attorney representing Bou-Salman, said in a statement.

“The complaint today alleges that PG&E’s executives, not its shareholders, should be held responsible for fostering a corporate culture that minimized the need to address safety,” Molumphy said.

PG&E spokeswoman Brittany Chord said, “We are carefully reviewing the allegations and we’ll respond according to the process set by the court.”

Chord said, “We remain committed to providing our communities with a safe and reliable gas system.”

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VikingPrincess September 23, 2013 at 8:23 PM

All a big racket anyways. If I could put up a few windmills and some solar panels at our house I would and be done with it. When I read Obama’s initial bill offerring funding for pipeline upgrades I knew they’d be on it…but wait! A fire conveniently reared its ugly head. Coincidence? We will never know. Only those working there know.

Steve September 23, 2013 at 8:36 PM

This is how PG&E runs it’s entire operation. Why fix it if they can use the money to keep the shareholders and executives happy.

On another note.
They sold all of they’re power generation plants with the exception of Diablo Canyon, because the California PUC regulates the rates for electricity produced within the state, PG&E now imports it’s power from out of state and can charge whatever the market will bare. They also subcontract a lot of they’re maintenance work that they used to do themselves.

funny guy September 23, 2013 at 8:44 PM

Incorporated states of the North American free trade union pledge

I pledge allegiance to the shareholders of limited liability states of Walmart, and to the oligarchy to which it reports, one nation, under Apple, with indebtedness and wage slavehood for all.

Mimi (original) September 23, 2013 at 8:55 PM

How do I support the lawsuit?

Anon September 23, 2013 at 9:04 PM

If anything changes it would be a miracle.

The PUC is nothing but a puppet organization that serves PG&E.

Dorothy September 23, 2013 at 9:11 PM

PG&E used to be what investors called a “widows and orphans” stock because of the dividend.

Besides suing in order not to foot the bill with management, which is why they are doing it, the investors could see however much stock they hold.

Dorothy September 23, 2013 at 9:12 PM

Meant to say they should SELL however much stock they hold.

Anonymous September 23, 2013 at 9:13 PM

@steve #2……. Wrong, wrong, wrong.

PG&E still owns their own hydro plants, maybe 3800 megawatts and two new fossil plants in Antioch and near Colusa for another 1200 megawatts or so.

They have to buy power to supply the demand above that. And no, they’re limited to what they can charge and that’s set by the CPUC.

Depends which maintenance work you’re talking about. They’ve never done the major equipment maintenance themselves, but depended on the manufacturers for that. They handle the day to day maintenance stuff and contract out the mid-size work. You don’t keep large crews on hand waiting for a maintenance outage to happen and plant maintenance is a lot different than gas line of power line work.

California Nightmare September 23, 2013 at 9:29 PM

PGE and other electric companies in California have been forced to spend/waste billions of rate payer $$$ on over priced “alternative energy” schemes foisted on all of us by the enviro-fascist democRATS running the state legislature.

Of course the executives at PG&E were eager to please their masters in the DemocRAT party, so they shifted money from needed pipeline maintenance to pipedream energy boondoggles.

Anon September 23, 2013 at 9:29 PM

Who can disagree with the share holder. I mean did the last CEO who already had a $5.47 million / year salary really need the $39 million dollar bonus?

VikingPrincess September 23, 2013 at 9:42 PM was brought to my attention PUC can act as a finger puppet organization to PGE. They intentionally created that shortage a decade or so ago. Ordering companies like WMngmt to shut down their turbines. I know a few contractors, superintendents n engineers with consciouses that quit because of it. No joke

Anon September 23, 2013 at 10:12 PM

Don’t forget the bankruptcy, where just before hand they handed out huge bonuses to employees. Their excuse? The bonuses had already been scheduled. Wonder of the bankruptcy had been scheduled as well?

Anononymous September 23, 2013 at 10:55 PM

Why is a lawsuit a story? Random Tasks could sue Mad Mom for sorcery if he wanted to. Who cares about one person who bought a share of stock suing anyone?

Eloiuse September 24, 2013 at 12:13 AM

@Anononymous #13
If one stakeholder does this, and gets away with it-it literally opens the door for thousands of suits. And you’re right, as customers of pg&e we also have a stake in how our money is spent. Just attend one of the meetings. I’m pretty sure that other stakeholders are looking at this closely, because pg&e almost has the monopoly here in northern california. This suit has the possibility of breaking up the company into smaller utility companies as in the midwest because it would be considered mismanaged. In these trying days and times-no one wants to lose their job.

anon September 24, 2013 at 12:53 AM

Hoping for real change but not holding my breath. I’ll give them a prime example they can use in this case. Fairview Ave. in Brentwood has been ripped up all year for pipe upgrades. This whole area was just built up in the last decade. PGE collected thousands of hook up fees from developers that were to be used to upgrade the supply pipes for the new houses. This was not done. Now we the rate payers have to pay to rip up brand new streets, planted medians and to hire all these people to stand around and make sure traffic can still flow somewhat. If they would have just done this when they collected the hook up fees (rather than divert to their budget pool for keeping cost low) this would have all been done before the population ballooned in that area.

Rob September 24, 2013 at 6:02 AM

“Instead, the lawsuit states that PG&E executives “promoted an atmosphere and culture in which short-term profits, cost cutting and personal profiteering was put ahead of the proper management of the company.”

Isn’t’ that just modern corporate America in nutshell?

Sounds like PG&E are just doing business as it is done in the US these days…

Suburban Dad September 24, 2013 at 7:31 AM

Steve, I don’t know where you got your info but I suspect it’s not a reliable source. I’m a whitewater kayaker so I spend a lot of weekends on various Calif. rivers. I see PG&E owned dams all over the place. They own and operate the majority of the dams in Ca. I see PG&E trucks and employees working on and around those dams. Whitewater organizations have to negotiate with PG&E to get dam releases for recreation. PG&E doesn’t like this, they used the rivers as they saw fit for decades.
Getting back to the article, It seems that the era of corporate greed is still going strong. It seems that making BIG money in the short term trumps fiscal stability and doing the right thing.

Anon September 24, 2013 at 9:27 AM

PG&E is as corrupt as corporations can be. Heard from a former PG&E Manager about an “overtime” scam. We witnessed it outside of our home in Clayton for weeks. Some kind of line repair in the street. 7:30 a.m. each morning, the same PG&E guys would show up. 5 or 6 of them. All stood there staring in a hole. Seriously. If they weren’t staring in the hole, they were meandering back and forth doing nothing, or sitting in their trucks. Absolutely ridiculous. Rates keep rising so we can fund this scam. If you happen to work for PG&E and actually work, then I apologize, however, from what I saw, there is a lot of dead wood collecting paychecks with hefty overtime attached.

The Mamba September 24, 2013 at 9:30 AM

PG&E has a terrible record of caring about safety, and basically stole millions of dollars from the public during the Enron scandal. If you invest in PG&E, you invested in a company that blew up a neighborhood and you get to wear it as well. Don’t worry though, they are basically a government granted monopoly that is overseen by former executives of the company, so they’ll just jack up rates to make up for it.

Mimi (original) September 24, 2013 at 11:33 AM

wouldn’t it be nice if they gave EVERYONE some money back?

Anon September 24, 2013 at 7:04 PM

Mr. Mayor, any chance of an update to this story?

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