The state agency responsible for ensuring Pacific Gas and Electric Co. and other utilities operate their natural-gas systems safely has a two-year backlog of unfinished investigations, and its probes are often poorly documented and seldom result in penalties against the companies, a federal audit has found.
More than four years after a PG&E gas-transmission pipeline exploded in San Bruno, killing eight people and destroying 38 homes, the California Public Utilities Commission is dragging on its investigations of gas leaks and other problems with pipelines, said the U.S. Pipeline and Hazardous Materials Safety Administration.
The commission’s “organization of record-keeping, accessibility of records and inspection documentation” were all lacking when investigators looked at the agency’s files in August and September, according to the federal audit.
The annual audit helps determine how much federal funding the state is entitled to for its enforcement of U.S. pipeline laws. The utilities commission historically has lost federal money for not meeting staffing targets in its gas-safety division.
Staffing no longer appears to be a problem; since the San Bruno disaster, the utilities commission has added 25 people to its gas safety division, bringing the total to 34.
Costing the state
However, the problems that auditors spelled out — slow investigations, sloppy documentation and stalled enforcement action — are likely to cost California at least some of the sum it would otherwise get from Washington for pipeline-law enforcement. Last year, that total amounted to nearly $4million. Just how much the state will lose won’t be known until the federal agency completes its funding review.
Michael Picker, who was named to the utilities commission last year and became its president in December, said the federal audit “pointed out useful issues for us to work toward.”
“We are working on improving safety in all the industries we regulate, including rail and transportation safety,” Picker said in a statement. “The CPUC needs to step up its game and show that safety is our top priority.”
The commission says a reorganized inspection program and other changes should result in improved findings when federal auditors return this year.
The utilities commission came under fire after the San Bruno disaster for its regulation of PG&E’s gas operations, first by a blue-ribbon panel that the commission itself appointed, then by the National Transportation Safety Board. The safety board concluded in 2011 that both California and federal pipeline safety officials had failed to exercise oversight of PG&E, and that the company had taken advantage of that lax monitoring.
More recently, e-mails between a now-fired PG&E vice president and commission officials showed that the utility still had a sympathetic ear at the regulatory agency, at least when it came to rate-setting cases.
Commission President Michael Peevey, whose chief of staff was among those promising to help PG&E in a $1.3 billion rate case, retired soon after PG&E made the e-mails public. Picker said in a recent interview with KQED radio that he did not think the commission was too close to the utility.
A letter last month from Alan Mayberry, the federal pipeline agency’s deputy associate administrator, describing the new audit concludes that California’s post-San Bruno enforcement is “improving, but there remains important work to be accomplished.”
Records problems that federal investigators identified in 2013 showed “absolutely no improvement’’ in 2014, the audit said. The federal review of five sample pipeline incidents from 2013 showed the agency lacked documentation in all of them and that none had been resolved.
Three of the incidents involved PG&E: a case in which the utility had overpressurized a pipeline in Arvin (Kern County), an incident in which a contractor dug into a pipeline in Firebaugh (Fresno County) and a case in which a farmer struck a line in San Ardo (Monterey County).
The audit found the June 2013 Arvin event was not properly logged in the agency’s database, and that the Firebaugh case had languished since it occurred in August 2013 despite inspectors having found suspected violations by PG&E in March. The agency conducted no follow-up investigation in the November 2013 San Ardo incident, the federal audit said.
“Inspection notes were not included in many of the inspection files … and records were difficult to analyze,” the audit said. In some cases, investigators reported, the written records were barely legible.
The federal review said the utilities commission had found violations and started “various compliance actions” against utilities over the last two years, but that many of the cases were unresolved.
“While it appears progress is being made, there is still a lack of compliance resolution within a reasonable time frame,” the audit said.
One area where the audit found fault with state regulators was a persistent problem with contractors who dug into gas lines.
In November, just after the auditors finished their probe, the state commission staff finally acted against PG&E in several incidents in which construction crews, misled by faulty pipeline records, caused gas leaks or other problems. The agency’s staff also levied a $10.8 million fine against PG&E stemming from a gas explosion that destroyed a cottage in Carmel in March.
The investigative report showed that the utilities commission knew that faulty records were to blame for a July 2013 incident in Mountain View in which a PG&E crew misled by a bad map caused a gas leak. However, the agency had not completed its report on that incident before a utility crew, also misled by a bad map, caused the gas leak that blew up the Carmel cottage.
State Sen. Jerry Hill, D-San Mateo, said the issues with the state’s regulation of PG&E and other utilities are not going away.
“This is not unexpected — the organizational problems are not new,” Hill said. “We have seen them for years with no improvement. I expect, and public safety demands, that PUC’s new leadership and management will finally give these problems the attention they require.”
Mark Toney, executive director of The Utility Reform Network customer advocacy group, said Picker needs to act.
“It is the responsibility of President Picker and the rest of the commissioners to exercise the leadership necessary for the PUC to complete these inspections and investigations,” Toney said, “and hold the gas companies responsible for safe and reliable pipelines.”
Jaxon Van Derbeken is a San Francisco Chronicle staff writer.