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PG&E, CPUC Face Heat Over Pipeline Replacement Funds

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Following a tour last week of the San Bruno pipeline blast site, which killed eight people and destroyed 38 homes in September, U.S. Transportation Secretary Ray LaHood says that hes called on congress to raise the maximum civil penalties against companies committing safety violations, boost the number of safety inspectors, and close the loopholes that allow pipeline owners to evade safety standards.

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“I’m asking for America’s pipeline owners and operators to take a good, hard look at their lines as part of a top-to-bottom review,” he told reporters and residents. “We want them to replace and repair those lines in poor condition as soon as possible.”

Also on hand for the tour with Secretary LaHood was Congresswoman Jackie Speier (D-San Francisco/San Mateo), who recently called on the California Public Utilities Commission to respond to news reports that Pacific Gas & Electric failed to spend authorized funding for pipeline replacement and instead used the money for other operational needs or kept it for retained earnings.

The CPUC confirmed that it had agreed to PG&E’s Gas Pipeline Replacement Program (GPRP) in late 1987 and says the program was envisioned by PG&E “as a major program to replace all old lines constructed prior to the enactment of state and federal regulations governing the construction of pipeline systems over a 30-year time period.”

PG&E requested and was granted three rate increases for this program from 1987 to 1995 and the CPUC says in a response to Representative Speier that it had granted PG&E $183 million more in funds between 1987 and 1999 that was actually spent.

“This latest audit information underscores the critical need for the CPUC to closely monitor PG&E’s decision-making on the operation of its natural gas pipelines,” says Representative Speier in a press release. “PG&E is now required to file a safety report twice per year on its operation, inspection and replacement of pipelines with full scrutiny placed on how authorized money is spent. Obviously, this degree of monitoring didn’t exist when PG&E decided to forgo replacing aging pipelines in San Bruno in the early 1990s. In fact, PG&E decided not to replace the very pipelines it is now going to spend millions to hydro-test. It is tragic that it took a disaster that killed eight people to bring to light the ramifications of $183 million in under-spending.”

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