Valero Sues PG&E for ‘Reckless’ Outage at Benicia Refinery

An 18-minute power outage on May 5, 2017, at the Valero refinery in Benicia led to a prolonged episode of flaring during which 74,000 pounds of sulfur dioxide was released into the air.

An 18-minute power outage on May 5, 2017, at the Valero refinery in Benicia led to a prolonged episode of flaring during which 74,000 pounds of sulfur dioxide was released into the air. (California EPA)

Valero filed a federal lawsuit against PG&E on Friday, blaming the San Francisco-based utility for a power outage that shut down the oil company’s Benicia refinery in May and led to a major release of pollution.

Valero is seeking in excess of $75 million for damage to refinery equipment and lost revenue the company says resulted from the shutdown that took place after PG&E “shut off all electricity” to the Benicia facility on May 5.

“Given PG&E’s track record of poor reliability and safety problems in California, it is crucial that PG&E be held accountable for its actions,” Valero said in a statement.

“PG&E must take responsibility for the damages it caused to ensure reckless power outages with potentially significant consequences never happen again,” the company’s statement said.

Responding to the suit, PG&E said in a statement that “the safety of our customers, employees and the general public is always our top priority. We have engaged an outside, third-party engineering firm to conduct a review of the 18-minute power outage on May 5. We continue to partner with Valero and the city of Benicia to prevent similar power disruptions.”

In the past the utility has said that the power failure was triggered by an “inadvertent operation” to protect electrical circuits. The company has hired Exponent, an engineering firm, to review the cause.

Valero’s lawsuit, filed in the U.S. District Court in Sacramento, alleges that PG&E breached its contract with the company when it caused a primary and backup power supply to go down “simultaneously without any prior notice”.

The refinery released more than 74,000 pounds of sulfur dioxide during 14 days of flaring after the outage, according to a report the company filed in early June with state officials.

The massive release of pollution will┬ábe one focus of an investigation conducted by the Bay Area Air Quality Management District. Valero’s lawsuit says the air agency issued 11 notices of violation against the company for excess visible emissions and public nuisance violations.

California’s Division of Occupational Safety and Health (Cal/OSHA) and Solano County officials are also investigating the incident, which led to an increase in the state’s gasoline prices and prompted Benicia city leaders to consider increasing their oversight of the refinery and improve how they communicate with residents about emergencies.

The lawsuit is also the first time Valero has acknowledged that the shutdown hurt its bottom line.

“As a result of having to take most of the refinery units offline to evaluate the damage and complete repairs, Valero lost a substantial amount of profits,” the lawsuit says.

Valero Sues PG&E for ‘Reckless’ Outage at Benicia Refinery 30 June,2017Ted Goldberg

  • Dr. Luis Contreras

    Power outages are common. Backup power is required. Valero is fully responsible

    • Darrin Rice

      You’re right, but you’re wrong.
      You’re right in that “Backup power is required.”
      You’re wrong in that; backup power already exists.
      And you’re wrong in that PG&E — not Valero — is “fully responsible” for keeping the backup feed “live.”
      And you’re wrong in that you’d have known all of that and much more had you bothered to read the embedded legal Complaint and Demand for a Jury Trial.

      In fact, there are two separate, and independent, equal-capacity power feeds coming from PG&E to the Valero refinery. This infrastructure is intentionally designed to provide exactly the fully-redundant backup power you have in mind; it’s as fully-redundant as can be so long as PG&E does their part maintaining it diligently. In working with PG&E to get this in place, Valero has been as responsible as they could reasonably be expected to have been to ensure the continuity of power to their facilities, and the full weight of responsibility now rests upon PG&E to ensure it is in readiness at all times.

      At this juncture, PG&E was not diligent. Consequently, when the backup was needed, it was not ready; it was compromised, and failed.

      Now, observing that Valero already has co-generation capacity capable of supplying most of the plant’s power demands, one might argue that Valero should be made to increase that capacity so as to create yet another redundant “backup” power source. But here’s the issue with that: greater co-generation capacity would increase the plant’s carbon footprint on a continuous basis, and it makes very little sense to do that just to guard against an eventuality that has happened, now, once in some 60 years of refinery operations.

      So, since the existing pair of redundant power feeds is insufficient in your eyes, since Valero is “fully responsible” for only having done that much to ensure reliable power to their facilities, since they’ve gone only just far enough to take PG&E’s word for the reliability of PG&E’s power delivery systems; by what additional means is Valero expected to demonstrate further responsibility to ensure that they are never again subject to any sort of power failure? Exactly what is it you think they should do that is better than the infrastructure that they have set in place, already? You are quite ready to point the finger at Valero, and pronounce your summary judgment, but you offer no detail as to what, in your mind, they ought to have done that you believe they didn’t do.

      I’ll expect your reply, Doctor, to be the very embodiment of a world-class tour de force of power infrastructure engineering.

Author

Ted Goldberg

Ted Goldberg is the morning editor for KQED News. His beat areas include San Francisco politics, the city’s fire department and the Bay Area’s refineries.

Prior to joining KQED in 2014, Ted worked at CBS News and WCBS AM in New York and Bay City News and KCBS Radio in San Francisco. He graduated from Oberlin College in Ohio in 1998.

You can follow him at @TedrickG and reach him on email at tgoldberg@kqed.org

Sponsored by

Become a KQED sponsor