Trust, whether in personal relationships or in business, is easy to lose and hard to regain. Once lost, the effects snowball to the point where issues that might have been ignored now become highly visible and increase the damage done to one's reputation. The most recent reputational crisis from the Pacific Gas and Electric Company is a good case study of this effect.
Starting in 2008, PG&E replaced the steam generators and reactor vessel heads at the Diablo Canyon nuclear plant on the Central California Coast. Licensing for the plant required a test of the new equipment using a scenario involving an earthquake and a loss of coolant. Instead, PG$E used two separate scenarios, one involving and earthquake and the other a loss of coolant. The mistake was discovered in 2011 during an internal safety analysis and PG&E notified the cognizant agency, the Nuclear Regulatory Commission. PG&E engineers evaluated the new equipment and felt that it was seismically safe. The Commission accepted PG&E's findings.
In another time this incident would have most likely gone largely unremarked. PG&E found identified the problem, verified the safety of the new equipment, and reported the incident as required. Indeed, this incident only came to light in December of last year during hearings on Diablo Canyon held by Senator Barbara Boxer. However, following the explosion of a gas pipeline in San Bruno, California, in 2010 that killed 8 people, PG&E's safety practices came under intense scrutiny. Faulty record keeping, cost-cutting, and poor management decisions contrived to create the image of a company that placed shareholder return and profit above public safety.
As if this wasn't enough, evidence has emerged that PG&E has a too-close relationship with the California Public Utilities Commission, the state commission that oversees PG&E, forcing the resignation of the head of the commission. Similar criticism has been raised against the NRC by Senator Boxer.
PG&E now has a reputation for cutting corners wherever possible, barely meeting minimum standards, and covering up its greed by suborning its regulators. The incident at Diablo Canyon is now front page news, further eroding the public's confidence in the utility and providing leverage for those seeking to close the plant. Coming on top of the other negative revelations of the past few years, this incident compounds PG&E's reputational problems. Whether the utility will ever be able to regain the public's trust is debatable.