Outcomes met by completing this project:
1. identify ethical issues that arise in domestic and global business environments using an understanding of ethical concepts and of legal and business principles
Case Scenario:
Pacific Gas and Electric Corporation (PG&E) that supplies electricity and natural gas to 16 million people, owns the transmission lines attributed to causing the November 2018 California “Camp Fire” that killed 85 people and destroyed thousands of acres of land including wildlife and the town of Paradise, California. Facing more than $30 billion in liability costs, the company has filed for bankruptcy protection.
Recent investigations including documents obtained under the Freedom of Information Act, reveals disturbing historical facts about the company’s knowledge and management of its infrastructure. The information shows that the company knew of 49 steel towers needing replacement long before the November fire (WSJ, 2019). Built in the early 1900s, much of PG&E’s original equipment remained in service including towers with a life expectancy of 65 years but kept in operation up to 108 years (WSJ, 2019). More than 2500 towers in the system were installed in the 1900s and 1910s, and an additional 6900 towers were kept in operation without knowing their age (WSJ, 2019).
According to Federal Regulatory findings PG&E repeatedly delayed upgrades to the older equipment, opting instead to spend billions on projects like sub-station upgrades. California’s rules for electrical transmission are a simple three sentences stating that each utility company must come up with its own procedures and follow them.
The danger was exacerbated in 2013 when historic drought dried up California land. In 2017 the company acknowledged in its internal documents that a plan was needed to prevent structural failure and ground fires. State officials concluded that equipment failure on the Caribou-Palermo line, built in 1921 was the cause of the deadly California fire.
According to an attorney representing victims in a lawsuit against PG&E, the company spent money from customers to boost corporate profits and compensation, rather than infrastructure maintenance and safety (CNBC, 2018).
The lawyer further stated that while other utilities routinely shut power lines down when windy conditions prevailed, PG&E’s pattern was to remain in service. He attributed this to management bonuses that were tied to customer complaints, rather than safety adherence (CNBC, 2018). On June 18, 2019 PG&E agreed to pay the town of Paradise $569.5 million in settlements to help rebuild the destroyed community (KRCR, 2019). Other lawsuits are ongoing and pending without final rulings.
PG&E stated it has begun repairs and spot fixes to the most severe problems and has closed the Caribou-Palermo line all together. Its website dedicates a page to reorganization under Chapter 11 including specific infrastructure and safety measures. PG&E’s CEO and President, William D. Johnson is supported by a host of vice presidents including a Chief Ethics and Compliance Officer and a VP of Community Wildfire Safety (PG&E website).
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