This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

PG&E Will Fight Criminal Charge in San Bruno Blast

NEW YORK (TheStreet) -- PG&E Corporation (PCG - Get Report) said on Monday it would fight a dozen criminal charges filed against the California-based utility as a result of a September 2010 explosion of one of the company's pipelines in San Bruno, Calif. that killed eight people and injured 66.

The federal charges allege that PG&E willfully violated the Pipeline Safety Act in areas such as record keeping, pipeline integrity management and identification of pipeline threats. PG&E will fight the criminal charges; however, it has conceded negligence in civil litigation that paid out nearly $500 million to blast victims and their families.

PG&E paid $70 million to the city of San Bruno and said on Monday it has invested $2.7 billion in shareholder money toward safety improvements. The utility disclosed the prospect of an imminent criminal charge in a March filing with the Securities and Exchange.

Monday's criminal charges allege that PG&E violated the Pipeline Safety Act in its poor surveillance of pipelines. Specifically, the charges highlighted weak record keeping, pipeline integrity management and identification of pipeline threats, and allege that PG&E knowingly failed to fix safety shortfalls.

"As alleged in the indictment, PG&E knowingly and willfully failed to identify and evaluate threats to its transmission pipelines," California attorney general Kamala Harris said in a statement.

"Today's indictment is an important step in providing justice for the individuals, families and community devastated by the 2010 pipeline explosion and fire in San Bruno," Harris added.

"One of the worst natural gas disasters in American history was caused by PG&E's gross misconduct," San Bruno Mayor James Ruane said in a statement. "Its executives should get the harshest penalty to prevent this from ever happening again."

PG&E, on Monday, apologized once more for the pipeline explosion and attempted to emphasize its remedial efforts since 2010.

"We've taken accountability and are deeply sorry. We have worked hard to do the right thing for victims, their families and the community, and we will continue to do so," PG&E CEO Tony Earley said in a statement.

Earley was brought to PG&E after the blast and characterized it as an "accident" repeatedly on Monday. "San Bruno was a tragic accident," Earley said. PG&E said it believes that employees did not intentionally violate the federal Pipeline Safety Act and that, even if mistakes were made, the company's employees always acted in good faith.

In addition to billions in safety-related investment, PG&E said on Monday it had completed nine of 12 recommendations made by the National Transportation Safety Board, with acceptable progress on remaining initiatives. PG&E's safety investment includes the replacement of 127 miles of pipeline, and retrofitted 268 miles of pipelines.

A Monday criminal indictment of PG&E raises the prospect of further monetary penalties. Each criminal indictment carries a $500,000 maximum penalty. Meanwhile, the company continues to face an inquiry by the California Public Utilities Commission that could lead to billions more in fines.

In February, PG&E said it would stop providing guidance on its earnings per share forecasts for 2014, pending the settlement of major rate cases, in addition to San Bruno-related legal proceedings like the CPUC's probe.

Bank of America Merrill Lynch analyst Peter D. Quinn in a March 31 client note said rating agency downgrades would weigh heavily on PG&E. Were Standard & Poor's to downgrade PG&E in the event of a costly CPUC or criminal settlement, it would put the company's ratings at below investment grade.

PG&E shares were trading slightly higher in Tuesday morning trading at $42.60. Shares tumbled over 4%, wiping out $800 million in market cap when PG&E disclosed the imminent criminal charges in late March.

-- Written by Antoine Gara in New York

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
PCG $53.38 0.22%
AAPL $131.78 -0.20%
FB $80.20 -0.43%
GOOG $539.63 -0.03%
TSLA $251.52 1.70%

Markets

DOW 18,126.12 -36.87 -0.20%
S&P 500 2,120.79 -2.69 -0.13%
NASDAQ 5,097.9760 -8.6170 -0.17%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs