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PG&E to 'Show Cause' on Alleged Pipe Safety Violations

The California Public Utilities Commission (CPUC) Thursday unanimously (5-0) ordered Pacific Gas and Electric Co. (PG&E) to face a show-cause hearing Monday over what the regulators unequivocally have determined is the utility's lack of compliance in ongoing state and federal investigations of the Sept. 9 natural gas transmission pipeline rupture in San Bruno, CA. Separately, PG&E and the CPUC staff have worked out a stipulated resolution to correct the situation on an accelerated basis.

The CPUC staff now has what its general counsel calls essentially a consent decree in which the utility agrees to a $6 million financial penalty and a new compliance plan. Under this arrangement, the utility is not admitting it did not comply, but is agreeing to pay the fine and to pursue the new compliance to pressure test up to 600 miles of transmission pipelines in high consequence areas (HCA). This staff-initiated stipulation, including the fine, will be considered at Monday's hearing and would require separate approval by the CPUC.

State regulatory action stems from an interim report in early January from the National Transportation Safety Board (NTSB) and the CPUC's subsequent order for PG&E to thoroughly review its system records to determine if pressure testing had been completed on all of its pipelines in heavily populated areas (see Daily GPI, Jan. 5). Concerns were raised as to whether there was sufficient testing to support the maximum allowable operating pressures (MAOP) for the pipelines.

Based on PG&E's latest submittal, the CPUC said it concluded that the utility is currently operating 8% of its natural gas transmission pipeline system "without documents supporting the purported MAOP [see Daily GPI, March 21]."

Since the CPUC's publicly expressed criticism, PG&E has shown improved responsiveness to the state regulators as was evidenced by the its stipulated agreement with the CPUC staff headed by its Executive Director Paul Clanon. Nevertheless, Commissioner Michel Florio said he was "alarmed" that PG&E has acknowledged that more than 600 miles of high-pressure transmission pipelines in HCA areas "appear to have no records that they were pressure tested."

While he said he was encouraged by PG&E's most recent compliance actions and stipulation with the staff, Florio said he hoped the show-cause order "will send PG&E a clear message that we will not tolerate noncompliance through this [ongoing investigative] process. This commission has a constitutional, legal and moral duty to protect natural gas customers, and we must do everything in our power to make sure we live up to these obligations."

After voting on the show-cause hearing, the commissioners received a report from Clanon on the CPUC staff's separate negotiations with senior officials at the San Francisco-based combination utility. With a subsequent filing last Monday, PG&E has made a "good-faith effort" to take steps in the right direction, Clanon said.

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