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PG&E customers to foot part of pipe safety costs

  • Article by: LISA LEFF
  • Associated Press
  • December 20, 2012 - 9:25 PM

SAN FRANCISCO - California regulators on Thursday unanimously approved a two-year Pacific Gas and Electric Co. rate increase of $299 million to help pay for pipeline inspection and upgrade costs in the wake of the fatal 2010 gas pipeline explosion in a San Francisco Bay area suburb.

The amount approved by the California Public Utilities Commission was considerably less than the nearly $769 million PG&E had sought, but more than survivors of the blast felt the company should be allowed. Residential customers will see their monthly bills go up by an average of 88 cents next year and $1.36 in 2014, utility spokeswoman Brittany Chord said.

The money is aimed at safety testing, replacing and upgrading hundreds of miles of PG&E's gas transmission lines after the Sept. 9, 2010, blast that killed eight people and destroyed 38 homes in the bedroom community of San Bruno. The total cost of those improvements has been estimated at around $2.2 billion.

Consumer advocates and survivors of the inferno sparked by a ruptured pipeline nonetheless criticized commissioners for a last-minute decision Thursday to scrap an administrative law judge's proposal to lower how much PG&E shareholders will be allowed to profit in the next few decades from investments connected to the safety improvements.

The nonprofit Utility Reform Network legal director Tom Long said the commission's move means that ratepayers ultimately will be footing 55 percent of the safety upgrades' long-term costs.

"It's not good for safety, because PG&E won't get the message," Long said.

Commissioners said they were trying to strike a balance between punishing the company for past mismanagement and encouraging the company to invest in safety, which requires meeting expensive new infrastructure and operating requirements for all state utilities and fixing record-keeping and other problems found to be unique to PG&E.

"We want to make sure PG&E's new management team has the resources to provide the safe system we all want," Commissioner Mike Florio said.

The explosion prompted a series of state and federal investigations. The National Transportation Safety Board said the accident was caused by what NTSB chairman Deborah Hersman called "a litany of failures" by PG&E, as well as weak oversight by regulators.

Hersman called the explosion the nation's most significant pipeline accident in the last decade, not only in terms of its destructiveness, but also for the significant maintenance lapses it revealed.

California State Sen. Jerry Hill described the commission's decisions on how to apportion the expense of operating gas pipelines safely as a "Christmas gift" for PG&E.

"This will allow PG&E to profit from their gross negligence," he said.

PG&E could also face hundreds of millions of dollars in possible fines in other proceedings before the commission.

Attorneys for the San Bruno blast victims have argued that PG&E did not do enough to determine if the pipeline had defective welds.

PG&E has claimed in court filings that the explosion was an accident and not due to mismanagement.

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Associated Press writer Garance Burke contributed to this report.

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