PG&E says penalties for its 2010 pipeline explosion could push it to the brink of bankruptcy


PG&E (PCG) says it may be pushed to the edge of bankruptcy if state regulators impose a proposed $2.25B penalty for the deadly 2010 San Bruno pipeline explosion.

The penalty represents more than four times the company’s net income last year and is 15 years worth of earnings for the gas business.

If approved, it will push the total price tag for the disaster north of $4B, including money already spent on pipeline upgrades and safety work.

An earlier proposal would’ve given the company credit for money already spent on upgrades and safety work.

However, last month the California Public Utilities Commission changed its recommendation and called for harsher penalties, including a $300M fine for violating safety rules.

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Comments (13)
  • Alan Young
    , contributor
    Comments (2414) | Send Message
     
    Bankruptcy is what this turkey deserves. They collected ratepayer money for safety inspections which did not get done. They've been cheating Californians for years. There's only one answer to this kind of corporate culture. Some executives should go to jail for putting the public at risk as they have.

     

    Of course, some of the oil companies are even worse.
    20 Aug 2013, 08:04 PM Reply Like
  • redarrow5150
    , contributor
    Comments (1367) | Send Message
     
    This is what toooo big toooo fail looks like when it comes to utilities. Amazing the monopoly these companies are allowed to have when it's the year 2013.
    20 Aug 2013, 08:15 PM Reply Like
  • Paul Price
    , contributor
    Comments (1512) | Send Message
     
    Wiping out shareholders' and bond holders' net worths to pay a fine to the state of California is an insane remedy.

     

    Removal or imprisonment of the company officers would be much more appropriate and would serve as a better deterrent to future misdeeds.
    20 Aug 2013, 08:37 PM Reply Like
  • New Low Observer
    , contributor
    Comments (2476) | Send Message
     
    No worries for PG&E, the last time they filed bankruptcy they applied for and were granted, by FERC-its regulator, to use a "ring-fenced" to protect its assets less than two months before filing bankruptcy on April 6, 2001.

     

    "The Federal Energy Regulatory Commission (FERC) on Wednesday upheld a plan by utility PG&E Corp. to shield assets of its unregulated subsidiaries from creditors, denying objections raised by California state officials and by other companies.( source: "FERC Upholds PG&E Plan." The Oil Daily. Feb 22, 2001).

     

    The corporate structure of the company allows PG&E and it's officers to benefit regardless of the outcome. PG&E lost nothing then and will lose nothing now.

     

    I don't understand, after that last fraud of a bankruptcy, why anyone would bother buying PG&E stock and bonds. If a person didn't know this about the corporate structure and previous BK before they bought the stocks and bonds of PG&E then they didn't do their due diligence.

     

    Regards.
    20 Aug 2013, 09:32 PM Reply Like
  • The Sociology of Finance
    , contributor
    Comments (955) | Send Message
     
    Paul, good point. Insiders have the main responsibility and should take the biggest hit. Outside investors should also get a haircut for picking a company with bad management, but managers should be the ones to pay.
    21 Aug 2013, 06:54 AM Reply Like
  • geopark
    , contributor
    Comments (332) | Send Message
     
    Paul . . Well said and agreed. I don't know what happens to the fine $$$ when it gets into the hands of the PUC but . . it seems to me that significant compensation to those most directly affected by the explosion and better safety oversight to prevent future disasters would be appropriate as well as your suggestions. As a PCG shareholder I accept that the value of my investment would likely to be impacted negatively.

     

    geopark
    21 Aug 2013, 11:10 AM Reply Like
  • New Low Observer
    , contributor
    Comments (2476) | Send Message
     
    The number of substation explosions in San Francisco from the last BK to the present put into question whether PG&E has learned anything at all.

     

    To be honest, unfortunate as it was, I'm surprised that something like the San Bruno explosion didn't happen earlier.The next explosion in the middle of the financial district will likely result in a debilitating lawsuit.

     

    The prospects of BK rides sidesaddle with PG&E. After all, it is in earthquake country, a sort of Tepco-lite. Coupled with the prospects of a 1970's rising interest rate environment puts into question the judgment of investing in this stock.

     

    Regards.
    21 Aug 2013, 12:04 PM Reply Like
  • NLTInvestor
    , contributor
    Comments (394) | Send Message
     
    lol well i wanna see how this is going to play out tomorrow
    20 Aug 2013, 09:02 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4291) | Send Message
     
    When the Prince needs money, he takes it where he finds it.
    20 Aug 2013, 09:46 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4371) | Send Message
     
    CPUC can take it over and run it. That will right the ship toot sweet.
    20 Aug 2013, 10:34 PM Reply Like
  • joerobert
    , contributor
    Comment (1) | Send Message
     
    good, PG&E charges way too much and this might cause the company to be divided up so consumers will have a choice with their provider.

     

    Everybody is trying to avoid their insane .35$/kwh prices by going solar..... what will PG&E do once the majority of their "upper tier" consumers are "off grid"?
    20 Aug 2013, 11:30 PM Reply Like
  • Robin Hewitt
    , contributor
    Comments (5473) | Send Message
     
    Wasn't PG&E the utility company dumping Cr6 into drinking water in the Erin Brockovich story? Sounds like not much has changed.... Maybe bankruptcy followed by breakup will get their attention. If that don't work, maybe a few year's of jailtime will?
    21 Aug 2013, 04:02 AM Reply Like
  • User 353732
    , contributor
    Comments (5158) | Send Message
     
    Just more extortion and blackmail. The Regime, of course, is posturing for the gullible masses.
    There will be no real bankruptcy; the penalties will be "revisited" either by the regulators themselves or by the courts. Debt holders and Unions will not even be inconvenienced but retired people on fixed incomes will be terrified, as usual.
    21 Aug 2013, 06:19 AM Reply Like
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