the Cult of TIPs and PG&E

Republicans Encourage SNOOPS, like PG&E

Operation TIPS

Operation TIPS, where the last part is an anagram for the Terrorism Information and Prevention System, was designed by President George W. Bush to have United States citizens report suspicious activity.

It came under intense scrutiny in July of 2002 when the Washington Post alleged in an editorial that the program was vaguely defined.

The program's website implied that US workers who had access to private citizens' homes, such as cable installers and telephone repair workers, would be reporting on what was in people's homes if it was deemed "suspicious."

Operation TIPS was accused of doing an "end run" around the United States Constitution, and the original wording of the website was subsequently changed. President Bush's former Attorney General, John Ashcroft denied that private residences would be surveiled by private citizens operating as government spies.

Mr. Ashcroft nonetheless defended the program, equivocating on whether the reports by citizens on fellow citizens would be maintained in government databases. While saying that the information would not be in a central database as part of Operation TIPS, he maintained that the information would still be kept in databases by various law enforcement agencies.

The databases were an explicit concern of various civil liberties groups (on both the left and the right) who felt that such databases could include false information about citizens with no way for those citizens to know that such information was compiled about them, nor any way for them to correct the information, nor any way for them to confront their accusers.

Both Congressional Representative Dick Armey (Republican, Texas) and Senator Patrick Leahy (Democrat, Vermont) raised concerns.

Rep. Armey included legislation in the House's Homeland Security Bill that explicitly prohibited the creation of Operation TIPS.

Senator Leahy raised the concern that it was similar to J. Edgar Hoover's misuse of the FBI during the 1960s when Hoover hired citizens to spy on neighbors who were political protesters.

President Bush and Attorney General Ashcroft still want the program to be implemented. The initial start of the program was August of 2002. It was to include 1 million workers in 10 US cities and then to be expanded.

The United States Postal Service, after at first seeming supportive of the program, later resisted its personnel being included in this program, reasoning that if mail carriers became perceived as law enforcement personnel that they would be placed in danger at a level for which they could not reasonably be expected to be prepared, and that the downside of the program hence vastly outweighed any good that it could accomplish. The National Association of Letter Carriers, a postal labor union, was especially outspoken in its opposition.

From Wikipedia, the free encyclopedia

Operation TIPS Website (16 July 2002)

Operation TIPS - the Terrorism Information and Prevention System - will be a nationwide program giving millions of American truckers, letter carriers, train conductors, ship captains, utility employees, and others a formal way to report suspicious terrorist activity. Operation TIPS, a project of the U.S. Department of Justice, will begin as a pilot program in 10 cities that will be selected.

Operation TIPS, involving 1 million workers in the pilot stage, will be a national reporting system that allows these workers, whose routines make them well-positioned to recognize unusual events, to report suspicious activity. Every participant in this new program will be given an Operation TIPS information sticker to be affixed to the cab of their vehicle or placed in some other public location so that the toll-free reporting number is readily available.

Everywhere in America, a concerned worker can call a toll-free number and be connected directly to a hotline routing calls to the proper law enforcement agency or other responder organizations when appropriate.

Operation TIPS is coming in August 2002.
Volunteer now!

Operation TIPS Website (8 Aug 2002)

Operation TIPS, administered by the U.S. Department of Justice and developed in partnership with several other federal agencies, is one of the five component programs of the Citizen Corps. Operation TIPS will be a national system for reporting suspicious, and potentially terrorist-related activity. The program will involve the millions of American workers who, in the daily course of their work, are in a unique position to see potentially unusual or suspicious activity in public places.

The Department of Justice is discussing participation with several industry groups whose workers are ideally suited to help in the anti-terrorism effort because their routines allow them to recognize unusual events and have expressed a desire for a mechanism to report these events to authorities.

These workers will use their common sense and knowledge of their work environment to identify suspicious or unusual activity. This program offers a way for these workers to report what they see in public areas and along transportation routes.

All it will take to volunteer is a telephone or access to the Internet as tips can be reported on the toll-free hotline or online. Information received will be referred electronically to a point of contact in each state as appropriate. This is not a national 911 center, and callers are expected to dial 911 for emergency local response.

Industries that are interested in participating in this program will be given printed guidance material, flyers and brochures, about the program and how to contact the Operation TIPS reporting center. This information can be distributed to workers or posted in common work areas. Operation TIPS is scheduled to be launched in late summer or early fall 2002. The goal of the program is to establish a reliable and comprehensive national system for reporting suspicious, and potentially terrorist-related, activity. Operation TIPS will be phased in across the country to enable the system to build its capacity to receive an increasing volume of tips.

The Memory Hole

OPERATION TIPS: Almost Dead, but Not Quite
BY Andrew Colwell

"I find it kind of scary ... We used to laugh at the old Soviet Union idea where everybody reported everybody else ... We don't need to have it happen here," commented Patrick Leahy (Vermont-D), chair of the Senate Judiciary committee, on a program that is currently working its way through Congress.

Leahy's comment, published in the Brattleboro Reformer, seems to encapsulate the basic argument of the vociferous criticism being shot at the Operation Terrorist Information and Prevention System (TIPS) program: it is too reminiscent of fascism and can be considered unconstitutional.

TIPS, which has encountered an ongoing barrage of criticism from all sides of the political spectrum, is sponsored by the Department of Justice in conjunction with Homeland Security and several other government agencies. For months the Department of Justice has promoted the program while attempting to please its critics, who remain skeptical of its objective. The program's website ( describes the objective as "a national system for concerned workers to report suspicious activity."

To the relief of the program's critics, TIPS did not appear on the draft of the Homeland Security Bill passed by the House of Representatives on July 29, 2002. This is a preliminary victory for the diverse group of conservative and liberal organizations that oppose the program on the grounds that it would violate privacy laws and give neighbors incentive to "peep" on one another. "Citizens will not become informants," stated the House Chairman's summary for the bill.

But this does not mean that TIPS has disappeared. The Senate has its turn to review and amend the Homeland Security Bill this autumn, and since the Senate was unable to review it before the August recess Congress takes every year, the program is technically still pending.

Also, the Justice Department claims that it will pursue the program in some form or another--if it is not already made legal by the Senate.

In addition, The Policy Action Network reported that the International Longshoremen's Association, which has 65,000 members, offered its services; the U.S. Postal Service, which had originally declined to allow its letter carriers to participate, changed its mind and met with the Justice Department; and James P. Hoffa, president of the Teamster's Union, proposed the participation of its American members.

In one sense (the Justice Department's), they would all become "volunteer informants," but in the differing view of ACLU Legislative Counsel Rachel King, in an ACLU news release, these organizations would instead serve as "government-sanctioned peeping toms."

The ACLU is not alone in its criticism of TIPS. There has been opposition from politically diverse groups such as the Cato Institute, the conservative Rutherford Institute, and the National Lawyers Guild.

At the time of publication, the program was still waiting to be discussed on the Senate floor. But House Majority Leader Dick Armey's aide, Richard Diamond, said it is likely that the program will not be discussed due to its prohibition in the House Bill, which Armey played a key role in designing.

But only time will tell at this point whether or not TIPS is revived.

According to the ACLU, TIPS was originally scheduled for action as a pilot program in August 2002; but since the Justice Department is saying it is still planning to pursue the program, it seems as if it has only been temporarily postponed by the recent developments.

It was also reported by the Associated Press that the Justice Department was waiting until Congress returns in September before harvesting any "tips," giving them time to consult lawmakers. The Operation TIPS website did say that there were plans in the works with several private industry groups but did not mention who they were or when any "peeping" would begin.

At one point during the legislation process, the Justice Department was sending incoming "tips" to America's Most Wanted, a TV show owned by the Fox Network. This was stopped after much criticism, and now the TIPS website reports that it is discussing the use of the National White Collar Crime Center as a host for the TIPS hotline number. The center is a non-profit, private corporation that primarily assists local law enforcement agencies in combating cyber crime. The Justice Department theorizes that "volunteer informants" would use this hotline to report anomalous social activity, but whether any "tips" have already been processed by the hotline or through other means remains unclear.

Despite accusations that the program would cause privacy violations and turn neighbors against each other, Attorney General John Ashcroft defended the program at a Judiciary Committee Hearing on July 27, 2002. According to the Policy Action Network, Ashcroft claimed that TIPS was not "a program related to private places like homes." Thus, he mentioned truck drivers, who do not routinely enter households, as an example. However, letter carriers, who are indeed in a better position to view private activity in households, have been successfully sought out by the program.

For now, it remains unclear what the future of TIPS will be. But rest assured, as the Department of Justice continues to seek its realization, the criticism from all facets of the political spectrum will continue to tip off the government to the program's Orwellian implications.


Pacific Gas & Electric: Environmental Racist

"If this were a rich, white community, do you think they'd be forced to live on toxic soil for generations?" - Midway Village Residents

Over the next few months we will examine fifteen (15) years of research on a company accused of environmental racism on poor communities and counties in California ...and the agency who is supposed to protect us from this form of Racism: The California Public Utilities Commission

Daly City [PG&E] Site Draws Anger of Neighbors
Tainted soil being exposed, they say

by Angelica Pence, Chronicle Staff Writer
Wednesday, January 5, 2000

(01-05) 04:00 PDT DALY CITY -- Irate residents of a Daly City housing project led a demonstration yesterday to protest nearby construction that they say is the latest example of decades of economic and environmental racism.

More than two dozen people representing Midway Village held up signs and blocked the entrance to a Pacific Gas and Electric Co. construction site during a morning rain. The power company is overturning contaminated soil, which many residents hold responsible for a slew of health problems suffered by the project's 150 low- income families.

Some of the dirt and groundwater being dug up is known to contain the carcinogen polynuclear aromatic hydrocarbons, or PNAs. Protesters say the pollutant is also buried beneath residents' homes and in nearby Bayshore Park, giving Midway Village residents tumors, breathing problems, bloody noses, rashes and other illnesses.

Lula Bishop, whose home sits only about 10 feet away from the construction site, woke up with feelings of nausea yesterday morning after breathing fumes she said have come from the site since workers began excavation.

"We're in a medical emergency,'' said Bishop, who has lived in Midway Village since 1977. "Our kids are getting sick. They have rashes our doctors can't explain. We suffer from cancers. Something has to be done.''

The county built the housing complex in 1976 on a parcel of land that included the site of a former PG&E plant, which had deposited coal tar and soot into the soil before closing in 1913. PG&E found the waste in 1980 and a decade later notified county officials that the soil near Midway Village was polluted with suspected carcinogens.

The residents' most recent lawsuit against the San Mateo County Housing Authority and PG&E was dismissed in 1997 after a judge ruled that the residents failed to link the chemical exposure to their maladies.

John Martin, Daly City manager, said more than $160,000 has been spent on safety measures to prevent Midway Village residents from coming into contact with the chemicals during the project, which is to enlarge an outdated storm drainage system.

The state Department of Toxic Substances Control (DTSC) is overseeing the cleanup of contaminated soil, according to the department's project manager, Alfred Wanger.

Workers are watering down the work site and covering it with tarps and metal plates at the end of the workday, Wanger said, as well as monitoring the air quality to make sure any contaminated particles in the soil do not become airborne. At Bayshore Park, a 10-foot fence was also erected to keep people from getting too close to the excavation.

The project, which got under way in mid-October, was originally to be completed in three to four weeks, Wanger said. The agency has been forced to push back the completion date in part because of the continuing protests, he said, noting that pickets have blocked trucks sent in to haul away the toxic soil.

State officials also offered to temporarily relocate residents who live directly adjacent to the construction site. But of 16 families eligible for the transfer, only two volunteered to move, said Otis Jackson, spokesman for the department, which is under the California Environmental Protection Agency.

Some Midway Village residents said the offer was too little, too late. For years now, they have been seeking compensation for their ailments and are asking to be permanently moved from the area. They also want any medical expenses incurred as a result of the toxic soil paid for by those responsible.

Demonstrators hope the protest -- the seventh such action in the past few weeks -- will keep the spotlight on the residents' drawn- out battle with PG&E and the county Housing Authority over the soil.

Officials have shown "a callous disregard for the health and well- being of those who live here,'' said Bradley Angel, spokesman for Greenaction, a health and environmental justice group.

Midway Village residents "are prisoners of their low-income status,'' he said. "If this were a rich, white community, do you think they'd be forced to live on toxic soil for generations?''

A Struggle for Environmental Justice
by Melissa McMillan


One cannot define any single problem faced by the Residents of Midway Village without encountering a barrage of other problems along with it. First and foremost, the people who reside in the Midway Village Project Housing complex in Daly City, California, have an environmental justice problem. Environmental justice is defined as "those cultural norms and values, rules, regulations, behaviors, policies, and decisions to support sustainable communities where people can interact with confidence that their environment is safe, nurturing, and productive (Bryant, 2000). The residents of Midway village do not have confidence that their environment is safe. In fact, they have just the opposite. They are plagued with diseases and symptoms such as rashes, tumors, breathing troubles, bloody noses, and the latest: genetic defects. They claim that the reason that they suffer from these problems is due to the toxic soil upon which the housing complex was built. They also live only a few blocks away from the site from which the soil was taken: an old Pacific Gas and Electric (PG&E) Plant. A study published in 1989 by the United Church of Christ titled "Toxic Waste and Race in the United States," found a pattern in which minority communities were often more likely to be located near a toxic waste or hazardous facility. Midway Village is a low-income project-housing complex composed mostly of African Americans, Latinos, and a few Asian Americans. Continue reading at:

"Never doubt that a small group of thoughtful, committed people can change the world, it’s the only thing that ever has." - Margaret Mead, 1962

Environmental justice activities enable small grassroots organizations to bring national attention to environmental disasters that are intentionally located in areas populated by people of color and people with low social and economic status. Activists generally are average people driven by necessity to resist and change a system they believe is betraying them. They watch as the fabric of their lives is frayed by the danger of pollution and the effects chemical industries have on their children and grandchildren. They write letters, attend meetings, organize protests, interact with politicians and bureaucrats, and devote most of their personal time to the movement (Bullard, 1993).

The subject of environmental justice has become a concern with a growing audience, most notably in the mass media market. Two docudramas, "A Civil Action" (1999) and "Erin Brockovich" (2000) focused on real-life individuals fighting for information concerning the health of their communities. "A Civil Action" traces the formulation and outcome of the legal complaints filed by eight families in East Woburn, Massachusetts, against three local industries for the improper handling and disposal of toxic chemicals (Harr, 1996). The docudrama "Erin Brockovich" centers on a struggling single mother who helps California plaintiffs win a $333 million settlement of water-contamination claims against Pacific Gas & Electric Company (Grant, 1992). Continue Reading at:

Dim bulb award goes to PG&E

by Phillip Matier, Andrew Ross

Yesterday's vote tally aside, the folks at Pacific Gas and Electric Co. have got to be the biggest election bumblers to come down the political pike in quite some time.

After spending $1.4 million to try to defeat the proposed San Francisco power takeover, the company picked the very eve of the election to announce a 243 percent jump in its third-quarter profit.

Not a smart move, especially when you consider that what upset voters the most about PG&E, according to polls, was its image of crying poor while making off like bandits.

"It was probably the least helpful announcement I've ever seen in the history of campaigns," was how one head-shaking consultant summed up PG&E's wonderfully timed profit announcement.

Some of the biggest groans came from business interests like AT&T and Pacific Bell, the Chamber of Commerce, the Building Owners and Managers Association and the Residential Builders Association -- all of which had mounted their own $850,000 campaign to try to beat back public power Propositions I and F.

That included a $100,000, last-minute TV and radio blitz -- all aimed at getting voters to believe the issue was about more than just the immensely unpopular PG&E and its profit-happy parent company.

Ross Mirkarimi, campaign manager for the pro-public power forces, said the boost in PG&E's profits "validated everything we had been saying in our campaign, that PG&E has been transferring millions out of San Francisco and bleeding the ratepayers."

How big an effect the news had on the tight races is up for debate. "It probably came too late to have any real impact," pollster David Binder said of the profit announcement, "but it certainly was dramatic."

PG&E, corporate criminal

PG&E, corporate criminal

The utility likes to pretend it's a good corporate citizen – but the record shows otherwise.

By Savannah Blackwell

WHEN IRISH IMMIGRANTS arrived on San Francisco's shores during the first few decades of the past century, it wasn't easy for them to find decent, stable jobs. John Hanley, the president of the local firefighters union, likes to say that for many the only options were the police department, the fire department and Pacific Gas and Electric Co.

PG&E has played hard on its reputation from those days, using stories like Hanley's to push blue-collar workers to oppose public power. The company has spent millions on other public relations efforts: for years, PG&E representatives talked about all the widows and orphans who were living off company stock, and hyped the money the company gave to local charities.

But the image of PG&E as a fine, benevolent, and upstanding corporate citizen is long gone.

Today, with PG&E's stock in free fall, the small shareholders who had hoped to use the utility's stock as part of their retirement income are in trouble – while the same executives who drove the company into bankruptcy are earning multimillion-dollar bonuses.

The charitable contributions that once helped buy PG&E political protection have dried up.

And over the past few years, PG&E's most lasting legacy has become that of a corporate criminal.


In 1997 PG&E was tried and convicted in criminal court for endangering the lives and property of gold country residents by failing to trim tree branches near electrical wires frequently enough to prevent major fires. Evidence showed that PG&E executives had diverted tree-trimming money to fatten profits and salaries of top corporate executives.

The story of the company's poisoning of community water supplies in Hinkley became a major Hollywood movie called Erin Brockovich, and a similar environmental disaster is still underway just south of San Francisco. Meanwhile, residents of the Bayview-Hunters Point district in San Francisco are suffering from alarmingly high rates of asthma and other illnesses that they link to PG&E's dirty power plant in the neighborhood (see "Poison Power," 1/28/98). In addition, the nearby Potrero power plant, which PG&E sold to Mirant Corp. in 1998, is scheduled for expansion.

PG&E stole nearly $200,000 from San Francisco by illegally running its power lines to the Presidio, according to a 1995 lawsuit the city filed against the company. Indeed, PG&E's service to San Francisco residents is illegal, according to the terms of the 1913 Raker Act, which requires the city to operate a public power system. The company's monopoly has led to decades of structural corruption at City Hall (see "How PG&E Wires the City," page 26).

In 1998 a major blackout hit the city – leaving nearly half a million San Francisco residents without electricity (see "Still in the Dark," 12/16/98). Officials determined that a failure to make a key backup safety check at a San Mateo substation caused the outage. For several years the company had been cutting back on maintenance staff to fatten profits.

In 2001, after lobbying for the 1996 bill that deregulated part of the state's electricity industry, PG&E shuffled off more than $600 million in profits to its holding company, gave its top brass $50 million in bonuses and raises, and declared bankruptcy. Since spring 2001, rates have soared 40 percent and customer service for everything from hook-ups to billing problems has worsened (see "Feeling the Crunch," 9/4/02).

Under its proposed plan to get out of bankruptcy, PG&E wants to free itself of the last vestiges of state regulation while at the same time making a very anti-free market demand: ratepayers must protect its shareholders and CEOs from any potential future losses (see "Competing Energy Visions," page 30).

PG&E has a long record of harassing internal whistle-blowers and reporters who dare to take on the giant company.

When former presidential candidate Ralph Nader talked to reporters at an Oct. 8 forum at the Commonwealth Club of California, he slammed the company's business practices: "PG&E was caught up in the whole deregulation scam, which it helped frame and get through the [California] legislature unanimously. [It] promised that rates would be reduced by 2000. Instead, PG&E has been caught up in a wild gyration of transforming the electricity industry into a speculative commodity marked by secret deals and collusion, which is just now being exposed by government investigators and newspaper reporters. Nader was at the club to support fellow Green party candidate Peter Camejo in his bid for governor.

"I think on the philosophy of 'Three Strikes, You're Out,' there have been more than three strikes. [The company] should be subject to eminent domain and takeover by a public power entity to establish lower rates, cleaner energy, and the more focused efficiency we've learned to expect from the better-run public power districts in California."

Burning down the houses

In 1994 a disastrous wildfire struck the community of Rough and Ready in Nevada County, scorching 500 acres, destroying a dozen homes, burning a historic schoolhouse down to the ground, and running up $2 million in damages. Residents, some of whom lost everything they owned, literally had to run for their lives.

The local district attorney was livid: the fire was started by tree branches brushing against high-voltage PG&E lines – and for years California forestry officials had been telling the company to cut back those tree limbs. In 1997, D.A. Michael Ferguson, in an unusual move, took the corporation to criminal court, charging it with 746 counts of violating the state law requiring the utility to maintain safe clearance around power lines. Ferguson accused PG&E of a chronic and widespread pattern of negligence that resulted in the 1994 fire (see "Burning Secrets," 3/12/97, and "The People v. PG&E," 4/2/97).

PG&E brought in the big guns. The company hired former U.S. prosecutor Joseph Russoniello to defend its actions. But a quiet, determined assistant D.A. named Jenny Ross, who had practiced in San Francisco with Pillsbury Madison and Sutro, prevailed with the jury. The company was found guilty of 739 counts of criminal negligence and fined $2 million.

The evidence brought forward by the prosecutor was overwhelming. With the help of utility analyst Bill Marcus of Sacramento, Ross showed how PG&E had taken $80 million from ratepayers between 1987 to 1994 that was supposed to pay for tree trimming. Instead, the company used it to pad profits and ensure hefty salaries for CEOs at a time when it was trying to make up for losses incurred from the screwed-up construction of the Diablo Canyon nuclear power plant. PG&E had raked in more than $1 billion in profits the year prior to the fire.

Ross presented loads of documents (which PG&E fought fiercely to keep confidential) – including personal e-mails between staffers – in which it was clear PG&E's brass had made a fatal decision to save money by drastically cutting back on tree-trimming staff. PG&E's managers even mocked the forestry officials for their constant warnings of danger.

The California Public Utilities Commission, whose officials were angry PG&E had hoodwinked them during rate cases involving the tree-trimming money, took up the matter and fined the company $29 million in 1999.

Nevada County wasn't the only site of major fires caused by PG&E. In fact, California Department of Forestry officials told us in 1997 that PG&E's failure to trim overgrown trees had caused some 760 fires.

In 1997 a devastating fire in Los Gatos was caused by molten aluminum particles spewing from a PG&E power pole. Although PG&E was never charged with a crime, the company agreed to pay the full cost – $2.5 million – of the fire.

Poisoning the water

Not many utility companies have been the subject of major Hollywood films. But in 2000, director Steven Soderbergh released a blockbuster about the illnesses and deaths in Hinkley, a Mojave Desert town of 3,500, and how a rough-and-tumble law-firm clerk named Erin Brockovich forced the company into what was the largest class-action settlement of its time: $333 million.

The rampant sickness in the community was tied to exposure to chromium 6 prevalent in the groundwater. PG&E, which owned a natural-gas pumping station on about 20 acres near the town, never acknowledged direct responsibility for the illnesses. Runoff from the station, which also contained chromium 6, was stored in unlined wastewater ponds. The corporation knew the ponds were leaking into the water supply.

In Daly City, residents living in Midway Village, a 150-unit federally subsidized housing development, have for years suffered unexplained headaches and high rates of cancer, as well as skin disorders and neurological problems. They found out they were living amid toxic waste from lampblack (a kind of carbon) and coal tar in their yards and under the property directly next door, which PG&E owns as part of its Martin Service Center. The stuff had been there for at least 100 years – left behind by a gas manufacturing plant. Residents charged that PG&E had known for more than 15 years that residents were being exposed to dangerous carcinogens such as benzoapyrene and other petroleum-based cancer-causing toxins yet did nothing to warn residents or sufficiently clean up the mess. In 1980, state records showed, PG&E workers even complained to the U.S. Environmental Protection Agency about the problem, and some of the waste was removed.

Ten years later, the first set of residents sued PG&E. Eventually, 180 plaintiffs accused the company of endangering their health. In 1997, San Mateo County Superior Court Judge Joseph Bergeron dismissed the case, saying that residents hadn't proved a direct link between their illnesses and the chemicals in the soil. The residents appealed. In 2000 the state Court of Appeals upheld the superior court judge's findings and threw out the residents' suit. Now residents are focusing on trying to force state officials, who removed more contaminated soil in 2001, to compensate them for the costs of treating their illnesses and to pay to relocate them.

"From Bayview-Hunters Point to Midway Village and other communities, you see a pattern of PG&E putting corporate greed above the health of people impacted by their operations," Bradley Angel, director of Greenaction, an environmental justice group based in San Francisco, told us. Angel said it was only in the past few weeks that environmental and Native American activists, with the help of a bill authored by state assembly member Fred Keeley and signed by Gov. Gray Davis, succeeded in stopping PG&E's plans to send radioactive waste to Ward Valley. "We see a pattern of threats to community health as well as a pattern of environmental racism and injustice."

These are just a few examples of PG&E's blatant disregard for public health and safety. There are numerous others: For example, in 1997 Sonoma County settled a case against PG&E in which the district attorney alleged that the company's Geysers geothermal plant emitted hydrogen sulfide at levels higher than the law allowed (see "Another Step Forward," 3/19/97). That same year a Santa Clara jury awarded $30 million to the family of seven-year-old Cole Behr. The family claimed that Behr, who can barely walk and cannot speak, was born with brain damage because his mother, Cynthia, was exposed to carbon monoxide related to PG&E's gas service when the dangerous chemical infiltrated the heating system of a San Jose office building where she worked when she was pregnant.

Cheating the city

PG&E never should have delivered power to San Francisco. But even the terms under which it breaks the federal Raker Act are unfair. Since 1939, PG&E has paid San Francisco a pittance – 0.5 percent of its annual gross receipts on electricity sales – for the right to run its gas and electric lines across city property. San Francisco granted PG&E that deal under an agreement that supposedly lasts "in perpetuity" – a clause city attorneys, including Louise Renne, have used to staunch efforts to take the utility to court and get a better deal. The national average for so-called franchise fees is 4 percent.

But low fees weren't enough for the company – it tried to get away with paying nothing for a key part of its system. The Bay Guardian reported in 1994 that PG&E had illegally run its lines into the Presidio and never paid the city a dime in franchise fees for those lines (see "The Presidio Power Grab," 1/12/94).

After the story came out, Controller Ed Harrington undertook the first audit of the franchise fees and determined that PG&E owed $114,000 for delivering power to the Presidio over the years 1991 to 1993 and $18,218 for 1994 and 1995.

Former supervisor Angela Alioto forced then-city attorney Louise Renne to take PG&E to both state and federal court over the issue. In 1997, at the behest of Renne, the city settled the state case for a mere $132,494 (see "Settling for Less," 5/7/97, and "City Hall's Gift to PG&E," 7/16/97). The city had originally asked that all of the money the utility made while engaged in the unlawful business of using city property without the right to do so be returned to city coffers and that PG&E be fined $2,500 for each day broke the law. That would have been $53 million.

The federal case was decided in PG&E's favor in part due to mistakes Renne made in the case in 1996 (see "Presidio Power Outage," 1/1/97).

In addition PG&E successfully fought off the city's efforts to get the Presidio electricity contract, which would have brought in needed revenue and allowed for a significant expansion of the city's public system, which currently serves city agencies.

Thanks, PG&E

If you like higher electric rates, and you enjoyed the rolling blackouts of 2000, you can thank PG&E, which played a major role in bringing deregulation to California.

PG&E and the state's two other major private electric companies, Southern California Edison and San Diego Gas and Electric, were not the initial instigators of the push to deregulate the industry. That came from large commercial users and former Republican governor Pete Wilson. But soon the utilities became boosters and saw a way to rid themselves of the historic limits on their profits.

With San Diego state senator Steve Peace at the helm, PG&E and the other utilities succeeded in getting a sweetheart deal from the legislature. Spending some $4 million in lobbying efforts and $1 million on campaign contributions, the three companies got a bill that protected their profits and forced customers to foot the bill for more than $28 billion in money they lost building nuclear power plants – even though PG&E customers had already paid inflated rates to make up for Diablo Canyon for years (see "You Lose," 8/13/97).

PG&E was particularly effective at pushing the deregulation bill. Midway through the bill-making process, the company brought on Dan Richard, who had been representing independent power producers, to lobby for its interests instead. Richard didn't even tell former assemblymember Diane Martinez, who was in charge of the legislation in the assembly, that he had changed jobs and had become a flack for PG&E, she told us in 1997.

The final bill was supposed to allow customers choice in the electricity market. But it required all customers in PG&E's service territory, whether they wanted to buy power from PG&E or not, to pay for PG&E's nuclear power plant costs. That prevented potential rivals from being able to offer cheaper deals and made a mockery of Peace's promise that ratepayers would get a choice (see "Guilty Parties," 2/14/01).

In 1998 consumer advocates Nader, Harvey Rosenfield, the Consumers Union, and the Utility Reform Network tried to overturn the part of A.B. 1890 that required customers to pay for the nukes. But PG&E and the other two utilities poured some $30 million – with PG&E accounting for more than half – into a rash of misleading ads, bought the support of key environmental and consumer groups, and defeated the measure at the November ballot (see "Buying the Bailout," 10/14/98).

Then, in 2001, reeling from the implosion of the deregulated energy market and the high cost of power from out-of-state utilities, PG&E demanded that someone else bail the company out of its troubles. PG&E declared its utility company bankrupt – after shipping over the previous nine months more than $600 million to its parent company and shielding other revenues from creditors (see "Missing in Action," 4/11/01)

PG&E's top executives, who had started this whole debacle, got raises and bonuses totaling $50 million.

Silencing critics

Although PG&E likes to insist it is a tolerant and responsible company, it has a long history of retaliating against any employee who blows the whistle on its irresponsible practices.

In the 1997 Nevada County fire case, one of the prosecution's star witnesses was Jim Sprecher, a PG&E engineer who had written a report concluding that the company was letting trees go untrimmed for too long and jeopardizing public safety. Instead of heeding Sprecher's concerns, the company demoted him, relegating him to an unimportant job and ostracizing him socially, he testified.

He also testified that the report mysteriously disappeared from his unlocked filing cabinet at work at some point between 1993 and late 1996, when he was contacted by Nevada County prosecutors (see "Vanishing Report," 5/21/97). The report's recommendation to increase spending on tree trimming was ignored by PG&E higher-ups.

At PG&E's April 1998 shareholders meeting, Neil Aiken, a shift foreperson at the Diablo Canyon nuclear power plant, stood up and told shareholders about safety problems that came from cost cutting at the plant. He told the audience he came forward only in desperation, because he had exhausted all possible routes of solving the problem within the company. He also released a report detailing the safety issues called "Going Critical" (see "Nuclear Leak," 4/22/98).

That year PG&E executives forced Aiken to undergo psychiatric evaluation. He was locked out of the plant and forced off his job after 24 years (see "Plugging the Leak," 11/18/98). The Project on Liberty and the Workplace took up his case, and the U.S. Department of Labor found PG&E guilty of retaliation in November 1999 (see "PG&E Fires Whistleblower," 4/5/00).

PG&E also has a history of blackballing reporters who challenge the utility. Energy writer J.A. Savage sued PG&E in 1988, charging that the company had gotten her fired from two jobs because she had once worked for an antinuclear group and had written for the Bay Guardian. She settled the suit for an undisclosed sum in 1995 after the state Court of Appeals found that her allegations had enough merit to go to trial (see "Reporter Beats PG&E," 11/8/95).

"PG&E wields considerable power over the press covering its activities," Judge Williams Newsom wrote in a 1993 appeals court opinion dealing with the question of whether PG&E should be able to blacklist reporters who work for the Bay Guardian. "In the case of a public utility enjoying such extensive monopolistic authority ... there is an important public interest in assuring the freedom of the press in reporting on matters lying within the exercise of its franchise."

PG&E has used its formidable power to undermine that constitutionally protected freedom. The haze of P.R. the company generates regarding its operations has proved effective in protecting the utility's empire – at the direct expense of the public's financial interests, safety, and health.

PG&E: Other Scandals

1905: Abe Ruef Scandal Timeline: Abe Ruef, more commonly known as boss Ruef was prosecuted for bribing the SF board of supervisors over the city's gas lighting contract. He was paid by Frank Drum of Wells Fargo and PG&E to carry out this bribe and many more.

1917: SF labor leader Tom Mooney was fingered for a bomb attack by a Pinkerton investigator who worked for PG&E, and was jailed for 20 years until the first democrat in the state's history was elected govenor. Mooney had come to town to organize a union at PG&E.

The company financed the Greater California League, spending $200,000 in 1922 to kill a statewide initiative drive to municipalize utilities in California. Two more attempts also failed due to PG&E and friends tactics, such as red baiting and more.

The company and its financial backers bought out locally owned power companies all over California from the 1890's up to 1930.

The company came up with the tactic of publicly offering its stock to the public to offset political concerns about who really owned and benefitted from control of the company.

Participated in the national campaign to bury the controversial history of public vs. private power in the U.S. by influencing the textbook companies that wrote the history books for students in the country. Very few people today know of the importance of the 1935 PUHCA act or the roll electric utilities played in causing the great depression of 1929-42.

1978: Opposed lifeline electric rates in the state, but failed.

1980: Caught in PCB transformer scandals, with a majojr explosion in SF resulting in evacuation of part of the financial district.

1980's Designed and built the Helms Stored River project, that went nearly 10x's over original budget and killed a score of workers.

PG&E was a coalition partner in destroying the grassroots based alternative energy movement in the state that was culminated in their FERC appeal that killed PURPA contracts in the state in 1994.

PG&E took the national lead in the mid 80's, with their U.S. Supreme Court case that killed Citizen Utility Board's across the country. The Nader inspired CUB's had succesfully gained access to PG&E's electric bill here when the CPUC allowed TURN to do inserts.

As the result of contamination at a San Jose building in the late 1980's, PG&E is convicted of fraud and fined $30 million.

PG&E's was part of a coalition of California corporations that sponsored the Pacific Legal Foundation and its SLAP suit against the Abalone Alliance that put it out of existance by 1985.

PG&E is fined $14 million for covering up thermal plllution at Diablo Canyon for nearly a decade that resulted in a massive dieoff of Abalone along the central coast.

PG&E was one of the main players along with the Palo Alto based EPRI, in the national agenda to deregulate the electric industry here and nationally.

The San Diego team of Steve Peace and Governor Wilson led the team plan to give the state's utilities the disasterous deregulation mess. It included a $28 billion bonus to cover all the construction costs of Diablo Canyon and SoCal Eds' SONGS reactors.

PG&E starting preparing for deregulation in the early 90's by Cutting costs. In 1987, PG&E was given a rate increase for tree trimming, but pocketed the money. A 1990 wildfire resulted in a government lawsuit that ended in an $8 Million settlement. Then the company was fined $2 million for a 1994 wildfire. The PUC started its own investigation of the tree trimming scandal and found that PG&E had broken rules 500,000 times.

In 1991 PG&E withheld vital information to the CPUC about a gas contract it had, resulting in substantial financial gain for the company. Six years later the CPUC fined PG&E $850,000 fine for lying to the agency.

The first progessive mayor ever for Oakland calls for a doubling of PG&E franchise fees.

In 1996, Assembly Bill 1890 gives PG&E $500 million for blackout damages caused by the company's failure to spend previously allotted maintenance money!

The company is sued for extortion by Fresno couple.

Hayward residents are caught up in a 1996 PG&E settlement scam over power surge damages to their property.

The company secretly settles (for millions) with 33 San Jose Residents for a 1996 gas leak that caused a massive expolosion and damages to their properties.

PG&E hides behind 70 year old law that allowed them to escape a 1993 natural gas anti-trust lawsuit filed by Stanislaus County.

PG&E is sued for discrimination against gay workers.

The company agrees to pay $100,000 over a PG&E worker's electrocution.

Another Worker sues over PCB contamination.

A Diablo Canyon worker, turned whistleblower is viciously attacked by the company.

The company shows up on a national worker's safety project over Asbestos at its facilities.

As part of the deregulation process, PG&E is allowed to spin off dozens of companies that sell energy services to the public. These companies are then caught by the PUC for misleading advertising. The company was also ordered to give back $33 million to ratepayers due to illegal relationships the company was having with the former affiliates including undercharges for services that gave unfair financial advantages.

PG&E attempts to corner an exclusive contract for power to the new Presidio National Park, but runs into the Bay Guardian campaign over years of unpaid fees.

PG&E takes the money from its sale of power plants and reinvests it out of state, primarily in New England. Even this gambit has failed as their National Energy Group is now up for sale due to poor financial results.

The El Dorado Irrigation District files a $150 million lawsuit against PG&E in 1998 when PG&E backs out of a 70 year old water agreement with the district causing water rates to jump 100 fold.

PG&E sells its controversial SF plants in June of 1998 to avoid the closure campaign by Bayview Hunters Point residents.

PG&E pays $440,000 to settle the city claims against the utility for the December 1998 blackout.

Just after PG&E wins part of the $28 billion from state ratepayers to cover its stranded costs at Diablo, the company pushes for a $1.2 billion ratehike, just as we are all being told that deregulation is going to lower our electric rates. The $1.2 billion request is one of the largest ever, prior to the crisis in 2001.

In 1997, a highly contaminated PG&E site becomes another major health and contamination battle, even bringing Jesse Jackson to town to bat for the low income residents of the Midway public housing projects. Go here for more on Midway

Check out the $400 Million Chromium Contamination claims that resulted in the making of the The Erin Brockovich movie. PG&E attempted to escape from the long suit during their $100 million litigation campaign during their federal bankruptcy proceedings, but failed.

PG&E buys a dirty old floating power barge, and tries to get clean air wavers to run it in the bay, but fails.

Its Diablo Canyon facility is operating without a state Water Pollution Permit.

Oh, yes and its spent large amounts of money many many times to defeat public power initiatives in San Francisco and elsewhere. See PGE Power Politics for details

The Real Environmental Record of PG&E:
Manufactured Studies to Cover-up Environmental Crimes

Written by David Greenwald, Wednesday, 25 October 2006 09:53

For those who have seen the movie “Erin Brockovich” you know the story—residents of a small rural town in the Mojave Desert, Hinkley, California, alleged that PG&E contaminated drinking water with the carcinogen hexavalent chromium—chromium-6 and that this exposure led to widespread illness and disease. They used the chromium-infused water as a coolant at some of its natural gas compressor stations but the discharged water tainted local groundwater supplies. Earlier this year the company agreed to pay $315 million to settle the dispute, nearly a decade after agreeing to pay around $160 million.

Typical of settlements, the company refused to admit wrong doing however, PG&E spokesman Jon Tremayne issued a statement Friday saying, "Clearly this situation should never have happened, and we are sorry it did." (USA Today, 2-16-06).

Given that those practices go back to the 1950s and 1960s, it’s not clear that we should use this case to taint PG&E. More stunning however, is their recent attempts to manufacture a study that demonstrated no link between chromium-6 and cancer.

From the USA Today article:

In December, the Environmental Working Group published a detailed account of PG&E’s alleged attempts to corrupt a previous medical study on chromium-6’s carcinogenic effects.

Drawing on records obtained under California’s Public Records Act, the public interest group chronicled how shortly after the first Brockovich case resulted in the huge plaintiffs’ award, a PG&E-paid; environmental consultant persuaded a respected Chinese scientist to participate in an update of his 1987 study that found chromium-contaminated water in rural China was linked to an increase in villagers’ cancer.

The new study found no such link between chromium-6 and cancer. In its investigation, the Environmental Working Group alleged that the revised study, published in the influential Journal of Occupational and Environmental Medicine, was written by PG&E consultants rather than by the now-deceased JianDong Zhang, whose revised paper misspelled his name three times.

The public interest group obtained records from California’s Office of Environmental Health Hazard Assessment that supported its doubts about the revised study, including the sponsors’ alleged failure to disclose who actually wrote the manuscript and who paid for it, in addition to their allegedly incorrect use of several epidemiological terms, according to the Environmental Working Group.

Here’s the full report from the Environmental Working Group which documents how PG&E conspired to reverse findings of a cancer study.

The Wall Street Journal reported today that the San Francisco-based consultants, ChemRisk, "conceived, drafted, edited and submitted to medical journals" a "clarification" of the Chinese study, according to documents filed in another chromium lawsuit against PG&E. They did so despite a letter of objection from the Chinese scientist who led the original study, calling their reversal of his findings an "inappropriate inference."

Davis residents who listen to the rhetoric of PG&E may want to read through that report. It is very illustrative—first, PG&E is running on its green record and while the actual Hinkley case did occur decades ago, the attempts by PG&E to manufacture a study to exonerate their past behavior is utterly indefensible and is a matter of recent record and behavior. Of course these facts have not been brought up in the current campaign, but I think Davis residents need to know about it.

The issue here is about responsibility and this is how PG&E reacts when they have made a mistake, instead of making things whole and doing the right thing, they try to lie and connive their way out of responsibility. -

Report: No fines on PG&E over six-year period

SAN FRANCISCO — A review of public records shows the watchdog agency responsible for regulating public utilities has taken a mostly hands-off approach to violations by Pacific Gas and Electric Co.

Even though PG&E had more pipeline infractions than the rest of the state's major pipelines combined over a six-year period, The San Francisco Chronicle reports that the California Public Utilities Commission did not levy a single fine on the utility during that period.

The newspaper reports in an article in its Sunday edition that its review of CPUC records between 2004 and 2009, PG&E accounted for 410 of the probable violations of federal safety laws found by regulators.

By comparison, all other utilities accounted for 287 of the probable violations.

PG&E operates 42 percent of the gas pipelines in the state.

The report comes after word that the CPUC is forming a panel to conduct a review of the PG&E pipeline blast in San Bruno last month that killed eight people.

Richard Clark, head of the Consumer Projection and Safety Division of the CPUC, told the newspaper that the industry has a history of fixing problems voluntarily.

"We operate under the assumption they are interested in having a safely operated system," Clark told the Chronicle. "If we saw a trend that gave us concerns in terms of what we are finding out there, we would take enforcement action," he said.

It's been least seven years since the CPUC fined PG&E or any other utility operating a gas pipeline in the state, according to Clark.

According to the Chronicle, self-policing is almost a necessity because the commission has just nine inspectors to monitor 100,000 miles of gas pipelines running through California.

Kirk Johnson, vice president of gas transmission and distribution for PG&E, said the utility often reports safety problems to the commission on its own.

"We don't see problems that warrant the level of enforcement actions," Clark said. "We don't see it. This is an anomalous event that took place in San Bruno," he added.

Instead of fining pipeline operators over violations, the CPUC sends them a letter asking the companies to comply with federal safety regulations.

"We find a violation, we tell them to fix it," Clark said. "Unless its a real egregious violation," he added.

Clark could not recall any such violation.

In a response to the article, PG&E spokesman Andrew Souvall told the Associated Press the "safety of the our natural gas system is our top priority."

"We are very conservative deciding what are reportable incidents," Souvall said. "In fact we often self- report things we have already fixed," he told the AP.

Souvall added that it would be a "mistake" to suggest that a lack of fines levied on the utility comes as a result of a lack of oversight, noting the natural gas industry is closely regulated by state and federal agencies.

A call left for the CPUC seeking comment on Sunday was not immediately returned.

Copyright © 2010 The Associated Press. All rights reserved.

San Bruno blast victims get buyout offer from PG&E

by Demian Bulwa, Chronicle Staff Writer, Tuesday, October 19, 2010

(10-18) 21:59 PDT SAN BRUNO -- Pacific Gas and Electric Co. is offering to buy out San Bruno residents whose homes were destroyed or badly damaged in last month's deadly natural gas pipeline blast, according to documents obtained by The Chronicle.

Those who sell fast - within six months - stand to collect a hefty bonus: $50,000.

The offer comes as many victims worry about their land value and the difficulty of rebuilding, and as PG&E seeks to restore public trust after the Sept. 9 blast that killed eight people, destroyed 37 homes and damaged 18 more.

The utility began distributing the offer to residents late last week. It is a key part of a program offering financial incentives that PG&E says are aimed at helping residents put their lives back together quickly.

PG&E is also offering to help victims who want to stay in the neighborhood rebuild their homes, with a $50,000 bonus for finishing within 16 months.

However, an attorney who is preparing to file suit on behalf of dozens of fire victims said the offers lack key details, give too much control to the company and could hinder residents from seeking damages in the courts.

"This is not a system that's going to give control to people who have been victimized by this calamity," said the attorney, Frank Pitre.

A third PG&E program will compensate homeowners who, in selling to a third party, receive less than what the market value was before the explosion.

Finally, PG&E has created a "neighborhood restoration plan" offering as much as $10,000 to anyone near the blast site who wants to spiff up a home with paint or landscaping.

Rep. Jackie Speier, D-Hillsborough, said some elements of the plan seem generous, such as the $10,000 for home improvement.

But she said she was concerned about offering incentives based on speed. "If you've been traumatized by this event, which most people have, go slow," she said.

Some interested

Several fire victims said Monday that they were reviewing the offers. However, those interviewed said they could not make any decisions until they get a response to their demand that PG&E move the high-pressure pipe that ruptured.

For now, the line remains out of service in the immediate area. PG&E says it is weighing its options.

"We would like to be part of the program," said Bill Magoolaghan, 46, whose home was gutted by the fire but is still standing. "The only catch is the pipe."

Bob Hensel, a 73-year-old former fire battalion chief in San Bruno whose home was destroyed, said he had asked PG&E to give him a proposed price for his property.

"They said it would take about three months," Hensel said. "I told them I needed to make a decision by then on whether to rebuild."

Phil Piserchio, 49, whose home was damaged, said the plan to assure home values needed to be extended longer. "Everyone in the whole world thinks we live in a high-risk neighborhood," he said. "That will be with the house forever."

$100 million fund

The offers are part of a $100 million relief fund that PG&E calls "Rebuild San Bruno." The company has already given $3 million to the city and as much as $50,000 for living expenses to each household displaced by the disaster.

Katie Romans, a PG&E spokeswoman, said the money will not be figured into utility rates and does not preclude victims from filing lawsuits. It is, she said, part of "our commitment to rebuild that community and help the people who live there rebuild their lives."

Another spokesman, Matt Nauman, said PG&E is still working on the programs and will publish more details later. He said any homes the company buys will be resold.

Pitre objected to many aspects of the plans, including PG&E's intent to hire the appraisers who will decide how much residents' home sites are worth. He said the documents that PG&E has given to homeowners lack key details, such as how disputes would be resolved.

"My experience is that when you put the control of a system like this in the hands of one person or one company, it's biased," he said. "These are the kinds of complex issues that require the assistance of a judge and jury."

Not the first time

The offer to buy homes is unusual but not unprecedented. Enbridge Inc. of Calgary, Alberta, recently offered to buy homes along a waterway in Michigan that had been fouled by oil spilling from a ruptured pipeline.

"It's not unusual for companies to try to instill goodwill. I can't fault (PG&E) for that," said Richard Kuprewicz, a pipeline safety consultant in Redmond, Wash.

He noted that the amount of money involved in the new programs was small compared to other costs PG&E may incur from the blast.

State Assemblyman Jerry Hill, a Democrat who represents San Bruno, said the utility appeared to be acting in good faith. "I think they realize they have to make it right if they want to recover the public's confidence," he said.

But at The Utility Reform Network, a consumer watchdog group, spokeswoman Mindy Spatt said she is worried that PG&E customers will be stuck paying for the utility's failure in San Bruno and for "image control."

"It's too bad they didn't pay this kind of attention to things before the blast instead of after," Spatt said.

Chronicle coverage

Online: To see all of The Chronicle's coverage of the San Bruno fire since the explosion, go to

Rebuilding San Bruno

PG&E programs offered to victims of the Sept. 9 pipeline explosion and fire in San Bruno:

Rebuild Assistance: PG&E will pay insurance deductibles and cover insurance shortfalls related to relocation, temporary housing and the replacement of personal property. There are also incentives for rebuilding within a certain time frame: $50,000 for less than 16 months; $25,000 for less than 20 months; and $12,500 for less than 24 months.

Purchase: PG&E will pay the greater of the home mortgage or the "fair market value" as it was on Sept. 8, minus any insurance money. The company will hire the appraiser. PG&E will also pay any insurance deductibles and shortfalls. There are also incentives for selling within a certain time frame: $50,000 for less than six months; $25,000 for less than nine months; and $12,500 for less than a year.

Neighborhood Restoration Plan: PG&E will pay as much as $10,000 to residents near the blast site who make exterior home improvements unrelated to the blast. The offer is good for one year.

Value Assurance Program: PG&E will compensate residents near the blast site who sell their home to a third party but receive less than "fair market value." The offer stands until January 2016. Participants must use an approved real estate agent and give PG&E the chance to beat any offer.


PG&E diverted safety money for profit, bonuses

Eric Nalder, Chronicle Staff Writer, Friday, January 13, 2012, Article Source

Pacific Gas and Electric Co. diverted more than $100 million in gas safety and operations money collected from customers over a 15-year period and spent it for other purposes, including profit for stockholders and bonuses for executives, according to a pair of state-ordered reports released Thursday.

An independent audit and a staff report issued by the California Public Utilities Commission depicted a poorly led company well-heeled in its gas operations and more concerned with profit than safety.

The documents link a deficient PG&E safety culture - with its "focus on financial performance" - to the pipeline explosion in San Bruno on Sept. 9, 2010, that killed eight people and destroyed 38 homes.

The "low priority" the company gave to pipeline safety during the three years leading up to the San Bruno blast was "well outside industry practice - even during times of corporate austerity programs," said the audit by Overland Consulting of Leawood, Kan.

Making money

But PG&E wasn't hurting for cash, according to the audit. From 1999 to 2010, the company collected $430 million more from its gas-transmission and -storage operations than the revenue authorized by the California Public Utilities Commission, which sets the rates the company can charge its customers.

"PG&E chose to use the surplus revenues for general corporate purposes" rather than improved gas safety, the Overland audit said.

The audit was unable to trace exactly how PG&E spent the diverted money. But in a separate report on the San Bruno explosion released Thursday, the utilities commission staff noted that in the three years leading up to the San Bruno explosion, the company spent $56 million annually on an incentive plan for executives and "non-employee directors," including stock awards, performance shares and deferred compensation.

"A cursory review reveals that a significant portion, in the millions, has been awarded to the CEO," the commission staff report said in a reference to former PG&E head Peter Darbee, who retired last year.

Cutting corners

By cutting back on pipeline-replacement projects and maintenance, laying off workers, using cheaper but less effective inspection techniques and trimming other pipeline costs, PG&E saved upward of 6 percent of the money designated for pipeline safety, maintenance and operations programs, the Overland audit said.

Meanwhile, on the revenue side, transmission pipeline operations were "very profitable" for PG&E since March 1998, the audit said.

Assemblyman Jerry Hill, D-San Mateo, whose district includes San Bruno, called the company's diversion of customers' money "criminal behavior."

"When you divert funds intended for maintenance and safety to profits, there is nothing clearer," Hill said. "It is criminal."

Hill noted that the San Mateo County district attorney, the state attorney general and the U.S. attorney's office are conducting a joint investigation of the San Bruno disaster. He said he would talk to them about incorporating the Overland audit in their probe.

However, it is unclear whether PG&E broke any criminal statutes governing its behavior at the time, unless there was fraud.

The utilities commission staff report said that under state law and agency regulations, PG&E could spend less than what it was authorized to spend "because the commission is generally precluded from asking for the money back if the company overestimated its revenue requirement."

The Legislature passed a law last year, sponsored by Hill and others, that requires a utility to account for any under-spending and explain where every dollar went.

'Truly unconscionable'

"It is truly unconscionable that PG&E was allowed by the CPUC to steal ratepayer monies that should have been spent on safety and, instead, was put in the pockets of PG&E shareholders," said Rep. Jackie Speier, D-Hillsborough, who represents the devastated San Bruno neighborhood. "All these monies identified in the audit should be returned to ratepayers, presumably as a credit against the work that PG&E should have done, but didn't."

PG&E officials declined to comment on specifics of the two reports.

"Our No. 1 priority is to make our system the safest in the nation," said PG&E President Chris Johns.

No new money

The utilities commission issued the documents as part of a process that could lead to millions of dollars in fines. In addition, the commission recommended changes in how PG&E spends money on gas-system maintenance and pipeline replacement.

Before PG&E "seeks additional ratepayer funds," the commission said, it should:

-- Allocate $95.4 million that the company under-spent on capital expenditures since 1997 - including pipeline replacement - for those purposes.

-- Use the $430 million in additional revenue it collected since 1999 "to fund future transmission and storage operations."

-- Use $39.3 million that it collected but failed to spend for pipeline-transmission operations and maintenance since 1997 for those purposes.

Those recommendations put the commission and PG&E on a collision course.

In August, PG&E outlined a plan to modernize its gas-transmission lines in response to the San Bruno disaster. Included was money to replace 185 miles of pipe segments in PG&E's 5,700-mile gas-transmission system and to upgrade 200 miles of other segments unable to accommodate a modern inspection tool known as a "smart pig."

The company pegged the price at $2.2 billion and said 90 percent of that would be paid by gas customers through rate increases, with the rest covered by company investors.

Meeting new rules?

On Wednesday, PG&E issued a statement promising that it won't dun customers for any expense required to upgrade its gas system to meet existing federal and state standards.

"That said, let's be just as clear about what PG&E is proposing," the company added. "The vast majority of the pipeline safety work going forward is not about correcting issues from the past. It's about meeting entirely new standards being established by the California Public Utilities Commission."

PG&E estimated that the average residential customer will pay $1.93 per month more through 2014 to finance the work.

A Chronicle investigation published in March revealed that in 2000, PG&E sharply curtailed a program started in the mid-1980s to replace hundreds of miles of aging gas-transmission pipe. Records obtained by The Chronicle showed the decision was made by PG&E and approved by the utilities commission's safety chief.

The Overland audit noted that PG&E's replacement of transmission pipelines for safety purposes all but ceased in 2000.

Complete coverage

To see Chronicle reports on pipeline safety since the 2010 explosion in San Bruno, video of the disaster and government investigative documents, go to

San Bruno blast findings

Some key revelations in reports by the California Public Utilities Commission and auditors hired to investigate the deadly 2010 explosion of a Pacific Gas and Electric Co. gas pipe in San Bruno.

Testing: PG&E violated U.S. law by not conducting pressure-test inspections of the San Bruno pipeline after the company spiked gas levels in 2003 and 2008. Such tests would have revealed the substandard condition of the pipe and averted the 2010 disaster.

Video: PG&E destroyed a video of events at its gas-control center in Brentwood the night of the explosion, violating a state order.

Upkeep: PG&E diverted over the years more than $100 million collected from customers for pipe maintenance, replacement and safety to other purposes, including profit and executive bonuses.

Money: PG&E's gas transmission and storage operations collected $430 million over what the PUC authorized from 1998 to 2010.

Read the full reports:

Sources: California Public Utilities Commission, Overland Consulting

E-mail Eric Nalder at

PG&E Smart Meters

Time for a Corporate Death Penalty

by Bruce A. Dixon

There are more than 40 federal offenses for which the death penalty can be applied to human beings, most of them connected to homicide of one kind or another. But countless homicides committed by the artificial persons we call corporations go unpunished every day. Apparently “personal responsibility” applies only to humans who are not operating behind the legal shield of corporate personhood. - Continue Reading

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