Executives of California’s large privately-owned utility companies don’t usually have to worry about much. Their companies enjoy virtual monopolies in vast regions, their profits are guaranteed, their shareholders are generally assured of regular dividends – which means they can count on collecting large salaries indefinitely.
This security is enhanced by the fact that when the folks who run companies like Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric have made mistakes, they never have been held personally liable for anything.
But times have changed since the state’s abortive venture into electricity deregulation led to selloffs of many power plants and an energy supply crisis in 2000-2002, with no penalties to decision-making executives for the bankruptcy of PG&E and the almost simultaneous near failure of Edison.
The Disaster Trail
Since that time, actions and policies decided by officials of those companies have led to two more disasters of a different nature. There was the 2010 PG&E gas pipeline explosion that killed eight persons and destroyed 35 houses in the Crestmoor area of San Bruno. And there was Edison's decision to allow installation of faulty major parts in its San Onofre Nuclear Generating Station, leading to the retirement of SONGS, for which Edison and minority partner SDG&E now want to dun customers billions of dollars.
In both cases, customers have already paid plenty. PG&E, like counterparts Southern California Gas and SDG&E, regularly collects funds for gas pipeline maintenance via monthly bills and has done so since the 1950s. Since federal authorities after San Bruno fingered PG&E maintenance as negligent, it’s fair to ask what the company did with all the money it collected, a question not yet addressed.
Similarly, since Edison and SDG&E customers have paid monthly for decades for the eventual retirement of San Onofre, it’s hard to see why they should pay even a nickel more, especially when a federal report concluded the early retirement was caused by the knowing actions of Edison bosses.
So far, no utility executive has paid anything close to a personal price for those problems. But the utility brass involved in gas pipeline management and the San Onofre decisions ought to be quaking a bit today, in part because a San Mateo County judge in August cleared the way for lawsuits against executives whose alleged mismanagement led to San Bruno.
On the same day that legal decision came down, another court action about 6,000 miles away in London, should also have gotten executive attention.
This one saw three former top executives of the Associated Octel Corp., also known as Innospac, sentenced to prison for bribing Indonesian and Iraqi government officials to continue their nations’ importation of a toxic tetraethyl lead fuel additive that is banned in America and most of the rest of the world.
The Colorado-based company sustained profits for its lead product by making millions of dollars in illicit payments between 2002 and 2008.
Of course, an English court’s decision to send the threesome away for terms ranging from two years to four years cannot be a legal precedent in any American court. But it certainly could give federal prosecutors here the idea that the long era of personal immunity may be over for corporate executives and the decisions they make.
So far, there have been no court actions against Edison for its mismanagement that easily could have endangered the millions who live within range of a potential San Onofre radiation leak.
Grave Danger Ahead
But PG&E is now under criminal indictment for alleged obstruction of justice along with a variety of counts for regulatory violations.
Legal experts take the obstruction charge as a sign federal prosecutors plan to pursue the San Bruno case aggressively, with the likelihood of at least a huge fine for the corporation.
That, in turn, could open the so-far nameless executives responsible to shareholder lawsuits for lost profits and dividends, if the penalty is steep enough.
It opens the door to asking why, if PG&E did in fact both act negligently and then obstruct justice by impeding the investigation that followed San Bruno, the executives who guided those actions should escape personal penalties?
If personal penalties can be exacted in England, prosecutors should be asking themselves, why not here, too, especially when the direct cause of multiple deaths is much easier to prove here?
Mr. 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 second edition. His email address is tdelias@aol.com
