More confusion at the CPUC
The California Public Utilities Commissionhas returned $375,000 that Pacific Gas and Electric Co. paid as a natural-gas safety penalty, after regulators realized that accepting the money could jeopardize their effort to fine the utility as much as $2.5 billion for violations stemming from the San Bruno pipeline disaster.
The commission’s safety enforcement division imposed the fine earlier this month in response to a 2012 audit concluding that for more than four decades, PG&E lacked a legally required procedure to systematically monitor its gas-transmission pipelines for problems such as leaks and improper pressure levels.
Without a “unifying” system, PG&E’s gas-safety practices were “disconnected and did not result in effective” monitoring of its major pipelines, the safety division said. PG&E promptly paid the fine.
On Friday, however, the agency’s safety arm sent a letter to PG&E withdrawing the citation, along with a check from the state treasurer for $375,000.
The problem for the utilities commission was that many of PG&E’s gas-safety shortcomings have been at the center of exhaustive hearings into practices that contributed to the September 2010 explosion of a transmission pipeline in San Bruno. The blast killed eight people and destroyed 38 homes, and PG&E is facing as much as $2.5 billion in fines.
Commission legal-division attorneys involved in the San Bruno case were unaware of the $375,000 fine before the safety division issued it. They told attorneys for other parties in the San Bruno case that it could trigger a form of regulatory double jeopardy.
In a statement Friday, the commission said it was returning the check to prevent any “confusion” between the conduct that prompted the $375,000 fine and the San Bruno case.
But dropping the citation and returning the money may not eliminate the utilities commission’s problem. Attorneys for parties involved in the San Bruno case said PG&E could point to the lower fine in arguing that a multibillion-dollar penalty for the disaster, which stemmed from many of the same gas-system deficiencies, would be excessive.
“This episode is the type of backroom dealing that threatens to derail all of the commission’s work to enforce pipeline safety laws,” said Tom Long, lawyer for customer advocacy group The Utility Reform Network, which is a party in the San Bruno case.
PG&E spokesman Greg Snapper declined to comment on the matter Friday, referring questions to the utilities commission. Harvey Morris, the lead attorney for the commission’s San Bruno litigation team, also declined to comment.
San Bruno worried
City Manager Connie Jackson of San Bruno, whose attorneys were briefed about the snafu by the utilities commission, said the possibility that PG&E will use the smaller fine to try to escape a bigger penalty is “exactly what we’re concerned about.”
“PG&E ran right down and paid the fine and stipulated, in some sort of endorsement, that this will be viewed as settlement” of the violations cited in the 2012 audit, Jackson said. “I think there is every reason to believe that they will make a claim” that the fine should preclude a larger penalty for the San Bruno disaster.
Joe Como, head of the customer advocacy arm of the Public Utilities Commission, said the safety division should have alerted state attorneys dealing with the San Bruno disaster to the $375,000 fine. “If the attorneys had seen it, then we wouldn’t be in this predicament of having to worry about this,” he said.
Jackson said the episode shows that state regulators “don’t even understand what they are doing and why they are doing it. It’s just inconceivable that we would be in the middle of this proceeding and all of a sudden this pops out of the woodwork.”
State Sen. Jerry Hill, D-San Mateo, whose district includes the San Bruno neighborhood damaged in the 2010 explosion, called the affair an example of the utilities commission’s general ineptitude. He said the fact that at least some regulatory staffers would consider the $375,000 sum a proper fine for 41 years of violations suggests “they don’t know what they are doing.”
“No one is really thinking about the effects of what they do,” Hill said.