The head of the safety division of California's ratepayer protection agency has blasted Pacific Gas and Electric (PG&E) over the utility's reaction to a proposed $2.25 billon penalty stemming from a 2010 gas pipeline explosion in San Bruno that killed eight people. In a reply to PG&E's calling the proposed penalty "excessive," the California Public Utilities Commission's (CPUC) Emory J. (Jack) Hagan repeatedly referred to the utility's "lack of remorse," saying "It's time to throw the book at PG&E."
The September 9, 2010, explosion, which destroyed 38 homes and damaged 108 more in the San Francisco suburb, was traced to an aging, insufficiently maintained 30-inch buried gas pipeline. The explosion left a 30-foot crater, and flames lept 1,000 feet into the sky during the course of the resulting fire, which was worsened due to a 90-minute delay in getting gas turned off to the ruptured pipeline. In the end, 58 people were seriously injured, and 8 killed -- including Jacqueline Greig, a veteran CPUC staffer who worked as a natural gas utility expert in the Commission's Ratepayer Advocates office, as well as Greig's daughter.
Since the disaster, PG&E has admitted it had no idea the ailing section of pipeline was there, and the utility has said to regulators that it can't guarantee there aren't other similarly neglected and forgotten gas mains elsewhere in the company's service territory. The CPUC's Safety and Enforcement Division pointed to decades of flawed or nonexistent record keeping on ailing pipelines as part of the reason for its recommendation that PG&E pay the record $2.25 billion penalty, which it would be forbidden from recouping from ratepayers. Rather than go into state coffers, the Safety and Enforcement Division's recommendation is that PG&E be forced to spend the sum on immediate improvements to its infrastructure to help prevent a future San Bruno.
In May, PG&E filed a brief with the commission that the penalty was excessive. Hagan, who heads the Safety and Enforcement Division, took exception to that. In a reply brief filed with the CPUC last week, Hagan responded in language far stronger than one usually finds in bureaucratic documents, calling the utility remorseless and "unrepentant":
PG&E's brief on penalties displays a chilling lack of remorse for the many failures that led up to the tragedy in San Bruno. I believe the lack of remorse by PG&E in its brief only serves to reinforce the need for the Commission to impose the very substantial $2.25 billion penalty I have proposed.
PG&E's lack of remorse is particularly evident in the section of its brief entitled "Severity of the Offense." Although PG&E commences that section of the brief with a statement of "regret" for the incident in San Bruno, the gist of PG&E's argument is "don't blame us." ... PG&E's statements of "regret" ring hollow in the face of this continuing lack of any sincere remorse whatsoever for the Company's past shortcomings. If there was ever any doubt about the need for a very large penalty in this case, any such doubt is removed by the unrepentant tone of PG&E's brief. It is time to throw the book at PG&E.
Hagan points out that the penalty is only about half what PG&E would need to spend to bring its gas pipeline network up to the minimum acceptable standards, but he also suggests that higher penalties paid by the company's shareholders would degrade PG&E's ability to maintain safe operations while it makes those long-overdue upgrades. In fact, PG&E might well decide it's getting off easy if the CPUC goes with Hagan's proposal. The City of San Bruno is urging that PG&E's shareholders be fined an additional $1.6 billion, which would go into the state's general fund, as a civil penalty. San Bruno has pointed out that PG&E will be gaining a tax write-off of about $900 million under the CPUC penalty proposal, and wants the equivalent amount to be paid as a fine to the state.
A pair of administrative judges will be rendering a decision on the CPUC fine in late summer. In the meantime, problems with PG&E's pipeline maintenance continue to surface: a state audit found earlier this month that the utility had never spent $50 million it had received to pay for upgrades to its residential pipelines in the decade before the San Bruno explosion.
So make that two large California utilities who now face multi-billion dollar costs as the result of failures in the old-school conventional energy generation and distribution system. Between SCE paying for San Onofre and PG&E paying for San Bruno, the next couple years may be unhappy ones for the Energy As Usual industry.