PG&E Outage Settlement Targets Reliability, Public Safety Improvements in San Francisco

City Reaches Accord for $6.5 Million in Lieu of Fines for Massive Holiday Season Outage Caused By Mission Street Substation Fire in December 2003

SAN FRANCISCO (Oct. 18, 2005) — City Attorney Dennis Herrera submitted for approval to the California Public Utilities Commission today an agreement with PG&E in which the company will pay a total of $6.5 million-of which $5.5 million will directly benefit San Francisco-in lieu of fines for a massive holiday season power outage in December 2003 caused by a fire at the company’s Mission Street substation. Targeting specific reliability, public safety and environmental justice improvements within San Francisco, the agreement includes: $3 million for reliability improvements; $1.5 million for fire and public safety improvements; and $1 million in capital expenditures for visual improvements to the Hunters Point substation. PG&E will pay an additional $1 million to the State of California, with half funding a CPUC substation inspection program and the other half going to the state’s general fund. Typical penalties assessed by the CPUC against utilities revert to the state’s general fund in their entirety. The agreement, to which the CPUC’s Consumer Protection and Safety Division is also a party, further specifies that the $6.5 million total payment must be made from PG&E shareholder funds that cannot be passed along to ratepayers.

“We’ve reached a settlement that, in our view, punishes PG&E for its neglect while most directly benefiting consumers and businesses that have been plagued by the company’s reliability problems here in San Francisco,” said Herrera. “I’m hopeful that the California PUC will approve this settlement for the fair and prudent agreement that it is. I am thankful to Supervisor Jake McGoldrick, for his leadership in urging CPUC to thoroughly investigate the outage, as well as for the assistance of San Francisco’s PUC-General Manager Susan Leal and Assistant General Manager for Power Barbara Hale, in particular-for their assistance in reaching this accord.”

Supervisor Jake McGoldrick, who authored a resolution adopted by the Board of Supervisors in July 2005 urging the CPUC to conduct a thorough investigation and order appropriate remedial measures, said: “It’s high time PG&E started taking some responsibility for improving electric reliability in San Francisco.”

“This settlement obligates PG&E to make specific investments in fixing its infrastructure at the expense of company shareholders — not San Francisco ratepayers,” said SFPUC General Manager Susan Leal. “These monies will also help reduce the risk of future PG&E power failures and the resulting public safety crises. I applaud the work of City Attorney Dennis Herrera and his staff for putting the interests of San Francisco ratepayers first.”

On the afternoon of Saturday, December 20, 2003 a fire at the PG&E substation on the corner of Eighth and Mission Streets in San Francisco caused a massive power outage that, at its peak, affected more than 100,000 customers throughout the City, including downtown retail stores filled with shoppers on the busiest holiday shopping weekend of the year. Despite substantial smoke at the facility, PG&E neglected to notify the San Francisco Fire Department until more than two hours after the first signs of trouble. It was not until 11:45 p.m. the following night that PG&E finally succeeded in restoring power to all of its customers who were supplied by the Mission Substation.

The City has reached a separate agreement with PG&E for approximately $615,000 in direct damages caused by the December 2003 outage, which is expected to be submitted for approval to the Board of Supervisors later this month.