Late summer promises to be a busy time for federal regulatory proceedings related to the Pacific Gas and Electric Co. (PG&E) natural gas pipeline rupture last September in San Bruno, CA, according to a California-based staff member for Rep. Jackie Speier (D-San Mateo). For beleaguered PG&E, June has already presented a series of challenges, including criminal investigations, multi-million-dollar state fines and the hardening of a bunker mentality within the utility.

“Between now and the end of August/early September there is going to be stuff happening left and right,” Speier staffer Richard Steffen told NGI. “There are a number of investigations ongoing with all kinds of issues. We’re going to start posting information on our website almost daily.”

Steffen said Speier has been told that proposed rules from the Pipeline and Hazardous Materials Safety Administration (PHMSA) will be released in early August, and the results of a National Transportation Safety Board (NTSB) investigation are expected by the end of August.

PG&E has hunkered down more than ever in June, playing some serious defense, and very clearly not disputing all the critical shots being taken at its natural gas operations — past and present. On June 20, the California Public Utilities Commission (CPUC) staff released a proposed settlement with the combination utility that includes a $26 million fine for a 2008 Christmas Eve residential gas pipeline leak and explosion east of Sacramento that resulted in one death and five injuries. If adopted by the five-member CPUC, it would constitute the largest safety-related fine ever assessed by the state regulatory body.

That announcement came just after news surfaced that a joint criminal investigation has been launched regarding the PG&E pipeline rupture last September that resulted in an explosion and fire that killed eight people and wreaked havoc in San Bruno. Word of the probe was part of a brief disclosure by PG&E in a June 9 filing to the Securities and Exchange Commission (SEC).

At the same time, a damaging internal warning by a former PG&E consultant/employee from nearly 20 years ago was revealed. Speier’s office recently received four pages of internal PG&E memos dating back to late 1992 from a consultant/employee who left the utility a year later. The memos describe a gas operations department in the middle of a reorganization and a clear warning that many of the critical pipeline documentation functions that were being transferred to a newly organized distribution unit had not been “performed or kept current for some time now.”

The NTSB’s final hearing on the San Bruno pipeline explosion is expected to occur in Washington, DC, around Aug. 20, according to Steffen.

Specific examples of shortcomings by PG&E were cited as being historic records of pipeline strength test and pressure reports. These are the same issues that make up the heart of the post-San Bruno work and the center of controversy between PG&E and state and federal officials.

“Our pipeline record keeping needs to be significantly improved, and we are committed to addressing this issue,” PG&E’s spokesperson Brian Swanson told NGI last Tuesday, following the latest revelations. “We willfully acknowledge that our record keeping practices need to be improved.”

Critics such as Speier contend that this systemic failure going back to the 1980s creates seeds of doubt about how many other parts of the 6,000-mile PG&E transmission pipeline system might be vulnerable to a San Bruno-like catastrophe.

Swanson contends that steps being taken, including hydrostatic testing and inline camera inspections of pipeline sections similar to the failed Line 132 segment in San Bruno, have shown that the pipeline system’s current maximum allowable operating pressures (MAOP) are safe, and in 13 cases MAOP has been lowered by up to 20% as a precaution. Pipelines of a similar age and characteristics to the 30-inch diameter line that failed in San Bruno have been identified and prioritized for inspections and testing, he said.

“As we conduct and complete the hydrostatic pressure tests and the [inline, robotic camera] inspections, we will have validated safe operating pressures for our system,” he said. Hydrostatic tests, including one in the San Bruno area, have turned up no leaks or abnormalities, Swanson said.

On June 20, PG&E turned over to state regulators more 16,000 internal documents dating back several decades. Critics contend the additional documents revealed that the utility’s pipeline record keeping was flawed.

Only about 7,200 of the documents were relevant to the post-San Bruno investigation. Those documents were culled from 125,000 x-ray and safety test reports going back 55 years, Swanson said. About 94% of the 7,200 documents involved potential problems that the utility identified and corrected prior to the pipeline segments being put into service, Swanson said. “That reflects that we had an adequate quality assurance program for those pipes before they were put into service.”

In its SEC filing PG&E acknowledged that it had received notification from the U.S. Justice Department, California Attorney General’s Office and the San Mateo County District Attorney’s Office that the three prosecuting agencies have formed a task force to investigate the San Bruno incident. PG&E told the SEC it intends “to cooperate fully with the members of the task force.”

The utility and its holding company, PG&E Corp., acknowledged to the SEC that their financial condition could be adversely impacted if criminal fines and/or penalties are eventually imposed. It cited the possibility of operating results and cash flows being “materially and adversely affected” if the criminal probe results in punitive actions.

Swanson said the utility was “deeply sorry” that the 2008 distribution pipeline tragedy happened. PG&E “learned valuable lessons” about its operation, identifying “several areas where we could improve” during the subsequent investigation.

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