As part of one of the four active state proceedings dealing with the aftermath of the San Bruno natural gas pipeline explosion, Pacific Gas and Electric Co. (PG&E) now faces an additional $3 million fine based on a settlement agreement that has been recommended by an administrative law judge (ALJ) at the California Public Utilities Commission (CPUC).
The settlement is a portion of the ongoing CPUC rulemaking regarding natural gas safety and includes long-term multi-billion-dollar plans by the state’s major gas utilities to enhance their integrity management programs for intrastate pipelines. It is also the proceeding in which PG&E has asked regulators to separate review of past utility operations from plans for future operations and maintenance programs (Daily GPI, Feb. 7).
The CPUC is expected to take up the recommended decision from ALJ Maribeth Bushey at its March 22 meeting, acting on something that the combination utility and the CPUC staff agreed to last March in the show-cause proceeding initiated to look at the aftermath of the San Bruno incident that killed eight people Sept. 9, 2010.
Within days of the CPUC ordering the show-cause proceeding last March, the utility and the CPUC’s Consumer Protection and Safety Division said they had reached a settlement that included a detailed compliance plan and an immediate $3 million fine, with the provision that an additional $3 million fine could be tacked on for failure to meet the compliance provisions (see Daily GPI, March 31, 2011). Action on the fine and compliance plan was set aside as other post-San Bruno investigations and safety proceedings unfolded.
Bushey said in her proposed decision that in light of the ongoing regulatory and enforcement proceedings coming out of San Bruno, “we find that the public interest would be best served by concluding this portion of this [safety] proceeding and allowing PG&E, the parties and the commission to focus on the other efforts.”
She endorsed the settlement agreement that PG&E be fined $3 million for its actions, or lack thereof, prior to March 24 last year. This amount is relatively small compared to other fines involving the PG&E gas system that have been assessed or proposed in the past year.
“We have worked very aggressively to meet the schedule set in the settlement for providing records and to ensure that our records are accurate and complete,” a PG&E spokesperson told NGI Friday.
The total cost to PG&E shareholders to deal with the aftermath of San Bruno is approaching $1.5 billion, senior executives at the utility said on an earnings conference call earlier in February (see Daily GPI, Feb. 17). They noted for financial analysts that the added costs for the gas system last year were $1 billion above the previous year’s level.
These San Bruno costs to shareholders include $550 million spent to date, and “our guidance indicates we could spend nearly that same amount in 2012,” CFO Kent Harvey said. PG&E also faces a $200 million penalty from state regulators, and the company has committed to spending $200 annually this year and next for all operations. “That pushes our total shareholder costs to $1.6-1.7 billion, which is a very significant price tag. In fact, that total is approaching the total net investment in our pipelines over the past decade,” Harvey said.
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