By Will Carruthers, THE NORTH BAY BOHEMIAN
July 24, 2019
As summer brought blue skies to the North Bay, a recent editorial in Santa Rosa's Press Democrat was uncharacteristically out of sync with the editorial stances of California's two largest newspapers.
Gov. Gavin Newsom was pushing hard on state legislators to rubber-stamp AB 1054, a complex bill that would, among other things, establish a $21 billion "wildfire fund" that would be half funded by ratepayers. If it passed, the state's investor-owned utilities could dip into the monies to pay for damages from future fires caused by their equipment.
Newsom urged legislators to pass the bill before leaving for the summer break on July 12, citing concerns about the approaching fire season and a threat from Wall Street credit rating agencies to downgrade the lending status of the state's three utilities.
The L.A. Times and San Francisco Chronicle weren't persuaded. On July 11, the Times editorial board urged the Assembly to "say no to being rushed by Wall Street into the hasty adoption of a complex law that puts Californians on the hook for billions of dollars."
"It's more important to get AB 1054 right than it is to get it passed quickly," the Chronicle wrote. "The state Assembly must resist the pressure and stop giving this bill a fast run to the governor's desk."
For its part, the Press Democrat took an opposite view of the bill. The local paper of record ran an editorial that downplayed criticisms of AB 1054 and urged the Assembly to fast track the controversial bill.
"Despite some claims to the contrary, this bill isn't a bailout for PG&E or the state's other investor-owned utilities, Southern California Edison and San Diego Gas & Electric," the PD's July 11 editorial argued. "It does offer them some protection so long as they follow the rules, including spending $5 billion of shareholder funds on fire prevention and submitting wildfire safety plans annually for state approval. ... There's no reason to wait any longer."
In its editorial, the paper did not disclose that Darius Anderson, managing member of the paper's parent company, Sonoma Media Investments, is a registered lobbyist for PG&E. Nor did the Press Democrat's board of editors, which includes Sonoma Media Investments CEO Steve Falk, disclose that the Rebuild Northbay Foundation, the nonprofit founded by Anderson to receive funds for "rebuilding" fire-devastated communities—is almost entirely funded by PG&E.
Public records reveal PG&E regularly hands out tens of millions of dollars to law firms, lobbyists, and community, business and political organizations as it strives to guide the conversation around the besieged energy corporation's future, not to mention California's future in the age of climate disruption.
But one PG&E post-fire contribution to a nonprofit does not appear in paperwork filed with state regulators: On Dec. 26, 2017, PG&E contributed $2 million to the Rebuild Northbay Foundation, the nonprofit founded by Anderson in the wake of the fires. Neither PG&E, the Rebuild Northbay Foundation nor the Press Democrat drew public attention to the generous and tax-deductible contribution.
Billions of dollars of corporate profits are at risk should state government take action to hold PG&E shareholders accountable for corporate negligence. For the quarter preceding the 2017 North Bay fires, PG&E reported a $2.2 billion net profit—an astoundingly profitable 12.5 percent margin, according to net margins posted by macrotrends.net.
Then, back-to-back fire seasons, linked in part to PG&E's poorly-maintained equipment and aging transmission infrastructures, sent the investor-owned utility's stock price tumbling.
Suddenly an existential question arose: Would Californians be safer if the badly managed utility's assets were purchased by the state and municipal utility districts? That was an issue left for another day: although the state has the authority to close down and purchase the utility, state lawmakers and executives have not moved in that direction. Indeed, critics say AB 1054, which Newsom signed into law on July 12, makes it harder for a public takeover of the utility or any of its assets, should that option be raised again.
In the meantime, PG&E continues to invest heavily in legal and political damage control.
By the time the company declared bankruptcy in January 2019, it had paid California and New York City white-shoe law firms $100 million for advice, according to the Wall Street Journal.
In 2017, PG&E disclosed $1.9 million in payments on lobbying efforts. In 2018, PG&E raised the ante to $9.9 million. The powerhouse San Francisco public relations firm Storefront Political Media booked $4.1 million from PG&E in 2018. The same year, the largest electrical-workers local in Northern California, IBEW 1245, reported paying $1.36 million to the same firm, according to a report filed with the U.S. Department of Labor.
Eric Brooks, co-coordinator of Californians for Energy Choice, a statewide grassroots coalition that works to defend and expand local clean energy programs, says AB1054 is, flat-out, a PG&E bailout bill.
"A publicly owned utility will cost less to operate safely than a utility driven by the maximization of short-term shareholder profits," says Brooks. "AB 1054 reduces incentives for PG&E to seriously change its operations."
"The less they have to pay for wildfire damages caused by their equipment, the less they are incentivized to fix the underlying causes of those fires."
In a San Francisco Chronicle op-ed, former CPUC president Loretta Lynch wrote, "The legislation is being presented as the only way to compensate victims and stabilize utilities. But it is shockingly stacked in favor of Wall Street and the utilities, and it repeals the California Public Utilities Commission's authority to question the companies' claimed costs and past practices."
As part of its campaign to shape public policy and public opinion, the utility has sought to influence legislation written by the North Bay's 3rd District Senator, Bill Dodd, in a variety of ways.
Several organizations that received money from PG&E endorsed SB 901, legislation co-written by Dodd which established a "stress test" to determine how much utilities could pay for damages caused by the 2017 fires without going bankrupt. It also created cost recovery rules for future fires started by a utility's equipment. Critics of the legislation passed since the 2017 fire such as Brooks assail it as part of an overarching government bailout for a utility that appears to be more concerned with its bottom line than with saving lives.
PG&E's Influence Machine
How did PG&E—a company with a long record for capitalizing on poorly maintained infrastructure—get bailed out by Newsom and the legislature?
It is, in large part, a simple matter of money, says Carmen Balber, executive director of Consumer Watchdog, a nonprofit that tracks political spending. "PG&E has a pattern of throwing money around whether it be in TV advertising, lobbying or community contributions to try to dampen criticism and protect its financial interests."
PG&E disclosed about $28 million in contributions to nonprofits and community-based organizations each year since 2016, according to reports filed with the California Public Utilities Commission, the state body tasked with overseeing the utility.
PG&E has contributed $190,000 to the A. Phillip Randolph Institute San Francisco Chapter over the past two years. In 2018, the group, which represents African-American trade union workers, endorsed Dodd's SB 901.
Another major recipient of PG&E cash is the California Fire Foundation. In 2017 and 2018, PG&E contributed a total of $350,000 to the foundation, which is owned by the California Professional Firefighters, a labor council that signed on as a supporter of SB 901. PG&E also contributed $450,000 to the Bay Area Council Foundation over the same two years. The Bay Area Council, the foundation's business-advocacy group, supported SB 901.
Documentation of PG&E's $2 million contribution provided by Rebuild Northbay Foundation's executive director, Jennifer Gray Thompson, shows an employee of Anderson's Sacramento-based lobbying firm, Platinum Advisors, invoiced the utility for $2 million on behalf of the Rebuild Northbay Foundation on Dec. 1, 2017, three days after Anderson filed incorporation paperwork for the nonprofit. State records also show that in March 2018, Platinum Advisors added PG&E as a client.
The Rebuild Northbay Foundation's 2018 annual report lists PG&E as a donor of "$10,000 Or More." But the distinction could also apply to a separate, $11,000 contribution the utility gave to the Rebuild Northbay Foundation in 2018, which is also listed in the 2018 CPUC report.
Why didn't the Rebuild Northbay Foundation trumpet receiving a $2 million donation from PG&E? Rebuild Northbay Foundation's executive director Thompson says via email that she has told "anyone who asks" about the donation, including all of the neighborhood leaders the group has worked with.
"[PG&E] was not looking to be applauded. At no time did anyone or anything indicate to me it was a secret," says Thompson.
On Oct. 19, 2017, PG&E trumpeted a press release announcing $3 million in contributions to an array of North Bay nonprofits, including a $2 million donation to the local Redwood Credit Union's Fire Relief Fund.
A review of PG&E's press releases reveals the company did not make a similar announcement about donating $2 million to the Rebuild Northbay Foundation, even though it was a newsworthy contribution: PG&E's initial $2 million outlay to the Rebuild Northbay Foundation accounted for 85 percent of the nonprofit's revenue through April 9, 2019, according to the list of donations provided to the Bohemian by the Rebuild Northbay Foundation.
When shown a copy of the check issued to the Rebuild Northbay Foundation by PG&E, Terrie Prosper, head spokesperson at the CPUC, would not say whether the utility's undisclosed contribution violated commission rules. A follow-up response from public information officer Christopher Chow indicates the agency has not investigated the matter. "We cannot comment on the issue before we have looked into it," says Chow.
PG&E spokesperson Deanna Contreras says the utility did not disclose the initial $2 million contribution because the Rebuild Northbay Foundation was not a registered nonprofit at the time of the contribution. Contreras did not respond to subsequent inquiries about the donation.
The distinction made by Contreras does not hold up to scrutiny. General Order 77-M, the CPUC rule requiring the state's three largest utilities to disclose a variety of expenses including executive compensation, legal fees and contributions to outside organizations, does not distinguish between registered and unregistered nonprofits.
Charity or Lobbying?
Consumer Watchdog's Balber says the fact that a soon-to-be PG&E lobbyist incorporated a nonprofit funded primarily by PG&E muddies the ethical waters. And then there is the issue of press coverage.
"Making a charitable contribution of $2 million to a nonprofit designed to help victims of the wildfires is not a problem. What does raise eyebrows is that the owner of a local newspaper covering PG&E is also a PG&E lobbyist and the operator of the nonprofit," he says.
"That certainly brings into question whether the Press Democrat's coverage of PG&E and the serious damage it has caused to the community is completely independent of the owner's financial interests and editorial input," adds Balber.
It's also not clear how the Rebuild Northbay Foundation has spent the $2 million from PG&E so far.
A December 2017 letter from PG&E's Travis Kiyota sent to the Rebuild Northbay Foundation along with the utility's contribution specifies the funds are not to be used for political activities. "It is our understanding that these funds will not be used for federal, state, or local campaign activity, including independent expenditures to support or oppose candidates for elective office or lobbying efforts," Kiyota's letter states in part.
In an email to the Bohemian, Thompson says the Rebuild Northbay Foundation has held to a "very conservative" budget so far, tending to raise funds for projects individually rather than dipping into the PG&E pot.
Thompson says PG&E's money has been mixed with other contributions into a "general fund." She acknowledges that some of the utility's money has gone to ongoing costs, including the salaries of several employees and at least one contractor.
The nonprofit's board of directors will review and approve tax forms and an internal audit covering the Rebuild Northbay Foundation's first fiscal year at a July 29 meeting, according to Thompson.
Until very recently, PG&E executives served on the Rebuild Northbay Foundation's board of directors since it was founded by Anderson out of the Sacramento office of his lobbying business, Platinum Advisors. Anderson served on the board until he resigned earlier this year.
According to public records, the Rebuild Northbay Foundation's official address remains the same as Platinum Advisor's. Platinum Advisor's Chief Financial Officer, Charles Fina, is overseeing the Rebuild Northbay Foundation's tax filings, according to Thompson.
Rebuild Northbay Foundation board member Steven Malnight was a senior vice president for energy supply and policy at PG&E. He served on the board until April 2019 even as he was employed by PG&E as strategist for its corporate lobbying efforts.
Brian Bottari, until recently PG&E's North Bay public affairs manager, replaced Malnight on the board. Bottari influences political endorsements and expenditures as chair of the Santa Rosa Metro Chamber's Political Action Committee and as a member of the Sonoma County Alliance's Political Action Committee. According to his LinkedIn profile, Bottari took a job with Comcast in May.
According to state records, in Sept. 2017, PG&E contributed $12,500 to the Sonoma County Alliance's PAC, followed by $10,000 in Nov. 2018. In 2018, PG&E contributed $6,000 to Metro Chamber's PAC and $5,000 to a committee backing Measure N, a housing bond on the Santa Rosa ballot.
In short, two PG&E executives engaged in lobbying and exerting local political influence have governed the PG&E-funded Rebuild Northbay Foundation, which was created by a PG&E lobbyist who owns most of the print media in the North Bay, including the Press Democrat, Petaluma Argus-Courier, Sonoma Index Tribune, North Bay Business Journal, Sonoma Magazine, Spirit Magazine, La Prensa Sonoma and Emerald Report.
The Dodd Factor
In addition to shaping public perception through lobbying and charitable donations, PG&E-funded entities help finance the campaigns of many North Bay politicians, including state Senator Dodd, who has been influential in crafting legislation that impacts PG&E since the fires.
He's not alone in accepting campaign cash from the utility. ABC 10, the TV news station in Sacramento, recently reported PG&E made direct contributions to 80 percent of sitting state lawmakers since 2017.
But Dodd has benefited from utility largesse. In 2016, two independent expenditure committees backed by utilities helped Dodd win his Senate seat. Californians For Jobs and A Strong Economy, which received $280,000 from the state's three utilities, spent $656,657 on mailers, consultants and phone banks in support of Dodd's campaign. The same year, PG&E gave $30,000 to Building and Protecting A Strong California, an independent committee that spent $89,011 backing Dodd.
All told, Dodd's committee and the independent committees backing him spent $5.9 million, dwarfing the $569,000 supporting his opponent, according to an analysis by the Davis Enterprise.
In early 2018, Dodd was selected to chair the Wildfire Preparedness and Response Legislative Conference Committee, a committee tasked with writing legislation meant to deal with worsening wildfire seasons and to regulate the role of utilities in the deadly fires.
On the surface, Dodd was a logical choice. His district includes parts of Napa and Sonoma counties, parts of which were devastated by the October 2017 North Bay wildfires.
However, while writing and considering legislation to regulate PG&E in 2018, Dodd received a range of benefits from the utility and affiliated organizations, raising questions about whether he was influenced by the utility.
Dodd regularly attends events hosted by the California Foundation on the Environment and the Economy, a corporate-funded nonprofit associated with a variety of business and labor interests.
CFEE's Board of Directors includes PG&E's director of state government relations and executives from Sempra Energy Utilities and Southern California Edison, as well as representatives from four IBEW chapters, the labor union that represents utility workers.
In 2018, PG&E contributed $60,000 to the foundation, according to a report filed with the CPUC. IBEW 1245, the union's Vacaville local, contributed $51,533 to CFEE in 2018, according to a report filed with the U.S. Department of Labor.
In March and April 2018, Dodd attended two CFEE policy conferences in the North Bay and took a weeklong trip to the Netherlands with five other state lawmakers. The trip to the Netherlands was described as an opportunity to study that country's approach to dealing with climate change and sea level rise.
CFEE chipped in $11,994.22 to send Dodd to the Netherlands, according to Dodd's 2018 financial disclosure report.
A representative from CFEE told the Los Angeles Times in March that the trips offer an opportunity for lawmakers to meet policy leaders from other countries and gain a "broader understanding of complex issues."
But critics say business-funded trips can muddy the public's understanding of the policy-making process and create a perception that lawmakers are unduly influenced by the trip's sponsors. And besides, CFEE's rationale for its trips doesn't hold up, says Balber, who has researched the group's junkets.
"Lawmakers can learn everything they need to know about any issue right here in California," she says. "The overseas trips are an opportunity for lobbyists and business executives to get face time with lawmakers."
In a statement, Dodd says "I have not accepted any political contributions from PG&E since the 2017 wildfires and I do not intend to. I've done everything I can to make sure PG&E is held accountable for its past misdeeds and that its malfeasance doesn't lead to new wildfires. Indeed, my legislation ensures no ratepayer money goes toward executive compensation at PG&E, increases penalties for violations, sets expansive new safety standards and compliance audits, and helps victims get compensated. I will continue standing up for ratepayers and victims."
But as hearings on SB 901 picked up over the summer, Dodd hosted a fundraiser attended by PG&E and its allies, with embarrassing consequences on one occasion.
On Aug. 7, 2018, Dodd was filmed by Consumer Watchdog as he rushed through a committee hearing to attend a fundraiser for his committee, Bill Dodd for Senate 2020, one block from the state capitol. In the video, Dodd walks into a Sacramento bar for the fundraiser, followed by three lobbyists for PG&E and IBEW, the electric workers union.
The episode filmed by Consumer Watchdog received a lot of attention in Sacramento's political circles, notes Balber. Dodd's spokesman, Paul Payne, says the senator did not accept any contributions from PG&E at the Aug. 7 fundraiser and that "no lobbyists attended any fundraisers for Sen. Dodd on behalf of PG&E."
On Sept. 21, 2018, the day then–Gov. Jerry Brown signed SB 901 into law, Dodd held a fundraiser at the Wing and Barrel Ranch, the high-end hunting club in southeast Sonoma County owned by Anderson.
A month later Dodd attended an invitation-only retreat held at Ramekins Culinary School in Sonoma that was hosted by Anderson for politicians and Platinum Advisor clients. Dodd was a speaker at the Oct. 17 event, billed as the Platinum Advisors First Annual Client Retreat.
The senator spoke alongside Jennifer Gray Thompson from the Rebuild Northbay Foundation, and Steve Falk, the CEO of Sonoma Media Investments, according to a summary of the event obtained by the Bohemian.
According to documents obtained by the Bohemian, Dodd, Thompson and Falk provided retreat attendees, including elected officials, Platinum clients, corporate representatives and Sacramento lobbyists, with a "a snapshot into wildfire recovery."
While it's not clear what exactly the panel discussed, the presence of a newspaper executive, the director of a PG&E-funded nonprofit and a sitting politician charged with regulating utilities at a party thrown by PG&E lobbyists tell a story of Anderson and the utility's influence.
Sonoma Media Investments and Anderson did not respond to the Bohemian's requests for comment.