Safety and Enforcement Blog

CPUC President Proposes $1.6 Billion in Remedies in PG&E Pipeline Cases

(Natural Gas Pipeline Safety, Utility Enforcement) Permanent link

The CPUC has issued a proposal by President Michael Picker that would penalize Pacific Gas and Electric Company (PG&E) $1.6 billion in connection with the investigations of PG&E’s operations and practices related to gas transmission, including the pipeline rupture in San Bruno, Calif., in 2010.  The proposed penalty amount is $200 million higher than a previous recommendation by Administrative Law Judges and includes an $850 million shareholder penalty toward gas transmission pipeline safety infrastructure, a $300 million fine, and a one-time $400 million bill credit spread across PG&E’s gas customers.

On September 2, 2014, two Administrative Law Judges issued proposed decisions establishing the number of violations in connection with each investigation and recommending a $1.4 billion penalty based on the total number of violations. The decisions were appealed and today CPUC President Michael Picker issued an alternate penalty proposal (called a proposed Decision Different) increasing the penalties and remedies to $1.6 billion, shifting the bulk of the penalty from the state’s General Fund to safety in the ground. As such, the $1.6 billion penalty directs $850 million from PG&E shareholders toward safety improvements, assesses a $300 million fine to the General Fund, orders a $400 million bill credit, and directs approximately $50 million towards other remedies.  When added to the disallowances already adopted in a prior CPUC Decision, the penalties and remedies would exceed $2.2 billion.

The Administrative Law Judges also proposed revisions to their decisions (called Modified Presiding Officers’ Decisions) today, keeping the $1.4 billion penalty in their original proposed decision but, like President Picker’s proposed Decision Different, requiring that a $400 million disallowance be returned to PG&E consumers as a one-time bill credit.  When added to the disallowances already adopted in a prior CPUC Decision, the penalties and remedies would exceed $2 billion. 

A comparison of the proposals follows:

 

Original ALJ Proposed Decisions Issued 09/02/14, which were appealed

Administrative Law Judges’ Proposed Modified Decisions Issued 03/13/15

Proposed Decision Different of President Picker Issued 03/13/15

Fine to California General Fund

$950 million

$950 million

$300 million

Disallowance/Bill Credit

$400 million disallowance

$400 million bill credit

$400 million bill credit

Remedies to Enhance Pipeline Safety

$50 million (est.)

$50 million (est.)

$50 million (est.)

Shareholder Gas Safety Improvements

 

 

$850 million

 

Penalties and remedies assessed against PG&E must be paid by shareholders and are not recoverable from PG&E’s customers. 

 More information

 

CPUC Enlists Third-Party Experts to Help Set New Safety Path for Pipeline Regulation

(Natural Gas Pipeline Safety, Utility Enforcement) Permanent link

The CPUC today announced it had enlisted third-party experts to assess the strengths and weaknesses of its gas safety and reliability programs and is making needed improvements in order to create a first-class safety regulatory program.

Following Pacific Gas and Electric Company’s pipeline rupture in San Bruno in 2010, an Independent Review Panel recommended that the CPUC undertake an independent assessment of its gas safety and reliability functions. The CPUC enlisted consulting firm Crowe Horwath to conduct such as assessment over the past year with a forward-looking focus in order to identify opportunities for improvement in management and operations.

 “Safety is our number one priority. It is essential that we take an independent and thorough look at our processes in order to understand the strengths and weaknesses of our gas safety and reliability programs to identify realistic solutions,” said Elizaveta Malashenko, Director of the CPUC’s Safety and Enforcement Division. “We have begun implementing the recommendations, and are working through the state budget process to determine appropriate resources. We recognize that fully implementing many of these improvements will require long-term efforts such as modern IT systems and expanded training.”

The assessment details 12 opportunity areas for the CPUC’s gas safety and reliability functions, and provides 33 recommendations to address those challenges. The challenges include past frequent management changes and shifting priorities, inadequate database systems, delays in completion of investigations and inspections, inconsistent staff training and alignment, and limited ability to perform trend analysis.

Improvements already underway to the gas safety and reliability functions include:

  • Completed 39 backlogged inspections.
  • Completed 343 backlogged incident investigations.
  • Re-organized staff to better align resources.
  • Re-designed inspection/audit process to allow for more in-depth audits.
  • Re-designed incident investigation process by establishing a four-tier investigation structure.

The report and a summary presentation are available on the CPUC's website.