In separate announcements late Tuesday, California regulators released documents on two major parts of the Pacific Gas and Electric Co. (PG&E) natural gas pipeline and storage system. In one, the utility admits it still has work to do on the recording and testing of more than 400 miles of its pipelines in highly populated areas, and in the second a proposed decision would set utility rates for pipelines and storage at more than half-a-billion-dollars annually for the next four years.

Standard & Poor's Ratings Services (S&P) Wednesday revised downward the ratings for PG&E Corp. and the PG&E utility, concluding that the company's credibility has been compromised by what the ratings service called "a series of miscues."

The California Public Utilities Commission (CPUC) and the San Francisco-based combination utility released the latest PG&E-generated data on its pressure testing review of more than 1.25 million records covering its pipelines going back to July 1, 1961. Acknowledging that the utility has made progress, PG&E President Christopher Johns nevertheless said PG&E "is not satisfied with the results to date and will continue to search for and review our files for additional pressure test records."

Johns said PG&E plans to pressure test or replace approximately 150 miles of transmission pipe with records similar in vintage or other characteristics to the records of Line 132, a portion of which ruptured Sept. 9 last year in San Bruno, killing eight people and destroying a residential neighborhood. "Most of the additional segments will be hydrostatically pressure tested; shorter segments will be replaced," he said.

The PG&E report was prompted by a combination of the severity of the San Bruno incident and subsequent interim reports from an ongoing National Transportation Safety Bureau (NTSB) investigation. The NTSB reports criticized PG&E's alleged incomplete and in one case, contradictory record keeping on the pipeline that ruptured, which along with two parallel 30-inch diameter pipelines runs from the southeast corner of San Francisco Bay up the peninsula and into San Francisco, about 50 miles to the north.

Separately, the regulators released a proposed decision from CPUC Administrative Law Judge (ALJ) Randy Wong recommending adoption of a gas pipeline/storage rate settlement for PG&E that originally was filed with the commission before the San Bruno incident. The case was subsequently expanded to look at the aftermath of the pipeline disaster on the case. As part of Wong's proposed decision, PG&E is required to make twice-a-year reports to the regulatory commission on safety of its pipeline/storage operations.

Under the ALJ's recommended decision, PG&E revenues for gas pipeline and storage operations would increase to $514.2 million from last year's $461.8 million, and would reach $581.8 million by 2014. Rates for gas transmission and storage services would increase for all of PG&E customers.

S&P moved the corporate and utility ratings outlook for PG&E to "negative" from "stable," and its business profile to "strong" from "excellent." San Francisco-based S&P analyst Anne Selting said "the ongoing San Bruno, CA, pipeline explosion investigation, combined with disputes over advanced metering and the failed [June 10] ballot initiative PG&E heavily backed, have weakened the firm's business profile."

PG&E said it is looking to make further assessment of some 435 miles of its transmission pipelines that cross high consequent areas (HCA) and for which the utility still has not located pressure test records to back up current maximum operating pressures (MAOP).

The lines that have been ferreted out also meet PG&E criteria for one or more: (a) having certain welds or piping -- low-frequency electric resistance, single-submerged arc welds, lap welds or flash pipe installed prior to 1970; (b) other pipe installed prior to 1970 with none of the other distinguishing features, and (c) pipe installed after 1970.

"The field action program on these additional 435 miles of HCA pipeline will be based on further analysis of and tailored to the unique characteristics of each pipeline," PG&E said in its report to the CPUC.

PG&E said it has verified pressure tests on 91% of the pipeline segments installed since 1961 in HCA areas when pressure testing was first required in California. In a proposed second phase of its pressure test validation work, PG&E said it will focus on completing the verification of what was learned in its first phase looking at each HCA segment and analysis of "not only the pipeline segments, but also each component within the HCA pipeline system, such as valves, fittings, etc."

The latter will help validate the overall MAOP of the overall system, PG&E said.

PG&E said that all of its pipelines installed since July 1, 1961 have been pressure tested. The latest report confirmed that the utility has located the pressure test records for 90% of the 1,805 miles of gas transmission pipeline in HCA areas.

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