A final federal regulatory report including the identification of the cause of the San Bruno, CA, gas pipeline rupture and explosion last year will be completed next month, according to senior officials at PG&E Corp.

Questions and comments about the still-unfolding PG&E pipeline failure that killed eight people and destroyed a quiet, residential neighborhood dominated the company’s second quarter earnings conference call as PG&E executives said the utility and its parent have so far incurred nearly $190 million in pre-tax costs associated with the pipeline failure. The disaster has brought criticism of the combination utility’s handling of the incident from a state regulator-appointed independent review panel (see Daily GPI, June 10), the California Public Utilities Commission (CPUC), and the National Transportation Safety Board (NTSB).

In the meantime, PG&E lead director and interim CEO Lee Cox said the board is “very close” to announcing a new CEO who will be brought in from outside the company. Former CEO Peter Darbee suddenly retired earlier in the year (see Daily GPI, April 26). Cox said the announcement was imminent.

PG&E utility CEO Christopher Johns said the combination utility has “embraced” the independent review panel’s conclusions and recommendations while he outlined a number of upcoming regulatory milestones, headed by the NTSB releasing its final report of the root causes for the San Bruno explosion “sometime in September.”

“In the meantime, NTSB will continue providing updates of its previously released documents and will hold a meeting regarding the investigation at the end of August,” said Johns. “The findings will likely provide further insight on improving our operations and will inform all of our other [federal and two CPUC] proceedings.”

Regarding the two CPUC proceedings — one aimed at PG&E specifically for its pipeline record keeping and maintenance, and the second one aimed at the industry statewide to establish new rules and standards — Johns speculated that those proceedings would not be concluded until some time in the early part of next year. He said the state proceedings are on parallel but separate tracks.

For now, PG&E is concentrating on its natural gas system operations under a new executive vice president, Nick Stavropoulos, and reorganized gas utility structure. With other gas unit hirings at the director level, particularly pipeline experts, Johns said PG&E is focused on “turning around” its gas operations.

Johns said the utility should finish the hydrostatic testing of pipes in highly populated areas by the end of the year.

The next major milestone is to file an implementation plan in the CPUC rulemaking on standards and rules. Johns said it will be filed later in August and will “embrace the concepts that our original ‘Pipeline 2020’ program that the CPUC has asked us to include.”

The plan will include how the utility intends to pursue pipeline testing and replacement standards, retrofitting pipes to accommodate more inline inspection tools, and for automatic and remote shutoff valves. PG&E intends to address the question of costs, on which it received several questions from analysts. “The proposal will recognize the significant costs [pre-tax $189 million] that the shareholders have already funded,” Johns said.

Pacific Gas and Electric Co. (PG&E) second quarter net income was $362 million, or 91 cents/share, compared with $333 million, or 86 cents/share, for the same period in 2010. The latest results were achieved despite a charge for third-party liabilities associated with the San Bruno explosion of $59 million, or 9 cents/share, for the second quarter. This is part of a large aggregate provision for the liabilities totaling $279 million.

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.