Power and shared wealth

Pub date May 3, 2011
WriterRebecca Bowe


In the 1930s, political cartoonists often portrayed California’s monolithic Pacific Gas & Electric Co. as a giant octopus, its tentacles extending into every sphere of civic life. If money buys influence, the cephalopod analogy may still be apt today when considering the company’s tally of corporate giving, part of a detailed filing with the California Public Utilities Commission.

PG&E’s largesse, measured in thousands of dollars in donations, spills into a broad array of nonprofit organizations, educational institutions, chambers of commerce, and volunteer-led efforts throughout the state. PG&E’s corporate giving is so broad that it even extends to several organizations affiliated with appointees to the Independent Review Panel convened by the California Public Utilities Commission (CPUC) to investigate PG&E’s deadly San Bruno pipeline explosion.

While the utility undoubtedly advances worthy causes with its myriad donations to youth groups, cultural centers, organizations fighting AIDS and cancer, arts councils, environmental groups, and other charitable entities, corporate contributions always reflect a calculated decision, notes Bob Stern of the Center for Governmental Studies.

“They’re a big company, and they’re trying to, shall we say, ingratiate themselves with a wide swath of community interests, including nonprofit groups,” Stern told us. “The cigarette companies did that all the time, and it was very effective … because nonprofits then laid off on ballot measures, for example, or they would oppose ballot measures that would increase cigarette taxes. My bottom line is, businesses don’t just spend money gratuitously. There is a business reason a business spends money — campaign contributions or donations. And they have to justify that to their shareholders.”

In mid-October 2010, CPUC president Michael Peevey announced his selection of five expert panelists for the newly created advisory body on the San Bruno explosion. In an official filing, Peevey ordered PG&E to fund the panel, which would be tasked with gathering facts and making recommendations to the CPUC “as to whether there is a need for the general improvement of the safety of PG&E’s natural gas transmission lines, and if so, how these improvements should be made.” A report on the panel’s initial findings is expected in the coming weeks. The effort is on a parallel track with the federal investigation now underway at the National Transportation Safety Board.

The appointees bring a wealth of knowledge and expertise to the table. Panelist Karl Pister, for example, chairs the board of the California Council on Science and Technology, served as chancellor at UC Santa Cruz, and has taught civil engineering. Jan Schori has an insider’s understanding of how an energy company is run thanks to her past experience as CEO of the Sacramento Municipal Utility District (SMUD).

Yet some of Peevey’s appointees to the Independent Review Panel have ties to PG&E. Panelist Paula Rosput Reynolds formerly held positions at the investor-owned utility, according to her bio, including serving as an executive of the PG&E’s interstate natural gas pipeline subsidiary. An understanding of the company’s inner workings could be considered an asset, but it also raises questions about her independence.

Panelist Patrick Lavin serves as an executive council member of the International Brotherhood of Electrical Workers, which represents PG&E employees. He’s also on the board of directors of the California Foundation on the Environment and the Economy (CFEE), a nonprofit that counts PG&E among its membership. CFEE sponsored a two-week trip to Spain last November for government officials, energy industry representatives, and others to study “renewable energy, infrastructure, public private partnerships, desalination, and rail,” according to its website, picking up the $8,880 tab for Peevey to join the trip. The nonprofit received donations from PG&E totaling $45,000 in 2009, $45,000 in 2008, and $40,000 in 2006 — the three most recent years available.

Schori, meanwhile, has clearly held roles in the past that have placed her in an adversarial relationship with the utility considering that SMUD — a public power utility — has engaged in territorial battles against PG&E. Yet Schori also serves on the board of the Climate Action Reserve, a nonprofit that also counts former PG&E vice president of operations Nancy McFadden — the architect behind PG&E’s ill-fated ballot initiative Proposition 16 — on its board of directors.

Climate Action Reserve received $45,000 from PG&E in 2009, according to a CPUC filing. Schori also previously served on the board of directors of a nonprofit called the Alliance to Save Energy, which was co-chaired by former PG&E CEO Peter Darbee, who was expected to step down April 30 with a retirement package totaling nearly $35 million. The Alliance to Save Energy received $45,000, $35,000, and $35,000 in PG&E donations in 2009, 2008, and 2006, respectively. Schori did not respond to a request for comment.

The chair of the San Bruno Independent Review Panel is Larry Vanderhoef, former chancellor of UC Davis and a highly respected academic. As an ex-officio trustee of the UC Davis Foundation, Vanderhoef is engaged in soliciting private-sector contributions for the university. UC Davis has received an average of around $200,000 in philanthropic contributions from PG&E each year since 2005. In an e-mail to the Guardian, spokesperson Claudia Morain noted that Vanderhoef “has never been involved in PG&E solicitations.”

PG&E’s contributions to the two nonprofits and the university represent very small portions of the total budgets of these three entities, particularly in the case of UC Davis. At the same time, they are relatively large sums compared to the contributions the company generally makes. The city of Berkeley, for example, received just $2,500 from PG&E in 2009. Most organizations receive less than $10,000, but certain groups are given much more. The UC Regents, for example, received a $406,400 donation from PG&E in 2009.

“The panel members are all eminently qualified to perform the important job that has been entrusted to them.” CPUC spokesperson Terrie Prosper told us. “It is not surprising, or inappropriate, that the panel members also are involved in philanthropic activities of various kinds in California. Nor is it surprising that PG&E, California’s largest public utility company, in its own donations to various public and nonprofit institutions and its other philanthropic activities, supports some of these same worthy causes. These philanthropic activities in no way impair the independence, good judgment, or valued public service the members of the Independent Review Panel are giving to California.”

Stern, of the Center for Governmental Studies, said PG&E contributions to organizations affiliated with members of the Independent Review Panel did not necessarily raise a red flag. “Sure it has some impact, but not in terms of disqualification. That’s off the table as far as I’m concerned,” he said. “I have 15 members on my board of directors. I would never say that because we got a grant worth $200,000 from PG&E that that would affect my board member ruling on a PG&E matter,” he added, speaking hypothetically.

As members of an advisory group rather than public officials, he noted, the panelists would not be in violation of any conflict-of-interest rules. “Certainly there’s always a question of bias and appearance of impropriety. And the question is, how extensive is it? It’s a whole bunch of different factors. It’s all gradations. There is no rule on this, obviously, but it’s an appearance question, and whether or not the appearance looks like they’re going to be biased.” At the end of the day, he added, the question would be settled by “looking at the final results and seeing what the final results say.”