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California Establishes Stepped Up Gas Utility Penalty Program

As part of its efforts to increase the level of safety in natural gas delivery systems throughout the state, California regulatory safety staff on Friday finalized its procedures for implementing increased powers to issue citations for violations to the state's major gas utilities. The action was touted as the basis for "an aggressive program" making safety "central to the utility bottom line."

With powers granted earlier this year (see Daily GPIMay 13), the California Public Utilities Commission's (CPUC) safety staff has set its internal procedures for citing violations by gas utilities. The definition for a violation is "any failure to comply with state law or any order, decision, decree, rule, direction, demand or requirement of the CPUC or federal rules that the CPUC enforces."

In May, the CPUC's Consumer and Enforcement Division (CSED) recommended that state regulators impose a $2.25 billion penalty against Pacific Gas and Electric Co. (PG&E) for three penalty cases arising from a Sept. 9, 2010 pipeline rupture in San Bruno, CA (see Daily GPIMay 7).

CSED now has staff-level authority to issue citations to gas companies in the state for violations of CPUC or federal gas safety codes/regulations ranging up to $50,000/day per violation.

"Violations are identified through CSED's ongoing audits, inspections and investigations, or by the utilities themselves through mandatory disclosure requirements," a CPUC spokesperson said. Gas utilities are required to provide self-identified violations to the CPUC or local authorities within 10 calendar days of discovering the infractions.

The CPUC has also established a whistleblower program for anonymous and protected reporting of violations by gas utility employees or contractors. The number is 1-800 649-7570, or safetyhotline@cpuc.ca.gov.

California regulators stressed that they require "immediate correction" of any unsafe condition, and utilities also are expected to perform root-cause analyses to ensure that future violations are prevented and unsafe conditions permanently abated. 

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