PG&E’s $2.2 billion pipeline plan triggers outrage
PG&E on Friday unveiled an extensive pipeline modernization plan that would cost $2.2 billion over the next four years—an effort to prevent another disaster like the one that incinerated San Bruno last year.
But the company outraged consumer advocates and elected officials by proposing that customers pick up 90 percent of the expense.
The plan—which calls for overhauling 20 percent of PG&E’s pipeline system by inspecting hundreds of miles of aged pipe, replacing other gas lines and adding automated valves to shut off gas in emergencies — must be approved by the California Public Utilities Commission. PG&E said it also plans additional pipeline upgrades after that, but did not detail the cost.
The company estimated the expense through 2014 at $2.18 billion, with its customers responsible for $1.96 billion. It expects to bill them $769 million through 2014. That would increase a typical residential gas customer’s monthly bill by $1.93 to $47.16, the company said. The rest of the expense would be billed to PG&E customers over 40 years, according to company spokesman David Eisenhauer, but he said it would be difficult to calculate how much that might add to an average bill.
The proposal triggered vehement denunciations.
“It’s outrageous that the public would be asked to pay 90 percent of the cost,” said Assemblyman Jerry Hill, D-San Mateo. “They have neglected those lines for 50 years.”
While “the scope of the work looks good,” according to Hill, a licensed contractor, he vowed to closely follow the process and work to make PG&E shareholders pay a greater percentage of the cost.
As a public utility, PG&E is sometimes allowed to bill customers for its costs, while other times it must pass expenses on to its shareholders.
“The plan looks great on its face,” added Rep. Jackie Speier, D-San Mateo, “but it’s five to 10 years too late. And the shareholders need to bear a major part of the cost. A lot of this is needed because PG&E cut corners, and increased shareholder profits over the past 20 years by not doing certain things.” Consequently, she said, “you can’t just dump it all on the ratepayers.”
Mindy Spatt, a spokeswoman for The Utility Reform Network, a consumer group based in San Francisco, agreed.
“Shareholders need to pony up more money on this,” she said.
But PG&E defended the plan, noting in its regulatory filing with the PUC that it “will significantly enhance the integrity and operating safety margin of PG&E’s natural gas transmission system and restore public confidence” in its sprawling network of underground pipelines.
“This is not an incremental improvement,” added Nick Stavropoulos, the company’s executive vice president of gas operations in an interview with this newspaper. “It’s an order of magnitude change.”
Under the proposal, PG&E plans between now and 2014 to overhaul more than 1,000 miles of gas transmission pipes out of the 5,786 total miles it operates in Northern California between Bakersfield and the Oregon border.
That would include replacing at least 186 miles of pipe, inspecting 243 miles of gas lines with robotic devices called pigs, retrofitting 199 miles to accommodate pigs and assessing the strength of 783 miles of pipe that have older weld technology or other potentially troublesome characteristics.
Responding to pressure from political leaders such as>Sen. Dianne Feinstein, D-Calif., and Speier, PG&E also proposed installing 228 automatic or remotely controlled gas shut-off valves in critical urban areas, particularly near earthquake faults.
That would help avert the problem PG&E encountered during the Sept. 9 San Bruno explosion, where it took about an hour and a half for its crews to manually shut off gas to the inferno. Through 2014, PG&E proposes installing 21 of the valves in San Jose, 68 on the peninsula, 26 in the Oakland-Fremont-Livermore areas and 37 from Antioch to Richmond.
Additional money would be spent to upgrade PG&E’s computerized gas-control system. An electrical glitch in that system caused a brief surge in gas just before the San Bruno pipe erupted, killing eight people and destroying 38 homes. Part of the system’s improvement would involve training its operators “to help them quickly detect and respond to pipeline ruptures,” PG&E said in its filing.
Still another improvement would involve moving all of the company’s paper pipeline documents onto two electronic information systems. In the aftermath of the San Bruno disaster, the company has been intensely criticized for its inability to locate many of its gas-line records.
Stavropoulos noted that the company’s plan may have to be modified depending on what recommendations for improving gas-line safety are offered Tuesday by the National Transportation Safety Board, when the federal agency is scheduled to announce the results of its investigation into the San Bruno catastrophe.
While the improvements in PG&E’s plan center on its gas transmission lines, since those are the type that ruptured in San Bruno, Stavropoulos said its possible the company also may later offer a similar plan to upgrade the company’s more extensive network of distribution lines, which feed gas to individual homes and businesses.
He added that he is eager for the PUC to approve the company’s pipe-improvement plan. PG&E already has started work on it, he said, and “we don’t want to be too far down the road” making the changes if state regulators oppose them.
PUC spokesperson Terrie Prosper promised that the proposal would “be given a full public vetting and careful consideration by the commission.”