Friday, February 25, 2011

PG&E hikes cost of San Bruno disaster to up to $760 million

SAN FRANCISCO, Calif. - PG&E on Feb. 17 said its costs from the Sept. 2010 San Bruno natural-gas explosion could exceed $760 million by the end of this year - $150 million more than previous estimates - and that it will probably want some of that expense passed on to consumers.

The San Bruno disaster killed eight people and destroyed 38 homes.

PG&E officials stressed that the full cost of the San Bruno calamity won't be known until federal and state regulators have determined the accident's cause, the numerous lawsuits stemming from the blast are resolved and regulatory authorities clarify what improvements the utility will have to make to its gas system.

Some of those additional costs are expected to include the installation of automatic or remote shut-off lines for the gas transmission lines, since PG&E's crews had trouble shutting off two manual valves feeding gas to the San Bruno fireball. Based on PG&E's previous estimates, those valves could cost as much as $450 million.

According to PG&E's filing on Feb. 17, its costs through this year could total $400 million for liability claims and $363 million for other expenses, many related to improvements on its gas-line system and the search for records.

Much of that expense should be covered by the company's insurance policy, they said. But Kent Harvey, PG&E's chief financial officer, suggested that the company may ask the California Public Utilities Commission to pass on some of the cost to PG&E customers.

Of particular concern to the company is the cost it may incur from having to conduct expensive new tests on its pipelines. Because the SanBruno pipe ruptured at a pressure level below what PG&E had thought was safe, the commission fears the pressure level for other PG&E pipes also may be too high. It has ordered PG&E to produce inspection and other documents verifying that the pressure levels on its various gas lines are appropriate.

PG&E has assembled a small army of hundreds of workers to search for those records.

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