A plan unveiled last Friday by Pacific Gas and Electric Co. (PG&E) to transform its natural gas pipeline system into a role model for the industry carries a price tag of more than $1.9 billion spread over the next three-plus years, according to information released as part of the utility’s proposal to state regulators. Shareholders would absorb a little more than 25% of the total cost estimate.

PG&E said in its filing to the California Public Utilities Commission (CPUC) that it expects to spend about $2.2 billion during the period of 2011 through 2014, not all of which would it seek to recover in retail rates. On what the utility called a year-over-year basis there would be no impact of its retail gas rates for this year.

Potential fines and penalties that could develop from some ongoing investigations are not figured in these cost estimates, PG&E said (see Daily GPI, June 22; June 21).

For longer-term rate adjustments, PG&E estimates the need for a retail increase of $250 million next year, followed by a $30 million decrease the following year and an $80 million rate hike for 2014.

PG&E said that during the period through 2014, the total rate adjustment would equal $769 million. According to a PG&E spokesperson, that total equates to an average increase of less than $2 monthly for residential customers and less than $15 monthly for small businesses.

The San Francisco-based combination utility formally filed its multi-year plan to upgrade its natural gas pipeline infrastructure and operations to make it “one of the safest in the country,” including much of what PG&E has been talking about since the rupture and explosion last September of its Line 132, a 30-inch diameter pipeline in San Bruno. Federal regulators are poised to give their final determination on the causes of the incident, which killed eight people, while the CPUC prepares to issue stiffer pipeline safety rules and regulations.

Separately, the CPUC indicated Friday that it expected implementation plans from the other major pipeline operators in the state — Sempra Energy’s two utilities and Las Vegas, NV-based Southwest Gas Corp. — reiterating that the five-member commission last June ordered all gas pipeline operators to do this (see Daily GPI, June 10).

California’s major utility consumer watchdog group, The Utility Reform Network (TURN), immediately raised concerns following the PG&E’s submission of the plan, balking at what it called “$2 billion for improvements” in its gas safety programs. TURN’s Executive Director Mark Tony alleged that since San Bruno it has become known that PG&E has “given safety short shrift while profits and executive pay ballooned.”

Tony said that PG&E has “neglected safety and maintenance [of its pipeline system] for way too long; now they have to play catch up, and it should not be at customers’ expense.” He criticized the CPUC for allowing this to happen and urged that the utility shareholders “take a hit,” rather than raise rates for retail gas customers.

©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.