REDWOOD CITY -- PG&E's top leadership consistently chose profits over safety so those executives should personally pay the possibly billion dollar tab for the deadly San Bruno blast, a lawsuit filed Monday says.
The suit brought by a Pacific Gas & Electric shareholder in San Mateo County Superior Court seeks to hold executives and board members responsible for fines, legal fees and other costs of the 2010 blast that killed eight people.
By the end of 2012, the utility reported it had run up $1.83 billion in costs related to the San Bruno rupture and its natural gas system. PG&E recently announced it had settled $565 million in lawsuits from victims of the blast.
"Right now you have shareholders who are stuck with several hundred million dollars in bills. It could amount to billions of dollars," said attorney Frank Pitre, whose firm is representing Hind Bou-Salman, of Millbrae. "Let's get the individual officers and directors who are responsible for these flagrant decisions." Though Bou-Salman is the main plaintiff, the suit also represents other shareholders.
Federal investigators from the National Transportation Safety Board faulted the utility for the explosion in San Bruno, noting its poor record keeping had contributed to a high-pressure pipe's rupture. The company faces up to $2.25 billion in penalties from its state regulator, the California Public Utilities Commission.
The suit targets a list of more than 20 current and former top leaders who made the company's most important decisions. According to the 107-page complaint, the bosses violated their fiduciary duty to act in the best interest of shareholders.
The suit points to former CEO Peter Darbee, who stepped down after the San Bruno blast with a $34.8 million retirement package. PG&E handed Darbee an eye-popping $59.5 million in compensation between 2004 and 2011, according to the suit. Over that same period, the utility gave President Chris Johns $19.56 million.
"These substantial financial benefits were obtained by Darbee at the same time PG&E was underfunding and ignoring the safety obligations that (the utility) owed to its customers," the suit says.
Bou-Salman argues the utility misappropriated $100 million from 1997-2010. The money was paid to the utility by customers, with the approval of the California Public Utilities Commission, and was supposed to fund gas system safety measures and upgrades. Instead the utility spent portions of the money on stock buybacks and "lavish bonuses for executives," Bou-Salman says.
PG&E said it will carefully review the allegations and respond as appropriate.
"Our primary goal continues to be building a safe and reliable system for our customers," said spokeswoman Brittany Chord.
Contact Joshua Melvin at 650-348-4335. Follow him at Twitter.com/melvinreport.