PG&E Fined $14.75M for Bad Gas Records

By Published On: December 20, 2013

The California Public Utilities Commission unanimously voted to fine Pacific Gas & Electric an unprecedented $14.75 million Dec. 19 for failing to promptly correct significant errors about the status of natural gas pipelines running through two Bay Area cities. The penalty “is designed to serve as a deterrence of future violations,” said commissioner Mark Ferron, who authored the decision. He said it aims to reinforce the requirement of “forthright and timely disclosure by utilities.” PG&E called the fine "excessive." It acknowledged that its communications "fell short of expectations” and it’s “committed to improving the way that we communicate to meet the commission’s expectations for the timely flow of information in every instance." Ferron complained that the utility waited months to inform regulators about the known pipeline data error and then chose an inappropriate method to inform them. PG&E was found in violation of commission’s rules “by not correcting promptly a material misstatement of fact” as well as “mischaracterizing the correction submitted for filing on July 3, 2013 as a routine and non-substantive correction,” states the approved alternate ruling. At issue is the type of pipe, specifically whether it was seamless. That affects how much pressure a pipe can safely manage. In October 2012, while investigating a pipe leak in San Carlos, a PG&E engineer found significant discrepancies in the pipe records. It was not seamless as stated in utility records. PG&E took almost a year to rectify records. The ruling states that pipeline integrity must get “the full and undivided attention of every member of the PG&E senior management team.’ It adds, “The only acceptable response is one which is rapid, complete and in good faith.” The initial fine was $17.25 million but it was cut by $3 million before being approved on Thursday. A smaller fine of $6.75 million proposed by an administrative law judge failed. “There is an utter lack of trust in the community,” said regulator Mike Florio. PG&E also faces a fine of up to $2.25 billion for failures that led to a gas blast in San Bruno in September 2010, which killed eight and destroyed three dozen homes. In a related matter, the commission voted to lift restrictions on the maximum pipeline operating pressure of the same San Carlos area pipeline. This line 147 has been operating at 125 lbs. per square inch, a distribution pressure level, not the standard major transmission line pressure. Operating the pipeline at 330 psi entailed “a balancing of risks,” Florio said. “Not allowing a maximum flow of 330 lbs psi could result in shortage of gas to serve the northern peninsula.” Mark Ferron supported the decision noting that it was with “a very skeptical eye.” He added, “PG&E was at best insensitive at worst arrogant” towards San Carlos. Commissioner Carla Peterman said she was uncomfortable with the commission voting on gas pipeline pressures because the regulatory process is “too slow” and lacks timely detailed information.

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