PG&E on Trial: Back Door Deals are Business as Usual

The final witness for the prosecution in the P&GE trial for criminal negligence had an all too believable tale to tell. The witness, National Transportation Safety Board investigator Ravindra Chhatre, said PG&E held numerous back door meetings with employees before he was able to interview them, in direct violation of the NTSB’s directives.  The investigator considered those employees poor sources for his investigation. “If PG&E and the attorneys go in and talk to someone a few days before I do, (then) I have no confidence in that interview,” Chhatre said.

Back door deals have been part of PG&E’s playbook for as far back as TURN can remember. In PG&E’s recent gas rate case, the company was sanctioned for back door meetings with regulators, and in a now infamous 2011 meeting “over a few good bottles of pinot,” disgraced former CPUC President Peevey gave PG&E $68 million in unearned profits on customers’ dime.

That deal any many others, were made by disgraced PG&E ex -VP Brian Cherry. Cherry was expected to testify in the criminal trial- with immunity- but he and other “star” witnesses, including former PG&E CEO Peter Darbee, were not called. Darbee is widely rumored to have been sailing on his yacht at the time of the San Bruno explosion.

Of course, PG&E isn’t the only utility that operates this way- SoCal Edison is also under fire for its cozy relations with former President Peevey. And we’ll never know the full extent of what went on under his corrupt regime. What we do know is that the back door meetings about San Bruno tainted the results of that investigation, just as back door deals tainted the $68 million award of unearned profits, which TURN has appealed and intends to claw back.

PG&E obviously didn’t like having the strategy of back door meetings revealed and moved quickly to have Chhatre’s testimony struck- one of many PG&E motions denied by increasingly irate district court Judge Thelton Henderson. After Chhatre’s extremely damning testimony, confirming his view that PG&E did indeed obstruct the investigation, the prosecution rested.

PG&E’s defense was short and surprisingly ineffective. Witness Calivn Lui, a PG&E engineer, was called in an apparent bid by PG&E to suggest it would not have neglected pipelines that ran underneath the homes of its employees, but that testimony fell apart under questioning from US attorney Hallie Hoffman.   Other witnesses for PG&E likewise claimed that pressure testing was adequate, and that leaks and manufacturing threats had not been ignored.

Attorneys for both sides will likely make their closing arguments tomorrow, July 26, and then the jury will decide whether PG&E is guilty as charged. A guilty verdict might finally send PG&E the message that it can’t continue to collect billions in profits while giving short shrift to safety.

On another front, TURN has made some progress in putting a stop to back door deals at the CPUC. The Governor has announced his intention to sign our legislation to put limits on utilities’ back door meetings with the CPUC, SB 215 (Leno and Hueso). The best way to reform PG&E is with strong, effective regulations and a public process. Back door deals have provided the corrupt company with a way around accountability in the past. With new laws to stop those deals, and a criminal conviction that could cost PG&E over $500 million, maybe PG&E’s executives- or its shareholders- will finally get the message that it needs to find a new way of doing business.