When Gas Utilities Screw Up, Who Pays? And Who Profits?

For several months now, a leaking well at SoCal Gas’s Aliso Canyon field has been spewing methane gas into the atmosphere, literally poisoning every breath we take.

TURN and other public advocates will certainly advocate for meaningful mitigation measures, but the damage cannot be undone, and renders the many expensive state and local efforts to clean up our air moot.

SoCal Gas, and its ineffective parent Sempra, admit the end to this, the worse environmental disaster in California’s history, is far off- it could be another few months before the leak can be stopped. Recent press reports indicate SoCal knew the well lacked a shut off valve but had decided putting one there was not a necessity. In fact, SoCal may have known it was sitting on a ticking time bomb for decades.

That should be a red flag to regulators, especially after the fatal PG &E explosion in San Bruno. Numerous investigations into that explosion found it was caused, in part, by PG&E’s misclassification of a pipeline that was dangerously close to a residential community. In this case, proximity to a residential community apparently didn’t inspire SoCal Gas to take the simple and obvious step of installing a safety valve, or devising any other system for stopping a leak or responding to one.

Sempra and SoCal Gas, awash in profits, surely could have afforded the valve. The CPUC has consistently awarded SoCal Gas plenty of money, often under the guise of safety. Recent press reports claim SoCal Gas had requested and received funding for shut off valves at Aliso, although what that money was spent on is unknown.  TURN has advocated for the CPUC to hold utilities accountable for rate hikes awarded for safety purposes with some success, but the Commission has not gone far enough.

And although the CPUC has launched an investigation into the leak, vowing to protect consumers from the cost of this enormous fiasco, key details of that investigation remain murky. Holding consumers harmless will require the CPUC to break from its notoriously lax past and act quickly to demand far better from Sempra.

The Commission must be proactive in answering urgent questions, assuring the public that SoCal Gas will not be allowed to continue its inadequate safety practices in Aliso Canyon and elsewhere, and developing new ways to address the harm done to customers and the entire population of California.

Among the many urgent questions the public is demanding answers to are:

-How much gas has escaped and how will the CPUC ensure that Sempra repays customers for the lost gas?

-Why would SoCal Gas choose NOT to install a safety valve on this apparently at-risk well?

-How much of the money SoCal Gas has claimed it needed for shut off valves in the past was actually spent for that purpose?

-How can the environmental damage possibly be mitigated?

-How can customers be protected from secondary costs, including insurance premiums going up, and the activities of ratepayer- paid-for attorneys, executives and public relations staff.

-How much has SoCal Gas already received in guaranteed profits from this well? As we saw in the San Onofre debacle, utility returns on investment are protected even from utility mismanagement. But the Legislature or the Commission could lead efforts for a higher level of accountability and lower level of protected profits.

-Will the independent investigation the CPUC has ordered SoCal Gas to perform be truly independent?

-Will the CPUC’s own investigation be transparent?

The Commission will also have to address public anger over the lavish executive pay packages that come out of monthly gas bills. Under a new law going in effect this year, the Commission should not only review, but also hold hearings, before large bonuses can be awarded to executives responsible for putting the public’s safety at risk.

To get an idea of just how lavish those pay packages are, take a look at SoCal Gas’ report to the CPUC on its top tier employees. Debra Reed, the CEO of Sempra, costs gas customers a cool $4 million a year, and the deluxe retirement packages she and others enjoy are unimaginable to most Californians. And continue to grow almost as quickly as the noxious methane emissions we are all stuck with.