PG&E Plan: Customers to Pay for Pipeline Fixes

PG&E wants YOU to pay

A utility watchdog and state lawmaker have joined forces to urge the California Public Utilities Commission to reject a plan by Pacific Gas & Electric to have its customers foot most of the bill for about $5 billion in upgrades to its gas transmission pipelines across the state.

The company’s shareholders, not ratepayers, should pay for the fixes, Mark Toney, executive director at The Utility Reform Network, told the Daily Journal.

TURN and Assemblyman Jerry Hill, D-San Mateo, held a press conference outside a hearing in San Francisco yesterday to pressure CPUC officials to have PG&E come up with another way to pay for improvements to the system since it was negligent in keeping it safe.

“CPUC could order PG&E shareholders to pay for this,” Toney said yesterday.

Under PG&E’s Pipeline Safety Enhancement Plan the CPUC is currently reviewing, the utility could also reap a nearly $1.5 billion profit in return for making the capital investment. The CPUC is conducting an evidentiary hearing on the PG&E plan and commissioners are not set to make a decision on it any time soon, said CPUC spokesman Chris Chow.

The plan has customers paying for about 95 percent of the cost to fix the utility’s aging infrastructure over a 50-year period. Deficiencies to PG&E’s pipelines were exposed after a natural gas pipe exploded in San Bruno in September 2010 that killed eight and destroyed nearly 40 homes.

“PG&E’s bid to pretend San Bruno never happened is doubly self-serving, in that the company will reap huge profits from pipeline safety investments,” Toney said. “PG&E failed to manage and operate a safe gas transmission pipeline system even though they had the money to do so and even though the company was booking generous profits.” 

For each $1 in pipe the company places in the ground under its safety plan, ratepayers would pay more than $3.50, according to Hill’s office.

“PG&E customers pay their gas utility bill each month assuming they’re getting a safe, well-managed service. They shouldn’t have to pay PG&E 50 years of higher utility bills for service they should have been receiving all along,” Hill said.

The utility has nearly 5,800 miles of gas transmission pipes in the state it plans to have assessed by the end of 2015. Its safety plan calls for pipeline modernization and installing automated valves in highly-populated areas as well as to consolidate its pipeline records electronically.

The utility’s “new” safety program is a result of “new” regulatory requirements “that are unparalleled in the country,” according to a policy paper presented to CPUC officials by PG&E.

If the CPUC approves PG&E’s plan, rates will go up in 2012 by 4.26 percent, according to the policy paper.

But Toney contends the new regulatory requirements are based on PG&E’s past failings.

The San Bruno tragedy shined a light on PG&E’s entire system, Toney said.

“The systemwide problems were found by the National Transportation Safety Board after San Bruno,” Toney said. 

The $70 million settlement PG&E just made with the city of San Bruno was paid for by shareholders and not ratepayers, Toney said. Shareholders should also pay for improvements to the overall system, he said.

Ratepayers cannot be billed for utility errors and omissions, Toney said.