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PG&E Fine Refund Stirs Concerns on San Bruno Penalty

California's state regulatory commission safety unit last Friday refunded to Pacific Gas and Electric Co. (PG&E) a $375,000 fine paid earlier in the year for decades-long shortcomings in the utility's natural gas transmission pipeline safety programs.

Critics of the utility and regulators immediately raised concerns about the refund's impact on a pending proposed $2.25 billion penalty for PG&E's failures leading to the 2010 San Bruno pipeline rupture and explosion (see Daily GPI, May 7).

Based on a 2012 audit, the Safety and Enforcement Division (SED) at the California Public Utilities Commission (CPUC) concluded that PG&E lacked the right procedure internally to monitor for problems on its 6,000-mile transmission pipeline system. Thus, SED issued the citation and fine that the San Francisco-based combination utility paid.

Last Friday, the CPUC safety unit withdrew the citation and returned the payment to PG&E, prompting advocates for the multi-billion-dollar fine that is now being considered to raise red flags. Elected officials and consumer groups said the citation and smaller fine, even though now rescinded, may give the utility more support for its argument that the proposed $2.25 billion penalty is, in fact, "excessive" (see Daily GPI, May 29).

A date has not been set for the five-member CPUC to decide on the proposed penalty. The agenda for the commission's first meeting Jan. 16 will be released Jan. 6, according to a CPUC staff spokesperson.

State Sen. Jerry Hill, whose district includes San Bruno, the site of the September 2010 pipeline explosion, said the CPUC's refund is another example of the regulatory commission's "ineptitude." Hill has been an unrelenting critic of both PG&E and the CPUC during the past three years since the explosion.

Hill questioned how the SED staff could consider the $375,000 fine adequate for "41 years of violations" in the way it monitored its pipeline system.

San Bruno City Manager Connie Jackson told local news media the city is now concerned that given the refund, PG&E will try to avoid the much bigger proposed penalties. She pointed out that the utility immediately paid the fine and stipulated to "some sort of the endorsement" that it is now contending amounts to a "settlement" on safety concerns.

Reportedly, the CPUC legal division attorneys involved in the pipeline case were unaware of the SED penalty until it was issued. The concern is this may create a form of "regulatory double jeopardy."

A lawyer for consumer group The Utility Reform Network (TURN) told local news media the latest episode smacks of "backroom dealing" that could derail the ongoing state regulatory efforts to enforce new, stiffer pipeline safety laws.

Neither the CPUC attorney in charge of the penalty proceedings nor PG&E would comment on the refund.

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