Feds Blast PG&E and Utilities Commission

CPUC and PG&E faulted for failures leading up to San Bruno explosion

Why it took two deadly gas pipeline explosions for Pacific, Gas and Electric and the California Public Utilities Commission to admit complacency is the subject of a scathing report just completed by the National Transportation Safety Board.

Utility customers and victims of the explosions have been asking for investigations into the cozy and often interchangeable relationship between the regulator and utility, particularly in the aftermath of the San Bruno devastation, and revelations of PG&E’s many safety violations.

But will this latest report become just another exercise in futility, or a diversion measure, as do most reports involving regulatory agencies and the companies they are charged with overseeing?

The NTSB was very critical that there are no systems in place at PG&E to identify who the decision makers were, or who was responsible for allowing pipelines to essentially rot.

If any other business in the state were responsible for the deaths of nine people and millions of dollars of property damage, heads would roll and attorneys would be lining up for the public flogging.

After the December 2008 gas explosion in Rancho Cordova, and then the 2010 San Bruno pipeline explosion, CPUC President Michael Peevey admitted that the regulator had to take “a very hard look at PG&E as well as ourselves.” Peevey said that the CPUC had fallen into a “culture of complacency” and a pattern of just “checking the boxes.”

The mea culpa was a nice change of tone for Peevey. But it also appears to be the only change, even with nine people dead because of apparent gross negligence.

But many are still asking who will ultimately pay for the deaths, injuries and devastating property destruction.

The First Report

The CPUC created an independent review panel of industry experts  to investigate the explosion in San Bruno. Pipeline integrity management was the primary focus of its report. “As a result of our investigation, the Panel concludes the explosion of the pipeline at San Bruno was a consequence of multiple weaknesses in PG&E’s management and oversight of the safety of its gas transmission system,” the panel wrote. The panel even found that PG&E had provided incorrect pipeline data.

The damning report also identified “five factors as contributing to a dysfunctional culture at PG&E: excessive levels of management, inconsistent presence of subject matter expertise in management ranks, appearance-led strategy setting, insularity, (and) overemphasis on financial performance.”

It would appear to anyone reading the report that the CPUC has allowed PG&E to operate with little accountability and perhaps only cursory oversight.

And now the NTSB has concluded much the same.

NTSB Report

The report states that the NTSB found “that PG&E lacks a detailed and comprehensive procedure for responding to large-scale emergencies such as a transmission pipeline break, including a defined command structure that clearly assigns a single point of leadership and allocates specific duties to supervisory control and data acquisition staff and other involved employees. PG&E’s supervisory control and data acquisition system limitations caused delays in pinpointing the location of the break. The use of either automatic shutoff valves or remote control valves would have reduced the amount of time taken to stop the flow of gas.”

The NTSB said that PG&E had poor quality control during the pipe installation and inadequate emergency response.

The investigation also determined that “the California Public Utilities Commission, the pipeline safety regulator within the state of California, failed to detect the inadequacies in PG&E’s integrity management program.”

What has to happen next? With the independent review panel’s scathing report about the San Bruno explosion, and now the NTSB’s damning findings, what happens next? Will anyone ever be held accountable?

If these were “regular” businesses, lawsuits would be filed, regulators would go after the CEO and board and people would be fired and sent to prison. Imagine if the deaths and property damage was caused by a tobacco or drug company, or a manufacturing business.

Yet many in the state are asking what the next legal step should be in resolving the destruction and deaths caused by the gasline explosions, since the CPUC is as culpable.

Contributing to the accident were the exemptions by the California Public Utility Commission’s and the U.S. Department of Transportation of existing pipelines from the regulatory requirement for pressure testing, which likely would have detected the installation defects. Also contributing to the accident was the CPUC’s failure to detect the inadequacies of PG&E’s pipeline integrity management program.

But the real failure is with politicians who have had no problem regulating businesses over such petty issues as using paper or plastic shopping bags. This week a bill was introduced which would force parents to pay babysitters minimum wage as well as workers compensation insurance.

Ridiculous and expensive laws have been introduced to regulate the use of fitted or flat sheets, Styrofoam food containers, trans-fats, house pets, designer knockoff purses, parking and even food handouts at farmers markets. Politicians have imposed strict “green” building codes, and ridiculous levels of renewable energy mandates. Politicians have proposed fining parents $2,000 if children miss too much public school, and imposed prison sentences for parents who school kids at home. But rapists, murderers and child molesters are to be set free if they have a “disability.”

Policy Inequities

The inequities are staggering. PG&E, which is responsible for providing gas and electricity for millions of Californians, and was found to be at fault for the San Bruno and Rancho Cordova explosions and deaths, has not made significant changes to its management structure, nor have any heads rolled.

Instead, according to The Utility Reform Network, “PG&E charged its customers $5 million to fix a gas pipeline under San Bruno in 2009, but delayed the work citing other priorities. The company then spent $5 million on executive bonuses.”

TURN reported that PG&E has agreed to pay a $3 million fine for failing to provide its pipeline records. But there are already rumors about plans that the utility has to apply to the CPUC for rate increases to pay for pipeline upgrades.

The free market only works when the rules apply to everyone. State government has not applied its own laws, rules and regulations evenly, allowing the largest utilities to get away with negligence.