Pipeline safety? Haven’t we already paid for that?
Consumer advocates on Wednesday urged regulators to reject PG&E’s plan to saddle ratepayers with $2 billion for upgrades to its gas pipelines, saying the company should have completed the work long ago and in some cases, was already awarded ratepayer money to do it.
After the deadly 2010 explosion on a PG&E gas transmission pipeline in San Bruno, the California Public Utilities Commission ordered the state’s big three gas utilities to come up with plans to improve the safety of their pipelines.
PG&E wants to recover 90 percent of the $2.2 billion cost through customers’ bills.
Only the improvements needed because of the company’s failures in the past should be paid by PG&E shareholders, the company argues.
But consumer advocates attacked the plan, arguing that most of what PG&E is proposing to fix should have already been done or is needed because of the company’s poor record-keeping and pipeline maintenance.
Just last week the utility was fined $16.8 million for failing to check for leaks along 14 miles of smaller distribution pipelines in Contra Costa County due to faulty record-keeping. PG&E on Wednesday appealed the fine and at the same time, disclosed an additional 46 locations where distribution pipes were not regularly checked, including in Danville, Livermore, Orinda and Mountain View.
“The employees who worked on this exemplify the new PG&E because they didn’t just deal with the problem that was right in front of them — they expanded their search, alerted management immediately and came with a solution for the entire service area,” PG&E executive vice president for gas operations Nick Stavropoulos said in a statement.
Those problems and others should have been corrected long ago, countered Joe Como, acting director of the commission’s independent Division of Ratepayer Advocates.
“There is very, very little here that is new,” he said.
Como’s staff argued that since pressure testing gas transmission lines and keeping records of those tests have been the industry standard for more than 50 years, it should not fall to ratepayers to replace older pipes that were improperly maintained. The company should offset the costs of upgrading its pipelines by reducing management bonuses or shareholder earnings, the consumer advocates said.
“Sometimes they are overcompensated,” Como said. “That doesn’t mean when things are going bad, they can run to the commission. They have to take the bad with the good.”
The utilities commission is expected to approve gas pipeline safety plans by the end of the year, but the question of who should pay for PG&E’s plan has already become a hot topic.
PG&E says shareholders are already committed to pay more than $1 billion to address what it acknowledges were poor record-keeping and pipeline safety practices in the past.
“Any work we’re doing to correct past mistakes, all that work is going to be covered by PG&E shareholders,” said PG&E spokesman Brian Swanson.
The company also wants ratepayers to fund record-keeping improvements, though ratepayer advocates argue the company has been billing customers for record-keeping for years.
Como’s staff did agree with PG&E, however, that new requirements for automatic shut-off valves might be charged to ratepayers.
“We feel the burden of proof is on PG&E,” said Mindy Spatt, spokeswoman for The Utility Reform Network. “The only thing simple is the figure we think ratepayers should pay, and it’s zero.”