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CPUC Staff Insists that PG&E Deserves $2.25B Pipeline Fine
Safety staff at the California Public Utilities Commission (CPUC) on Wednesday reiterated their rationale for a proposed $2.25 billion penalty against Pacific Gas and Electric Co. (PG&E) in a reply to the utility’s recent filing in the CPUC penalty consideration cases arising out of a natural gas transmission pipeline rupture and explosion in San Bruno, south of San Francisco (see Daily GPI, May 7).
In its brief in the cases, which are nearing a decision, the CPUC Safety and Enforcement Division (SED) said “it’s time to throw the book at PG&E,” alleging that the giant San Francisco-based combination utility shows signs of “no remorse” for the explosion, based on its earlier characterization of the multi-billion-dollar penalty proposal as “excessive” (see Daily GPI, May 29).
In its earlier brief, PG&E argued that evidence does not confirm that it “could have known or should have detected” that a defective segment of large-diameter, high-pressure pipe had been erroneously installed in 1956.
SED said a consultant’s report has indicated that PG&E could absorb a penalty of $2.25 billion “without jeopardizing the safety of its operations and its financial viability.”
SED Director Jack Hagan said PG&E has made a “strong and commendable effort” since San Bruno to make its system safer, under CPUC direction. But he said two points supersede this: one being “decades of violations of fundamental safety rules and principles,” and the second that despite recent changes under new management, there is still much to be done to make the PG&E gas system safe.
“Based on my own evaluation, I estimate that PG&E will need to spend as much as $3-4 billion, in total, to bring this massive gas system into a state where we can say it is safe,” Hagan said (see Daily GPI, March 1, 2012).
Hagan proposes that PG&E absorb up to $2.25 billion of the costs of its future gas system upgrades as payment of the proposed penalty.
For the past two years, the utility has been proposing to spend nearly $2 billion of ratepayer-supported programs in its pipeline enhancement plan. In the penalty proceeding, SED and four other parties support multi-billion-dollar penalty assessments, plus little or no ratepayer support for the pipeline enhancement plan.
Hagan emphasized in the SED filing that he thinks PG&E “continues to manifest a conspicuous and disturbing lack of remorse” for what he called the utility’s “many failures leading up to the tragedy at San Bruno.”
Nevertheless, PG&E is arguing in its latest public responses that penalties of the magnitude proposed eventually are going to lead to under-funding of critical gas safety programs (see Daily GPI, June 6). Since San Bruno, a PG&E spokesperson said, “we’ve taken sweeping action to put public and workforce safety first, including recruitment of a new CEO and other key officers, and a top-to-bottom reorganization.”
The CPUC on Monday sent a progress report to the National Transportation Safety Board (NTSB), responding to the federal board’s set of four goals for the state regulators to pursue in implementing NTSB recommendations in the wake of San Bruno (see Daily GPI, Aug. 31, 2011). One of the recommendations was to require PG&E to correct all deficiencies found after the San Bruno explosion. CPUC Executive Director Paul Clanon said a final decision on the penalty cases is expected late this summer.
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