When the payouts and penalties are totaled on the aftermath of the Pacific Gas and Electric Co. (PG&E) transmission pipeline rupture and explosion in San Bruno, CA, almost two years ago, the utility may pay as much as $2 billion, PG&E CEO Tony Earley told news media at a press conference Monday in San Francisco.
There is already $1 billion that the combination utility has acknowledged — $500-600 million in out-of-pocket costs for which PG&E has said it will not seek recovery of in its utility rates, and it has announced that it will spend close to $400 million during the next two years correcting flaws in its overall natural gas pipeline operations.
This total doesn’t take into account additional fines and costs that PG&E faces in the three outstanding state regulatory proceedings at the California Public Utilities Commission (CPUC) or the outcome of pending litigation by victims of the tragedy that killed eight people. For the latter, a trial is now scheduled to begin in July, and that should prompt more intense global settlement discussions, Earley said.
As a baseline “technical” estimate by the utility, Earley said, it has projected that the smallest fine the utility is likely to incur would be $200 million. “That is just a very rough number,” he said.
“We have been saying that people could expect something in the $1.5 billion range, although it certainly could go as high as $2 billion.”
Earley acknowledged that regulators essentially can come up with just about any number for a fine. However, he thinks the CPUC will work toward what he called a “balance” and how much of a message it wants to send the company. “I think the company already has gotten the ‘message’, and I wouldn’t be here [as a new CEO] if that was not the case.”
“If you disable the company financially, where are you going to get the money to: (a) pay the fines, and (b) to make all the investments we want and need. So the [state regulators] will have to make a judgement on what is the right fine number and how much of a split there should be between ratepayer and shareholder costs.”
In emphasizing that the utility is making progress in both correcting the flaws exposed in its pipeline operations and resolving the legal/regulatory issues, Earley said PG&E already has done the “unprecedented” in telling a court judge in the pending lawsuits against the company that it is not disputing its liability in these cases. “The judge has set a trial date for mid-July, and that will really drive more settlements in the proceeding,” he said.
Earley said there is enough information out in the regulatory cases that he is hopeful the overall cases can be resolved in the next three or four months, or certainly by the end of the year we want to have resolved.”
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