City urges PG&E gas line testing, upgrades in tomorrow’s CPUC hearing on $3 million fine

‘The real outrage’ is lack of safety improvements to transmission lines seven months after San Bruno tragedy, Herrera argues

SAN FRANCISCO (April 10, 2011) — At tomorrow’s full hearing of the California Public Utilities Commission to decide on a proposed $3 million fine for PG&E’s willful failure to turn over gas line safety records, San Francisco’s formal opposition urges a more immediate priority: requiring the utility giant to test and replace gas transmission lines most similar to the one that cataclysmically failed in San Bruno, Calif. last year. A massive explosion of a PG&E gas pipeline there on Sept. 9, 2010 killed eight people and destroyed 38 homes.

Comments filed by City Attorney Dennis Herrera, which will be considered in Monday’s proceeding before the five-member commission, urge regulators to require the company to immediately begin safety testing and replacement work on some 152 miles of transmission lines running through densely populated neighborhoods. PG&E has expressed its intent to do such work, but to date no regulatory order or stipulation has required it, and no deadlines have been imposed for completion. Following the San Bruno catastrophe, Herrera initiated efforts to independently assess the age, condition, and maintenance histories of similar gas transmission lines running through San Francisco neighborhoods. At least one major pipeline of particular concern to Herrera’s office was installed in 1932 — predating the ruptured San Bruno line by nearly 25 years. It was found to have used welds that regulators characterize as brittle and likely to fail under sufficiently high stress.

“The real outrage is that seven months after the San Bruno tragedy, not a single PG&E gas transmission line prone to similar ruptures has been replaced,” Herrera said. “Yes, I think a $3 million fine for a utility giant that flouts regulatory orders is too lenient. But the imperatives of human life and safety ought to take precedence over punishing PG&E for slipshod recordkeeping. We public officials have a duty to protect the people we serve, and that goes for the CPUC, too. This commission has three new members, appointed by a new governor, and I am optimistic that they will bring a new attitude to safety and enforcement, especially where the risks are so high. That’s why I’m urging the CPUC to order PG&E to immediately start making the safety improvements the company identified as necessary. We can’t take PG&E at its word. And we can’t postpone real safety improvements while PG&E goes off on another paper chase for records.”

In January, the National Transportation Safety Board, which was investigating the San Bruno 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. Yet the report PG&E ultimately provided in response to the order was inadequate. On March 16, CPUC Executive Director Paul Clanon upbraided the utility giant 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 set the stage for the CPUC’s full hearing tomorrow.

The controversial $3 million penalty PG&E negotiated sought to replace a far tougher $1-million-per-day fine that the CPUC threatened immediately after the company provided inadequate safety records in March. Under terms of the current proposed deal, the utility giant would pay an immediate fine of $3 million and receive a five-month extension to produce records. PG&E would be required to pay another $3 million fine only if it again failed to comply with its new agreement.

Herrera strongly criticized the proposed fine after it became public last month. “A $3 million fine for a company with $13.8 billion in annual revenues is barely a slap on the wrist,” he said. “That’s about what PG&E takes in every two hours.”

Hearing and proceeding information
The California Public Utilities Commission hearing will take place at 10 a.m. on Monday, April 11, 2011, in the Commission Auditorium at 505 Van Ness Avenue (corner of Van Ness Avenue and McAllister Street) in San Francisco. According to the CPUC’s public calendar, questions about the hearing date, time, or place should be directed to the CPUC’s Calendar Clerk, Ann Hoang, at (415) 703-1203 or via email to The proceeding is on the “Order Instituting Rulemaking on the Commission’s Own Motion to Adopt New Safety and Reliability Regulations for Natural Gas Transmission and Distribution Pipelines and Related Ratemaking Mechanisms, California Public Utilities Commission, R.11-02-019, filed February 24, 2011.

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