Calling it dangerous and potentially harmful to its ability to finance natural gas pipeline safety upgrades, Pacific Gas and Electric Co. (PG&E) last week filed a formal reply to California regulators, strongly rejecting a safety staff recommendation of a $2.25 billion for the utility’s part in the Sept. 9, 2010 pipeline rupture and explosion in San Bruno, CA.
The California Public Utility Commission’s (CPUC) Safety and Enforcement Division early in May recommended that regulators impose the record fine because the fatalities, 66 injuries and 38 destroyed homes were “unsurpassed” in severity and PG&E’s failures were “long and reprehensible” (see NGI, May 13). If the recommendation is adopted, it would be the largest ever levied by a state regulator.
“I am recommending the highest penalty possible against PG&E, without compromising safety, and I want every penny of it to go toward making PG&E’s system safer,” said CPUC safety unit director Jack Hagan. The recommended penalty is to be used “solely for safety purposes.”
The San Francisco-based combination utility argued in filings that shareholders already have paid $900 million to help make the pipeline system among the safest in the nation, and it plans to spend another $1.3 billion that won’t be recovered in retail utility rates. PG&E said it accepted its responsibility for the explosion, but the proposed penalty “ignores the fundamental truth of this tragedy — this accident was not the result of willful or knowing violations of state law, federal standards or commission orders, policies or directives.”
The evidence does not confirm that the utility “could have known or should have detected” that a defective segment of large-diameter, high-pressure pipe had been erroneously installed in 1956, PG&E stated. It further claimed that no integrity management program, “even one that was perfectly implemented based on federal and state regulations,” would have discovered the defect or prevented the tragedy.
PG&E said the parties involved in the regulatory penalty proceeding have “offered no rationale for the disproportionate and excessive size of the recommended penalties based on evidence of culpability.” As an alternative, state regulators should apply unrecovered amounts that PG&E shareholders have spent and plan to spend on the gas system safety to any penalty imposed. The utility’s actions since the accident “should be acknowledged, not punished.”
PG&E said that since San Bruno it has “made unprecedented investments” in implementing “far-reaching changes” in its gas system with the goal of making it the nation’s safest. If the $2.25 billion penalty is imposed, the utility could lose its ability to continue this level of investment, the CPUC filing said. There is no precedent for a penalty of this magnitude, PG&E said.
The largest CPUC safety-related penalty previously imposed was a $38 million penalty also against PG&E following a gas pipeline explosion on Dec. 24, 2008, in Rancho Cordova, CA. The largest penalty under federal pipeline safety laws to date is a $101.5 million penalty for an explosion in New Mexico in August 2000 on an El Paso Corp. interstate transmission pipeline.
Â©Copyright 2013Intelligence 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.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |