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State Entity Says PG&E Responsible for Gas Pipeline Safety Upgrade Costs

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The Division of Ratepayer Advocates (DRA), an independent consumer advocacy division within the California Public Utilities Commission, last week recommended that shareholders of Pacific Gas and Electric Co., not ratepayers, should fund the vast majority of the utility’s natural gas pipeline safety upgrade costs due to the company’s mismanagement of its pipeline safety programs.

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In August 2011, PG&E submitted a plan that it estimates will cost $2.2 billion for high-priority pipeline testing, repairs, and renovations over the next few years. PG&E has asked the CPUC for the authority to charge its customers $768.8 million for phase 1, which would fund safety upgrade measures to be implemented from 2012 to 2014.

On Jan. 31, the DRA submitted testimony concluding that much of the work required to make PG&E’s pipeline system safe is necessary because of the utility’s poor record-keeping and maintenance over several decades, a pattern uncovered by investigations into the San Bruno natural gas line explosion tragedy. The DRA recommends that PG&E not be allowed to increase rates to recover the costs incurred during this three-year period and that PG&E should seek other funding sources such as reducing management bonuses and reducing its shareholders’ earnings.

DRA said it also found that PG&E relied on incomplete and erroneous data for its pipeline modernization plan. While the DRA said it believes that PG&E should continue testing its pipelines and replacing them where necessary, PG&E should provide a long-term modernization plan based on up-to-date and complete data.

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