California regulators on Thursday opened a third penalty proceeding for Pacific Gas and Electric Co. (PG&E) alleging that the utility violated state law and various federal regulations. The allegations came as the California Public Utilities Commission’s (CPUC) Consumer Protection and Safety Division completed its investigation of the San Bruno, CA pipeline tragedy in 2010.

The new penalty case “means a formal enforcement action, leading to possible penalties and other remedies, has now been launched by the CPUC,” a spokeswoman said. The commission will announce soon a prehearing conference before a CPUC administrative law judge, who will establish a case schedule for upcoming evidentiary hearings.

Last month the CPUC assessed a $38 million penalty against PG&E for a 2008 distribution pipeline incident that killed a resident in Rancho Cordova, CA, and two other penalty cases are already ongoing (see NGI, Dec. 5, 2011). The new proceeding “will not be solely limited to the events that took place on Sept. 9, 2010 in San Bruno, but will include all past operations, practices, and other events or courses of conduct that could have led to or contributed to the pipeline rupture,” the CPUC spokeswoman said.

CPUC President Michael Peevey said three different investigations — two by the state and one by a federal agency — “have presented us with sufficient information and good cause to move to this new phase and determine whether safety violations have occurred with respect to PG&E before, during and after the San Bruno pipeline rupture.” State regulators are “giving PG&E its day in court, and if we determine PG&E has violated the law, we are prepared to impose very significant fines.”

PG&E’s utility president Chris Johns said the utility is taking the latest findings “very seriously and will cooperate fully.” Special consultant Jim Hall, a former head of the National Transportation Safety Board, who agreed last October to do an assessment of PG&E’s safety programs, said the combination utility “still has a lot of work to do, but I believe it is on the right path.”

On Wednesday CPUC Executive Director Paul Clanon said state regulators, staff and PG&E all failed in regard to the San Bruno gas transmission pipeline explosion. Clanon’s comments came at a hearing on improving and enhancing utility safety programs in future rate proceedings.

“We collectively failed,” said Clanon, noting that in order to find future success the CPUC needs to acknowledge its shortcomings. “Success is the word I very much want to use a year from now, or two or three years from now. We need to set the standard for natural gas safety in this nation.”

The CPUC’s role is to “guarantee safety” in all of the industries it regulates. “California is far ahead of the rest of the nation in the regulation of natural gas pipelines. Now comes the hard work…the work of institutionalizing safety.”

PG&E said it would not ask retail utility customers to “pay for its past mistakes,” but it wants to strike a balance in the three-year Pipeline Safety Enhancement Plan it submitted to regulators last year. The combination utility last year spent nearly $400 million to improve gas system operations that were not paid for in utility rates. It plans to spend another $400 million this year and in 2013 on general operations and customer service.

“A sizable but still-undetermined portion will be invested in additional upgrades to the gas operations practice,” a PG&E spokesperson said. “All told, the investments will be more than $1 billion to improve the safe operations of PG&E’s gas and electric systems, not a penny of which is coming from customers.”

The CPUC last week established rules to reduce the hazards of fires from overhead power lines, particularly during severe wind storms, and the five-member panel also authorized staff to provide more input to federal regulators on natural gas pipeline safety management programs being implemented under a new federal law.

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