Fined and verbally flogged by federal and state regulators over the 18 months since its catastrophic gas transmission pipeline explosion in San Bruno, CA, Pacific Gas and Electric Co. (PG&E) received more critical reviews last week, some at its own hands.

A new California regulatory unit identified 17 potential hazards as part of a new statewide database on gas system hazards. The Risk Assessment Unit (RAU) at the California Public Utilities Commission (CPUC) filed its first status report last Wednesday under a process that state regulators established after the September 2010 San Bruno pipeline rupture and explosion as a means of ensuring that both the CPUC and utilities take action on public safety concerns.

Among the 17 hazards, 11 were classified as needing to be addressed now, including the susceptibility of older plastic pipe to premature, brittle-like cracking and ineffective gas leak detection and response programs.

PG&E and the City of San Bruno settled their differences last Monday with the utility agreeing to pay the city $70 million. The deal was labeled as restitution to support the city’s efforts to recover and heal following the blast, which killed eight people, injured many more and destroyed or badly damaged more than four dozen homes. The $70 million is in addition to PG&E’s commitment to fund replacement and repair of the city’s infrastructure and other costs related to the accident and restoration of the impacted neighborhood.

PG&E committed to not trying to recover the contribution through either insurance or utility customer rates.

San Bruno Mayor Jim Ruane said the funds will be used for the benefit of “all the citizens of our city and to help us, as a community, get beyond the tragedy and devastation caused by PG&E’s explosion and fire.” Ruane accused PG&E of walking away from settlement talks in February, loudly criticizing the San Francisco-based combination utility.

The mayor alleged that PG&E was failing to negotiate in good faith, and he asked the CPUC to get involved to help restart the talks. For their part, PG&E senior executives maintained that the utility had not “walked away,” but was in the process of scheduling more meetings with the city.

In the midst of continuing critiques, the San Francisco-based combination utility said it was moving to improve record-keeping of its pipelines and maintenance/safety programs. PG&E said it was moving fast to overhaul its records management, particularly for gas pipelines, following a critical report from CPUC’s safety staff.

A CPUC Consumer Protection and Safety Division (CPSD) report concluded that poor record-keeping allegedly was a “contributing factor” to the San Bruno explosion. CPSD confirmed what has emerged since the pipeline rupture, namely that PG&E’s record-keeping as part of its pipeline integrity management and safety system was “deficient, ineffective, incomplete and inaccurate.”

Following the San Bruno explosion, PG&E retained PricewaterhouseCoopers (PwC) to assess record-keeping across its entire gas operations organization, and PwC is close to concluding its work and publishing a final report. Noting data management is a cornerstone of pipeline safety, PG&E said it has been forging ahead on a “multi-faceted process” to improve how it keeps track of its thousands of miles of distribution and transmission pipe.

“PG&E is well aware that we had records challenges and we’re addressing them in a thoughtful manner,” said Executive Vice President Nick Stavropoulos, who heads the utility’s gas operations. “That’s where PwC’s assessment will help.”

The report recommended that state regulators reject a proposed $222.8 million PG&E wants to spend to correct its flawed record-keeping systems, calling it “excessive.” It is part of a larger $2.2 billion pipeline safety enhancement plan that the utility has pending before the CPUC, the majority of which it would have paid for in utility customer rates.

Separately, as part of its periodic self-reporting to the CPSD, PG&E said a third-party engineering consultant has identified problems with pressure relief valves at 19 different locations spread over 15 counties in which some of its gas pipeline system runs. “Although the venting problem does not affect safety, the failure to properly vent is not in compliance [with state rules and regulations],” PG&E’s Bill Gibson, director of regulatory compliance and support, told CPSD Director Michelle Cooke.

RAU said that in its initial round of work it identified some 550 potential hazards in the post-San Bruno assessment. Further refinement reduced the total to slightly more than 100, and from that the 17 areas needing attention were composed. They are identified as potentially impacting public safety, and they are of concern not only to the CPUC but also the federal Pipeline Hazardous Materials and Pipeline Safety Administration (PHMSA) in the Department of Transportation.

In regard to the plastic pipe cracking hazard, PHMSA has issued advisories to gas system operators. The RAU is preparing to solicit data from PG&E and the other major California utility natural gas pipeline system operators, and the risk unit will report findings to the CPUC once the data collected is analyzed. The RAU is also looking for “blind spots” for state and federal regulation and will be dealing with the CPUC staff and internal issues, one of which it is recommended that the CPUC create a cross-functional task force.

Finally, the internal issues to be addressed center on CPSD developing a better internal/external communications approach.

The CPSD said its latest findings are consistent with the findings of the National Transportation Safety Board, the CPUC’s independent investigatory panel and PG&E itself (see NGI, Oct. 3, 2011).

Stavropoulos acknowledged that the utility needs to improve how it “collects, stores, accesses and shares information about its natural gas system,” and it has a “major effort” under way validating the safe operating pressures for critical parts of its pipeline system. “Our push to improve record-keeping is one of the ways PG&E is going back to basics to create a culture that puts safety first.”

The report said PG&E admitted deficiencies in its record-keeping but has proposed an overpriced program that regulators should reject. It urged the CPUC to take a close look at a separate record-keeping review and proposal that PwC has done for PG&E, which is due at the end of March, and that it confirms that many of the deficiencies that existed before San Bruno still exist.

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