By Joe Como Following the San Bruno pipeline explosion of Line 132, the National Transportation Safety Board concluded that the probable cause of the accident was Pacific Gas & Electric’s inadequate quality assurance and quality control in 1956 that allowed a defective pipe weld to go unnoticed even though it would have been visible to the naked eye if PG&E inspectors had simply bothered to look. Maybe they did, but we will never know. The pipe that exploded, killing eight and destroying 38 homes, did not meet generally accepted industry quality control and welding standards at the time, indicating those standards were overlooked or ignored, according to the NTSB. Shameful revelations followed the accident. Line 132 was constructed in phases starting in 1944 and extends 46 miles from Milpitas to Daly City. PG&E knew of weld defects on Line 132 from three other seam leaks, going back as early as 1948. Many of its records needed for pipeline safety were either missing or wrong. And, although a 1955 voluntary consensus standard called for hydrostatic pressure testing of pipelines prior to being put into service, PG&E elected not to follow that standard. If it had, those eight people would be alive today because Line 132 would have failed that pressure test in 1956. Now, PG&E is demanding that customers foot the bill to correct deficiencies in its gas system as part of the Pipeline Safety Enhancement Plan called for by the California Public Utilities Commission. The San Bruno accident revealed the extent of PG&E’s nonfeasance in general and lack of responsible corporate culture on safety. Billions of dollars are needed to update records on pipeline characteristics, perform hydrostatic pressure tests where records do not exist, and replace pipes if that testing is too difficult. The utility’s pipeline integrity management program needs a complete overhaul from top to bottom. Plus, PG&E management wants customers to pay more than $9 billion of the cost to complete this safety overhaul. That is excessive and unwarranted. First, PG&E customers have already been paying for every safety-related component, apparatus, equipment, and personnel requirement for decades so that PG&E had the opportunity to build and maintain a safe and operative gas transmission network. Recordkeeping requirements, for example, have been in place since 1912. Hydrostatic pressure testing has been a standard since 1935. Under cross examination last week at the CPUC, even PG&E’s senior vice president for regulatory relations, Tom Bottorff, agreed that PG&E had received all the safety funding it asked for over the past 30 years of his career with the utility. The bottom line is that PG&E, like any U.S. business that handles a hazardous material or deals with the public and must maintain the public trust, has the duty to keep its enterprises safe. A second reason PG&E should not get ratepayer funding to fix its systemic problems is that it has failed to prudently invest ratepayer funds in pipeline integrity management as required by law. Section 451 of the California Public Utilities Code requires utilities to furnish “just and reasonable service, instrumentalities, equipment, and facilities as are necessary to promote the safety, health, comfort and convenience of its patrons, employees, and the public.” Only then can the utility charge for that service through rates. Regrettably, the National Transportation Safety Board found that PG&E’s pipeline integrity management program was “deficient and ineffective,” a far cry from the just and reasonable standard required for rate recovery. Finally, the often forgotten “regulatory compact” should be used to hold PG&E to its obligations and stop the utility from reaching into its customers’ pockets. The regulatory compact is the quid pro quo received by the monopoly utility in exchange for the right to provide exclusive utility service. It means that ratepayers must pay the adopted rates as long as the utility does what is necessary to provide safe and reliable service. The state affords the utility a reasonable opportunity of earning a fair return on investment that is commensurate with rates that it could command in a free market. PG&E does not enjoy a right to extract funds from its customers when the company is negligent any more than British Petroleum enjoys a right to charge the people of Louisiana for the Deepwater Horizon oil spill. PG&E was in the best position to manage its risks and had the responsibility to conduct itself as a responsible corporate citizen. PG&E must quickly determine the safety of its pipeline network and establish an integrity management program. It would be a mistake for the CPUC to allow customers to fund those improvements. No free market player would be able to charge its customers twice for the same service or to expect those customers to pay for its negligent acts. PG&E should not have that right either. --Joe Como, Division of Ratepayer Advocates Acting Director Edited By:
