CPUC

By Jaxon Van Derbeken
Thursday, April 9, 2015 – Updated 9:14 pm

Minutes after the California Public Utilities Commission levied a record $1.6 billion penalty against Pacific Gas and Electric Co. on Thursday for the deadly San Bruno pipeline explosion, the state’s top regulator said the utility is still plagued by gas-system problems, shrugs off even the harshest sanctions and may be too big to operate safely.

Despite promising to make reforms after the September 2010 blast that killed eight people and leveled 38 homes, PG&E has been cited repeatedly in recent years for violating natural-gas safety regulations, commission President Michael Picker noted at the panel’s meeting in San Francisco.

“If PG&E is failing to establish a safety culture, and we continue to see more accidents and violations, what are our tools?” Picker said, pointing to a chart showing that safety citations skyrocketed in 2013.

“Is the organization simply too large — spread across a sizable portion of a large state, and encompassing diverse functions such as both gas transmission and gas distribution, as well as electric service — to succeed at safety?” Picker said.

Picker said the state’s lawyers would look into the question, and gave no details about what steps the commission might take. But he suggested that PG&E’s profitability made it immune, even to hefty penalties such as the one the utilities commission approved Thursday on a 4-0 vote.

Pipeline upgrades

The $1.6 billion sanction — the largest penalty against a pipeline operator in U.S. history — forces shareholders to pay for $850 million in pipeline upgrades. The company must also issue $400 million in rebates to customers and pay a $300 million fine to the state’s general fund.

PG&E said it would not appeal the penalty, which also requires it to set aside $50 million for safety measures and to pay for more rigorous auditing of its pipeline system.

Picker noted that after he announced the proposed penalty last month, PG&E’s stock rose 3 percent.

PG&E shareholders “simply may be abdicating their responsibility to hold their board of directors accountable to state laws and rules, knowing that we have an interest in limiting our sanctions to levels that they, as owners, can live with, so as to avoid impacts on ratepayers as well,” Picker said. “Capital markets, then, are treating fines and penalties as a cost of doing business.”

No accountability

He asked whether PG&E’s board of directors or executive officers “feel CPUC sanctions directly. Is there anyone there in the company who is accountable for the impact of our fines and penalties?”

Picker noted that Peter Darbee, “the CEO who held that position at the time of the San Bruno incident, and during cuts in funding for pipeline replacement and inspection programs, retired with a reported $38 million bonus. The president of PG&E at the time of the San Bruno incident (Chris Johns) is still the president. Who’s accountable?”

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