The agency charged with ensuring the state's energy infrastructure doesn't endanger public safety is being taken to the woodshed by Federal regulators in the wake of a 2010 gas pipeline explosion that killed eight people and destroyed 38 homes.
The Administrator of the Pipeline and Hazardous Materials Safety Administration (PHMSA), an office within the U.S. Department of Transportation, is conducting an audit of the California Public Utilities Commission (CPUC) to determine whether the state agency is adequately managing gas pipeline safety in the state, and in fact whether it's competent to do so.
The audit announcement comes not long after U.S. Representative Jackie Speier called on PHMSA to investigate the state agency and its handling of aftermath of the September 2010 disaster in the San Francisco suburb of San Bruno.
The explosion involved an improperly maintained 30-inch gas pipeline owned by Pacific Gas & Electric, which has admitted responsibility for the explosion.
In a June 25 letter to PHMSA, Speier wrote: "The CPUC appears to be rife with conflicts of interest between its role as a guardian of public safety, its role as a rate setter and its role in ensuring the ongoing financial stability of the utility."
In her letter, Speier also noted rumors of potentially unethical interference by CPUC Executive Director Paul Clanon in the assessment of penalties to be paid by PG&E related to the San Bruno disaster. She wrote:
Separately, allegations have been made to my staff that the Executive Director of the CPUC may have directed one or more administrative law judges involved in the PG&E proceedings to deny a motion related to the penalty to be paid by PG&E. From the public record available it appears that the instruction, if indeed it was made, was not obeyed by the administrative law judge. However, if the attempt to influence the proceeding in this manner happened, this would further undermine the integrity of, and public confidence in, the safety enforcement process at the CPUC.
In response, the PHMSA's administrator Cynthia Quarterman asked CPUC chair Michael Peevey for a response to the concerns Speier outlined, and announced that the agency will be undertaking a full audit of CPUC's performance and grant handling in the area of pipeline safety.
If the CPUC fails to earn PHMSA's approval during the audit, the federal agency could strip CPUC of its certification to accept Federal funding for intrastate gas pipeline regulation, which covers as much as 80 percent of the CPUC's costs in that field of work.
An increasing number of critics from ratepayer activists to San Bruno city leaders are calling for Michael Peevey to step down from his role as CPUC's President. Peevey has long been criticized for being too cozy with the companies he's charged with regulating, probably unsurprising given his tenure as President of Southern California Edison. Some observers charge that coziness allegedly extends to the Peevey's relationship with PG&E post-San Bruno, including abortive plans for a pipeline safety symposium in May of this year that would have been convened by CPUC with significant involvement from PG&E. That symposium was canceled after charges of conflict of interest forced CPUC staff to drop off the speakers' list.
ReWire could find no evidence that the CPUC has responded to the announcement of a Federal audit.