Time for New Leadership at the PUC

A year ago almost to the day, California and the entire country watched in shock and horror while giant flames severely damaged the Crestmoor neighborhood in San Bruno and the lives of its residents

A year ago almost to the day, California and the entire country watched in shock and horror while giant flames severely damaged the Crestmoor neighborhood in San Bruno and the lives of its residents. Since then, revelations of PG&E incompetence and regulatory laxity have continued to stun the public. Those culminated in the damning report by the National Transportation Safety Board last week, pointing to major deficiencies in PG&E’s pipeline safety program as the cause of the destruction.

The board’s investigation revealed not only that PG&E negligence caused the blast that killed eight, but also that regulators bore responsibility as well. The report makes it clear that change is needed at PG&E and at the California Public Utilities Commission. Gov. Jerry Brown has begun to make changes with his recent appointments, and now can complete the task by appointing a new commission president.

President Michael Peevey, a former utility executive, has exercised leadership at the agency for close to 10 years now, years in which PG&E has seen profits, executive pay – and the number of serious accidents – soar. On Peevey’s watch, repeated and serious gas safety violations by PG&E did not result in a single fine.

"Our (San Bruno) investigation revealed that for years, PG&E exploited weaknesses in a lax system of oversight," NTSB Chair Deborah Hersman said. "We also identified regulators that placed a blind trust in the companies that they were charged with overseeing, to the detriment of public safety." The board found that exemptions from pressure testing and failure to detect and correct flawed pipeline integrity management programs had contributed to the accident.

It was even more troubling to learn that the CPUC had failed to wake from its lethargy after a homeowner was killed in an explosion in Rancho Cordova in 2008. An NTSB investigation had blamed substandard pipes and poor emergency response procedures for that deadly blast. As NTSB Commissioner Robert Sumwalt pointed out, "If our recommendations had been followed after Rancho Cordova, San Bruno may have been prevented."

The root of the problem is that for the past decade, the CPUC has been guided by a misguided philosophy – regulation in the corporate interest. The commission has rubberstamped millions in unjustified rate hikes, pushed PG&E into spending billion on an unpopular smart meter program that so far has delivered no benefit and allowed energy efficiency to become a utility slush fund, while insulating PG&E from its mistakes with guaranteed high profits. Granted, Peevey has presided over some new and needed environmental initiatives, but that doesn’t justify his continuing as president.

What Californians need is a CPUC guided by the philosophy that puts customers first-regulation in the public interest. Regulators must provide stricter oversight and quality assurance while holding PG&E accountable for past failures. That means requiring shareholders, rather than ratepayers, to shoulder the entire cost when PG&E has to play catch up to fix pipelines that we’ve already paid for. And it means making sure PG&E doesn’t make one penny of profit on overdue pipeline safety investments.

The NTSB findings cry out for a response from Gov. Brown. Just days after the NTSB released its report, another explosion occurred on a PG&E gas line, this time in Cupertino. It is time for Gov. Brown to step in and replace Peevey with a president who prioritizes protecting the safety and pocketbooks of Californians over creating inflated profits and pay for utilities and their executives.