Valero Sues PG&E for 'Reckless' Outage at Benicia Refinery

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 be 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.