PG&E penalty payments should benefit customers not shareholders

Group: Penalty For PG&E Explosion Not Nearly Enough

Though regulators are insisting that Pacific Gas & Electric (PG&E) pay a record $2.25 billion in penalties for its role in a disastrous September 2010 gas line explosion in San Bruno, a ratepayer activist group says that doesn’t go nearly far enough. The Utility Reform Network (TURN), which has been watch-dogging California utilities for decades, says that PG&E should pay almost $1.7 billion in additional penalties.

As we reported yesterday, the Safety and Enforcement Division of the California Public Utilities Commission (CPUC) is recommending that PG&E shareholders cough up $2.25 billion to upgrade PG&E’s aging, neglected, and occasionally completely undocumented pipeline network across its Northern California territory. The San Bruno explosion, which killed eight people and injured more than 100, was traced to a substandard 30-inch gas pipeline that PG&E hadn’t maintained in years.

“In our view the CPUC’s proposal is in effect no fine at all,” TURN’s Communications Director Mindy Spatt told ReWire in an email Tuesday. “All the money would go to safety measures that the CPUC has ordered to be done on shareholder’s dime. So PG&E wouldn’t just get off easy, it would get off scot-free.”

In a reply brief filed with the CPUC on June 7, TURN proposed that PG&E be fined in a way that actually constitutes punishment for the company, as opposed to being forced to bring their infrastructure up to a safety standard that should be a matter of course. In that brief, TURN minced no words:

“The widespread, numerous and longstanding violations demonstrated in these cases cry out for the imposition of additional, incremental financial consequences on PG&E’s shareholders in a very large amount.”

What’s TURN asking for, specifically? A penalty of $1 billion that would be paid out to the company’s ratepayers, and an additional $670 million in fines payable to the state”s general fund.

Which isn’t to say PG&E wouldn’t be aying to make its pipelines safe: it needs to do so with or without a penalty. “It would negate the purpose of the penalties altogether to allow PG&E to pay for work the commission was forced to order because PG&E had failed to do it right the first time,” said TURN legal director Tom Long. “We hope the commission will not go soft on PG&E again.”