Republicans Help PG&E Write Off Penalty for Blowing Up San Bruno

Monday, September 07, 2015
San Bruno fire after a gas line exploded (photo: Brant Ward, San Francisco Chronicle)

In the estimation of the state Senate’s 14 Republican members, Pacific Gas & Electric (PG&E) is not as despicable as disgraced former Los Angeles Clippers owner Donald T. Sterling.

They all voted to let PG&E keep its tax write-off for most of the $1.6-billion penalty assessed for the deadly 2010 San Bruno gas pipeline explosion, blocking Senate Bill 681 from getting a two-thirds majority by two votes. The legislation prohibits a gas corporation from claiming tax deductions for expenditures related to any penalty from the California Public Utilities Commission (CPUC). The vote was 25-14 in favor.

It got every Democrat’s vote except for Senator Cathleen Galgiani (D-Manteca), who abstained. She cited a “separation of powers issue” mentioned prominantly by Republicans, who also didn’t want to pass a law that only applied to a single entity.

As a legislative staff analyst pointed out, SB 681 had a precedent. Lawmakers easily passed Assembly Bill 877 last September, which was obviously aimed at preventing Sterling from writing off a $2.5-million fine by the National Basketball Association (NBA) for racially insensitive remarks.

The bill’s author, state Senator Jerry Hill (D-San Mateo), did not mince words about why he thought it failed. He told the San Francisco Chronicle:

“There is no argument against the bill. This is about political influence by a major utility who spends a lot of money in Sacramento on campaigns and lobbying. This is an expression of that.”

The California Public Utilities Commission (CPUC), the subject of a criminal investigation of its cozy relationship with Southern California Edison in the San Onofre nuclear plant fiasco, parcelled out the penalty in April. The commission, under the direction of newly-appointed President Michael Picker, adjusted upward a preliminary $1.4-billion penalty while lowering the amount paid as a straight fine to the state’s General Fund from $400 million to $300 million. 

The law currently states that all the civil penalty can be written off of taxes, but the fine cannot. Eventually, PG&E was assessed $850 million for gas safety improvements paid by shareholders.

Critics said the improvements, which would have prevented the San Bruno blast that killed eight people and leveled a neighborhood, should already have been made. Ratepayers got a one-time $400 million payout, $50 million went to “various pipeline safety-related remedies” and the General Fund picked up the $300-million fine.    

Senator Hill can bring the bill up one last time this week, in a process called “reconsideration,” before the legislative session ends.

–Ken Broder


To Learn More:

San Bruno Penalty Remains Tax Write-Off for PG&E (by Melody Gutierrez, San Francisco Chronice)

Bill Banning PG&E Penalty Tax Write-Off Fails in Senate (by Alexei Koseff, Sacramento Bee)

PG&E Likely to Get Tax Write-Off on San Bruno Fine After Bill Fails (by Riley McDermid, San Francisco Business Times)

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