Herrera blasts PG&E’s deal for $3 million fine, asks CPUC to urgently protect public safety

Penalty ‘disregards the risks to human life and safety,’ provides ‘no incentive for PG&E to take its responsibilities seriously’

SAN FRANCISCO (March 28, 2011) — City Attorney Dennis Herrera will today present the California Public Utilities Commission with San Francisco’s opposition to a $3 million penalty deal for Pacific Gas and Electric Company’s “willful non-compliance” with its own agreement to provide state regulators records about the safety of gas transmission pipelines. The penalty PG&E negotiated last week would replace the far tougher $1-million-per-day fine CPUC staffers had urged — and that the five-member commission had originally endorsed — with an immediate fine of $3 million and a new compliance deadline in five months. Under terms of the deal, PG&E would need to pay another $3 million fine only if it again fails to comply with the new agreement to provide safety records.

The newly proposed deadline would approach the one-year anniversary of the Sept. 9, 2010 PG&E pipeline explosion in San Bruno, Calif., which claimed the lives of eight people and destroyed 38 homes. In the aftermath of that catastrophe, Herrera’s office has worked to obtain adequate information about the age, condition, and maintenance histories of similar gas transmission lines that run through several densely populated San Francisco neighborhoods. At least one gas pipeline of particular concern to Herrera’s office was installed in 1932 — predating the ruptured San Bruno line by nearly 25 years — and reportedly used welds that regulators have described as brittle and prone to failure under high stress.

“This proposed fine disregards the risks to human life and safety, and it’s no incentive for PG&E to take its responsibilities seriously,” said Herrera. “A $3 million fine for a company with $13.8 billion in annual revenues is barely a slap on the wrist. That’s about what PG&E takes in every two hours. We local officials have a duty to protect the residents we serve, and that’s a duty for the CPUC, too. I urge state regulators to take all necessary steps to protect public safety, including requiring PG&E to immediately start testing or replacing the 152 miles of pipelines in high consequence areas most similar to the line that failed in San Bruno. PG&E officials have already voiced their intention to do that. We can’t allow this company to postpone safety improvements while it’s off on a five-month paper chase for records they’re not even sure they have. I would also urge the CPUC to allow parties to submit formal written comments on the proposed stipulation. Assuming the commission votes on the agreement at its next meeting, allowing comments on this matter of critical public importance will not result in delays.”

In January, the National Transportation Safety Board, which was investigating the blast, issued urgent safety recommendations that in turn led the CPUC to order PG&E to locate records of pressure tests for its gas pipeline system. If it could not locate evidence of pressure testing, PG&E was ordered to provide regulators with records documenting the structural integrity of its pipeline system and to use those records to determine maximum allowable operating pressures for its gas pipelines. PG&E was initially given until Feb. 1 to comply with the order, but the commission extended that deadline until March 15. Still, the report PG&E provided in response was inadequate. On March 16, CPUC Executive Director Paul Clanon excoriated PG&E in a letter that read, in part: “By its action, PG&E not only is refusing to comply with the plain terms of the Commission’s order and the NTSB’s urgent safety recommendations, but worse, may be placing public safety in jeopardy. This is particularly inexcusable in the wake of the tragedy at San Bruno.” The Commission then issued a draft Order to Show Cause, or OSC, which established the date and time for today’s hearing.

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