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PG&E Errs with Regulators, But Not on Safety, Execs Say

Pacific Gas and Electric Co. (PG&E) senior executives admitted Wednesday that the utility has dropped the ball in keeping state regulators informed of its efforts to upgrade the safety of its natural gas pipeline network. But they argued that at no time has the system's safety been compromised.

PG&E CEO Tony Earley late Wednesday asked the utility's board of directors audit committee to review the latest assertions from California Public Utilities Commission (CPUC) officials alleging "dishonesty" and "attempts to conceal" information by PG&E top management (see Daily GPI, Nov. 6).

Stinging from rebukes this week from one of the five CPUC members and the head of the CPUC safety division, Earley said the criticisms were not based on safety issues but rather "compliance" issues. In that regard, he said PG&E has to do a better job of keeping the CPUC informed.

"It is essential to PG&E's future that our conduct be above reproach at all times and that we maintain credibility with the commission, our customers and the public," said Earley, calling the latest accusations from the regulatory officials "very disturbing."

The PG&E board committee will look at charges and make a report of its findings "expeditiously" so Earley can pass on the assessment to the CPUC.

"We really need to ask ourselves what really happened here [in the recent incident involving the Line 147 lateral in San Carlos]," said Nick Stavropoulos, PG&E executive vice president in charge of gas operations. "We provide a mountain of information to the CPUC about what we do and how we do it, and it seems that obviously we did not meet expectations here."

In interviews before Earley issued his call for an internal audit, Stavropoulos and Jesus Soto, senior vice president for gas transmission operations, said "at no time was there any safety concern regarding Line 147."

Because there were no safety concerns, PG&E was slow in reporting some record-keeping errors on the pipeline, and in retrospect that was a major miscalculation in its relationship with the CPUC and its safety staff, Stavropoulos and Soto told NGI. They saw no urgency to communicate with the regulators following a routine leak identification and repair because Line 147 had been operating at a reduced pressure, Soto said.

Along with several other transmission pipelines on the peninsula south of San Francisco following the San Bruno explosion in September 2010, Line 147 came in for special handling and reduction of operating pressures as a precaution. As part of that, the CPUC established a process for the utility to follow in testing pipelines prior to raising their pressures to more normal operating levels.

"The mistake we made was not understanding clearly the expectations of the commission around the (peninsula) pipelines that had gone through the special process and the need to report back to them immediately if we identified something that was different after the fact," Stavropoulos said. "We treated Line 147 like any other pipeline."

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