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PG&E Files Show-Cause Agreement on Pipe Pressure Review

Pacific Gas and Electric Co. (PG&E) on Wednesday asked California regulators to approve an agreement the utility made with regulatory staff on an accelerated compliance plan and payment of up $6 million in penalties.

The deal, in which PG&E does not admit to misconduct, resulted from the utility's alleged lack of responsiveness in verifying its gas system's safety following the rupture of one of its transmission pipelines in San Bruno, CA, last September. The stipulated agreement, for which the staff filed its own motion with the California Public Utilities Commission (CPUC), includes PG&E's acknowledgment that the CPUC could assess additional financial penalties.

While the five-member CPUC has come down the hardest on PG&E in alleging its "willful failures" to search its records and calculate the maximum allowable operating pressures (MAOP) for its 1,805 miles of transmission pipeline in highly populated areas, the stipulation and agreement were hammered out with the CPUC staff at its Consumer Protection and Safety Division (CPSD).

The CPSD has continued to maintain that PG&E failed in its March 15 filing to fully comply with the state and federal directives it received in early January after a National Transportation Safety Board (NTSB) interim report on the Sept. 9 San Bruno pipeline rupture that killed eight people (see Daily GPI, Jan. 5).

PG&E told the CPUC in its filing that its agreement with the staff is preferable to continuing with an order to show cause proceeding that would "require substantial time and resources" for both the CPSD and the utility.

"Rather than engage in extensive litigation to determine whether the scope and speed of PG&E's efforts and the clarity of its related communications with the commission constitute an 'indifferent disregard' of [the utility's] duty to comply, PG&E believes the focus should be on ensuring the accuracy of [utility] records and the future safety of its pipeline operations," the PG&E filing said. It said the agreed-upon penalty was "reasonable."

The stipulation by the utility has two primary parts: $6 million in penalties and the new compliance plan, which is supposed to result in MAOPs for all of the utility's HCA pipelines without engineering-validated pressure tests by Aug. 31.

The penalty stipulation calls for PG&E to pay $3 million within 10 days after the CPUC approves the agreement, and another $3 million if the CPUC finds that the utility "inexcusably" failed to meet a compliance plan milestone. The compliance plan requires PG&E to submit monthly reports to the CPUC and confer with the CPSD regulatory staff as the MAOP validation progresses, including any assumptions the utility plans to use and the field work it plans to conduct as part of its verifications.

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