The California commission accused of growing too close to Pacific Gas and Electric Co. on Thursday approved an 85 percent jump in the amount of money the utility collects from customers to spend on its natural gas pipelines, saying the money would fund badly needed safety work.
The 4-0 decision by the California Public Utilities Commission comes even as PG&E stands trial in a federal court for criminal charges related to the deadly 2010 explosion of a natural gas pipeline under San Bruno.
Under the decision, the amount PG&E collects each year to fund its gas transmission and storage system will rise in stages, from about $715 million in 2014 to $1.324 billion in 2018. While the increase is substantial, PG&E had wanted more, asking the commission for $1.5 billion.
“Although the rate increase is large, this is about work we believe is necessary to the safety and reliability of the system,” said Commissioner Catherine Sandoval.
$6 rise in average bill
Gas transmission and storage charges are just one component of PG&E’s monthly gas bills, which also cover the wholesale cost of gas that customers use.
As a result, customers’ bills will rise following Tuesday’s decision, but by a smaller percentage. According to the commission, the average monthly residential gas bill will increase from $50.89 last year to $56.79 in 2018.
The money will pay for replacing some aging pipelines, pressure-testing others, installing automated safety valves and making more of the network suitable for inspection by “pigs” — robot probes that travel through the inside of a pipe.
“While we don’t agree with all aspects of the commission’s decision, we want our customers to know that the dedication to our mission of becoming the safest, most reliable gas company in the country is as strong as ever,” said PG&E spokesman Donald Cutler.
The bill increases may end up being less than the commission forecast on Thursday.
When the same panel last year imposed a record $1.6 billion penalty on PG&E for the San Bruno blast, the commissioners specified that $850 million of that penalty should go toward pipeline safety work. Some of the increased pipeline spending approved Thursday will be offset by that $850 million, with the specific details to be hashed out in an upcoming series of hearings.
Increase spread out
The commissioners called Thursday’s decision a balancing act, acknowledging the impact on PG&E’s customers while insisting PG&E’s immense system of pipelines and storage facilities needs upgrades and increased inspections. To minimize “rate shock,” the commission stretched out the timeline for the increases as well as for some of the work.
The commission also forced PG&E to cover some of the costs that the company wanted to pass on to its customers. That last element of the decision followed a scandal that delayed Thursday’s votes and tarnished the reputations of both the commission and PG&E.
Following the San Bruno explosion, which killed eight people and destroyed 38 homes, PG&E submitted a request in December 2013 to raise the amount it would collect for pipeline work over three years — 2015, 2016 and 2017. But in 2014, emails disclosed by PG&E showed that company executives had lobbied some commissioners to influence which CPUC administrative law judge would handle the gas-rate case.
Florio recused himself
Those revelations cost two top PG&E executives their jobs and forced one commissioner — Mike Florio — to recuse himself from Thursday’s vote.
While the final decision gave PG&E less money than the utility requested, it angered consumer advocates.
The utility, they say, long scrimped on maintenance and upgrades to help boost its profits, and customers shouldn’t bear the cost of catching up on overdue work. Meanwhile, the number of PG&E customers disconnected for not paying their bills has risen steadily for years.
“According to federal prosecutors, PG&E’s pipeline neglect was driven by greed for higher profits,” said Mark Toney, executive director of The Utility Reform Network. “Those profits came at the expense of customers’ safety and now should be put back into the system in order to reduce the risks created by PG&E’s greed.”
His organization argues that, based on the commission’s own data, the average monthly residential gas bill will likely rise to $59 in 2018 due to Thursday’s decision. PG&E, meanwhile, forecast a $7 per month increase during the same period — close to the commission’s estimate.