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CPUC Staff Urges 'Significant' Pipe Penalties for PG&E

California regulatory staff released a report late Friday urging "significant penalties" for Pacific Gas and Electric Co.'s (PG&E) lax natural gas pipeline system record-keeping and alleging that some of the misclassifications of gas pipelines resulted in them being operated at pressures that violated federal standards. The staff document alleges that the violations presented "significant risks" to the general public and went unreported for years.

The report by the California Public Utilities Commission's (CPUC) Consumer Protection and Safety Division (CPSD) is one of three ongoing CPUC proceedings resulting from the deadly September 2010 PG&E transmission pipeline rupture and explosion in San Bruno, CA, about 10 miles south of San Francisco. PG&E officials stress that the utility has completely changed its gas system operations since the tragedy, which claimed eight lives.

Separately on Friday, PG&E released its latest update report to the National Transportation Safety Board (NTSB), outlining the utility's progress in responding to recommendations by the NTSB. "We have made many fundamental changes to the operations and management practices throughout our gas organization," PG&E utility President Christopher Johns told NTSB Chairman Deborah A.P. Hersman in a cover letter to the report.

As part of the ongoing CPUC penalty case regarding alleged violations of federal regulations on pipeline classifications, the CPSD alleged in its latest report that PG&E failed to monitor pipelines in areas of increased population density. It alleged that the utility failed to identify 898 pipeline segments with class location changes, resulting in some pipelines operating at pressures above maximum allowable operating pressure (MAOP), which is particularly troublesome in high-population or "high-consequence areas."

The CPSD report further alleged that PG&E assumed yield strength levels for some of its pipe segments that exceeded values permitted under federal regulations. It also failed to retain essential records on which to base its monitoring of changes in pipeline classifications in more populated areas. The result was a total of 3,062 violations, the CPSD staff report said.

A PG&E spokesperson told NGI the San Francisco-based utility has "completely changed our approach to training for this key role," and that combined with "thorough patrolling and documentation [now] ensures that all our transmission lines are operating at appropriate pressures for their location."

The CPSD said PG&E has admitted its failure to properly identify 898 pipeline segments with class location changes on its gas transmission system. Each failure, the regulatory staff report said, ultimately resulted in a failure to confirm or revise the appropriate MAOP.

"In failing to adequately monitor potential class changes, PG&E failed to provide the necessary continuing surveillance of its pipeline system under federal regulations [49 CFR 192.613]," the report said. "PG&E also admits it either did not patrol, or lacks patrolling records for, more than 100 miles of pipe segments in violation of [federal regulations...49 CFR]."

The CPSD concluded that the repeated violations "presented significant risks to the public and went unreported for many years." PG&E should have recognized the obvious weaknesses in its procedures, failed to meet "even minimum levels of training" for its employees and a showed general disregard for compliance with federal class location safety regulations, according to CPSD.

PG&E has until July 23 to respond to the CPUC staff report; intervenors in the case must respond by June 25.

Johns said the utility last year conducted strength tests and verified strength test pressure records for 214.5 miles of pipeline, and in the first four months this year it completed an additional 37.6 miles as part of its pipeline safety enhancement plan (PSEP), which currently is before the CPUC for approval.

At the suggestion of the NTSB, PG&E has "a comprehensive emergency response procedure" for large-scale emergencies on transmission pipelines. The updated procedure identifies a single person in charge, outlines specific protocols and provides drills and training for key operating employees at the utility.

"PG&E has initiated a complete assessment of every aspect of our transmission integrity management program, including threat identification and assessment," Johns said. "Much more work lays ahead, but the progress to date gives us confidence that PG&E is on track to achieving the goal of regaining the trust of the public and our regulators by demonstrating our steadfast commitment to safety."

In its progress report, PG&E cited a March 13 letter from NTSB that acknowledged successes the utility has had in implementing the federal agency's recommendations regarding MAOP, records verification, hydrostatic testing and implementation of parts of the pipeline enhancement plan. Under its supervisory control and data acquisition (SCADA) system, PG&E reported on its progress in implementing three projects: automated valves; software to integrate SCADA and gas information systems, and the creation of a new distribution control center.

PG&E told NTSB it is moving forward with plans to create the new control center by the fourth quarter this year. "Thousands of distribution pressure points and flow meters will be installed over multiple years and will increase the availability of equipment status data on SCADA."

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