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PG&E Fined $16.7M For Failing to Inspect Lines Countywide

Utility faces $2.7 million in fines for Concord violations, $3.4 million for Danville, among others.

The California Public Utilities Commission fined PG&E more than $16 million Friday for failing to conduct gas pipeline leak surveys on a stretch of pipeline throughout Contra Costa County.

PG&E said it was "surprised" by the $16.7 million fine, since the utility self-reported the problem to the state regulatory agency in December and has taken steps to survey the 14 miles of affected pipeline and repair the 22 leaks that were subsequently discovered on them.

The utility company apparently failed to conduct regular leak surveys of the affected pipelines because the utility's maps were not updated to accurately reflect new construction.

Two of a total 16 violations named in the citation correspond to failure to inspect maps in the City of Concord, according to citation documments. Those two violations alone account for $2.7 million of the total $16 million fine.

A total of $3.4 million correspond to two violations in Danvile. Other cities include Antioch, Pittsburg, Brentwood, Discovery Bay and areas of unincorporated Contra Costa County. 

"To receive a penalty this extreme for being open, transparent and accountable is disappointing," said Nick Stavropoulos, PG&E's executive vice president of gas operations. "In fact, members of the commission recently applauded the work our team did and the company's recognition of the employees who came forward."

While some of the new construction occurred within the past five years, in other places the violations date back to 1993, according to the CPUC citation.

"Because of the duration and seriousness of the violation and the numerous opportunities PG&E had to find these problems earlier, we concluded that a citation was warranted," said Michelle Cooke, interim director of the CPUC's Consumer Protection and Safety Division.

Today's citation is the first under a new program authorizing CPUC staff to issue fines without the approval of the commission.

The citation program, approved in December, is one of a number of changes the agency has made in response to the September 2010 San Bruno pipeline explosion, which killed eight people, injured scores of others and destroyed dozens of homes.

PG&E has 10 days to either pay the fine with shareholder dollars or submit an appeal.

The utility is reviewing the citation and fine to determine whether to appeal, spokesman Brian Swanson said.

- Bay City News and Adalto Nascimento contributed to this report.

Do you think the citation is fairly priced? Tell us in the comments.

Kathy D January 28, 2012 at 03:54 PM
Yes, I think it's fair. P G & E is a monopoly and thinks they can do anything they want to. My question is - will the fine be passed along to consumers? P G & E has already said that costs for the San Bruno explosion will be borne by consumers.
Adalto Nascimento January 28, 2012 at 06:07 PM
Kathy, Should the fine not be appealed, PG&E will have to pay it with shareholder money - so customers wouldn't have to pick up the tab. Whether the utility appeals it or not, it has 10 days to respond to the Public Utilities Commission. The fine is to be deposited in the State Treasury's General Fund, according to the citation documents (link is in the article for anybody who wants to read it). It sounds like there was a bit of a debate on customers picking up the tab in the San Bruno case. It appears that fines are paid for with company shareholder money, but subsequent upgrades companywide ($2.2billion worth or $1.93 per month for residential customers), were to be picked up by customers, according to San Bruno Patch articles. - Adalto, Concord Patch
Kathy D January 28, 2012 at 06:16 PM
Thanks, that information helped!
Bill Schilz January 29, 2012 at 03:22 PM
When you think about how PG&E violated the public trust and has risked the lives of its customers, all in the name of providing profits for shareholders, $16.7 million seems low to me. Don't get me wrong... I'm ALL for companies making profits, but not by sacrificing the safety of the public. The San Bruno fire was absolutely devastating and took eight lives. It could have been worse and there may be "ticking time-bombs" elsewhere because they chose to ignore the mandates that help ensure all of our safety. If it had been me, I'd have thrown a fine at them that would cause companies to think twice before ever cutting corners like PG&E did!
Sprtndad January 31, 2012 at 04:35 PM
Kathy, Yes. Ultimately, irrespective of the structure of the fine, consumers will pay the costs for any and all PG&E fines, levies, encumbrances, taxes (whatever you want to call them). In a competitive market the fine would be impactful. PGE has no competitor. They just roll along raising prices on all of us. I want to know where the fine goes? Who gets the money? What do they do with it? Anyone know? If it goes to the State then it becomes another tax on citizens.
Adalto Nascimento January 31, 2012 at 05:15 PM
@Spartndad - If the fine is not successfully appealed by PG&E, the $16,760,000 check has to be made to the California Public Utilities Commission. Once received, CPUC documents say the state gets the $ added to its General Fund (Education, transportation, Medicaid, operating costs, etc ...) Here's a breakdown of how California's 2010 General Fund was spent: http://www.statehealthfacts.org/profileind.jsp?rgn=6&ind=33&cat=1 Good questions, Spartndad. I'm not sure I understand your last sentence about taxes, though. How would the money become tax on citizens?
Sprtndad February 01, 2012 at 07:25 PM
Thanks Adalto. Figured the money was going to the State, just not sure where. My comment about tax is simply that fining a public utility has the same effect as a tax on citizens. CPUC could have fined PG&E 10x that amount but it's all the same - we pay it in higher utility bills. There is no competition so we have no choice. The real problem here is that the CPUC failed in their duties as regulators. Who is looking at what they did with this and the San Bruno fire BEFORE it happened? What are they doing???? We're spending a fortune on them and now more on fines.

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