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PG&E Gas Matters in Limbo After Email Scandal

Two billion-dollar state regulatory cases crucial to Pacific Gas and Electric Co.'s (PG&E) future natural gas operations are in limbo following the recent email-driven communications violations scandal involving the combination utility and the California Public Utilities Commission (CPUC) (see Daily GPI, Sept. 16).

Up in the air is the pending presiding officers' decision by two CPUC regulatory judges calling for penalties of up to $1.4 billion for PG&E due to negligence related to the September 2010 natural gas transmission pipeline explosion in San Bruno, CA (see Daily GPI, Sept. 2).

The other CPUC proceeding that appears to be stalled is PG&E's $1.29 billion gas pipeline/storage rate case, which was the focus of the initial improper communications that the utility self-reported to state regulators following an internal investigation. A new scoping memo to restart the formal rate proceedings has still not been submitted, said a CPUC spokesperson, who told NGI that she could not speculate about the future timetable for either proceeding.

Two of the five governor-appointed CPUC members, including its long-standing president, Michael Peevey, have recused themselves from the two cases (Daily GPI, Oct. 17) because of their involvement in improper communications that were divulged in the emails. Under the CPUC rules, a quorum of three commissioners can make decisions on the pending penalty case.

Instead of opening the PG&E gas rate proceeding, a CPUC administrative law judge and assigned commissioner have issued proposed actions in a show-cause case against PG&E regarding the email revelations that put strict limitations on the utility's communications with CPUC commissioners and staff.

The proposals also establish strict reporting requirements on any subsequent communications and, in the case of Commissioner Carla Peterman's alternate decision, would impose a $1.05 million fine and orders that PG&E shareholders bear half the costs incurred by the continuing gas rate case delay.

Essentially, the actions say PG&E's communications violations are the cause for the delay in the gas rate proceeding and shareholders should bear part of the costs of the delays. Normally the delay costs would be recovered in the ultimate rate decision.

Separately, California Gov. Jerry Brown's office has retained a former CPUC ALJ and now a lawyer/consultant, Ed O’Neill, as a senior adviser to complete a review of the regulatory commission's functions and procedures and make recommendations by June.

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