CPUC Proposes Fining PG&E $3 Million for Incomplete Pipeline Documentation

The CPUC today proposed fining PG&E $3 million for being out of compliance with its order to justify the pressure levels on older, untested segments of its gas pipeline. An additional $3 million fine would be held in suspension, pending PG&E coming into full compliance with the order.

PG&E spokesperson Terrie Prosper said that the compliance plan and the fine will be discussed at a hearing on Monday and will be subject to a vote by commissioners.

Last week, after PG&E made its filing with the CPUC, the agency’s Executive Director gave a fairly scathing interview to KQED’s Tara Siler.

“I’m amazed to tell you that PG&E, far short of providing complete records…, gave us no records on their grandfathered pipelines,” he said. “Except, for some reason, going back to show us how they set the maximum operating pressure during the grandfathering process back in 1970. That is beside the point, and that tells me that PG&E has not learned the lessons from San Bruno.”

Clanon said that PG&E was most definitely not in compliance with the CPUC order to prove the safety of its pipeline, and he threatened to fine the company as much as $1 million per day until it was.

The tough talk led to a fair amount of anticipation about the punishment that the CPUC might mete out. Some headlines from yesterday and this morning:

And from the San Jose Mercury News yesterday:

The California Public Utilities Commission, with three new members on board — including a longtime PG&E critic — will consider endorsing a proposed fine against the utility of up to $1 million a day for not providing pipeline safety documents the agency had requested. Agency officials say that would be the biggest fine they’ve ever issued against PG&E for a safety violation.

“All signs point to a harsher, more adversarial reception for PG&E at the CPUC in the future,” concluded analysts at Bernstein Research, which does detailed financial analysis of various companies, including utilities. In a report last week, Bernstein predicted the fine — which would run until PG&E complies with the records request — eventually could total hundreds of millions of dollars.

Aside from the fines, Tara Siler reports, PG&E has agreed to a compliance plan that sets out “rapid milestones,” according to Executive Director Paul Clanon. Details of the plan will be filed with the CPUC later today. Clanon called the proposed deal unusual, adding that the most important thing is to get PG&E into compliance so regulators and the public can be assured the transmission pipelines are operating at safe pressures.

CPUC spokesperson Terrie Prosper said that the agency could order pressure reductions at any time throughout the process.

Mindy Spratt with The Utility Reform Network, a consumer advocacy group frequently critical of PG&E, called the $3 million dollar fine “chump change,” and said that the CPUC is missing an opportunity to send a strong message to PG&E.

Update 3:05 p.m.: Here’s the press release from CPUC.

CPUC TO CONSIDER $6 MILLION FINE AGAINST PG&E FOR NON-COMPLIANCE WITH PIPELINE RECORDS SEARCH ORDER

SAN FRANCISCO, March 24, 2011 – The California Public Utilities Commission (CPUC) today approved an Order to Show Cause directing Pacific Gas and Electric Company (PG&E) to appear at a hearing to show why it should not be found in contempt and fined for failing to comply with a CPUC pipeline records search order.

The CPUC’s Executive Director, Paul Clanon, said that CPUC staff had reached a stipulated outcome with PG&E for the Order to Show Cause, which will be discussed at a hearing on Monday and come before the CPUC’s Commissioners for consideration thereafter. The stipulated outcome would fine PG&E $6 million in shareholder funds for failure to comply with the CPUC’s order and would require PG&E to operate under a compliance plan to complete the CPUC’s directive. Of the $6 million, $3 million would be immediately payable to the state’s General Fund, and $3 million would be suspended if PG&E hits milestones in their records search process and completes its records search for information on grandfathered pipes by August 31, 2011.

On Jan. 3, 2011, the CPUC directed PG&E to submit pipeline records by March 15, 2011, following PG&E’s pipeline rupture in San Bruno. After reviewing PG&E’s submission, the CPUC staff said that PG&E did not respond to the CPUC’s order to comply with the CPUC’s directives to compare installed pipe to as-built drawings and other records in order to be certain the proper maximum pressure has been established for pipelines. Instead, PG&E relied on the determination of maximum pressure based on the historical high operating pressure. The CPUC’s directive, and the NTSB’s recommendation, called for PG&E to find, to the extent possible, a basis for setting maximum pressure by means other than the grandfathering method described in PG&E’s response.

An Evidentiary Hearing will be held before an Administrative Law Judge and two CPUC Commissioners on March 28, 2011, at 10 a.m., where the stipulated outcome will be discussed.

Author

Jon Brooks

Jon Brooks writes mostly on film for KQED Arts. He is also an online editor and writer for KQED's daily news blog, News Fix. Jon is a playwright whose work has been produced in San Francisco, New York, Italy, and around the U.S.

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