PG&E may be assessed $26 million fine for 2008 natural gas explosion

SAN FRANCISCO, Calif. - State regulators might finally penalize PG&E $26 million for a deadly pipeline explosion that occurred nearly two years before the blast in San Bruno.

On Christmas Eve 2008, a pipeline exploded in the Sacramento suburb of Rancho Cordova, killing one person and injuring five others. A federal investigation into the incident revealed that PG&E was in violation of several safety requirements.

Despite those findings, the California Public Utilities Commission (CPUC) only opened a penalty case against PG&E in December 2010, after the San Bruno explosion had brought pipeline safety under close public scrutiny.

Now, CPUC staff has announced a settlement that would fine the utility $26 million in shareholder funds for its failure to comply with safety regulations. The settlement must still be approved by the full commission.

PG&E admits it can't fill California PUC order for pipeline records

SAN FRANCISCO, Calif. - Pacific Gas and Electric Co. told California regulators on April 21 that it will never find documents for some of its older gas pipelines, and that if the state doesn't accept "assumptions" about some pipes, the company will have to spend five years shutting them down and hydrostatically testing them.

In a filing with the California Public Utilities Commission, PG&E said it cannot satisfy a state order to come up with "traceable, verifiable and complete" records on all 1,800-plus miles of its pipeline in and around urban areas.

The commission issued the order after it was revealed that PG&E's records incorrectly described as seamless the San Bruno pipeline that exploded Sept. 9, killing eight people and destroying 38 homes. Federal metallurgists have concluded that the pipe failed at a seam weld, but PG&E never conducted inspections that might have detected the problem weld.

PG&E couldn't come up with records for more than 600 miles of gas transmission line by the state's March 15 deadline and has proposed that it pay a $3 million fine while it produces additional documentation by August. The utilities commission is still considering the deal.

In its April 21 filing, PG&E called the order for complete records "unprecedented" and said that full documentation would be a "very difficult, if not infeasible, threshold to achieve."

Before the March 15 deadline, the company enlisted hundreds of employees to search through more than a million boxed documents, looking for records to back up PG&E's stated safety levels on pipelines.

Instead of complete records, PG&E said, it wants the commission to accept what amount to educated guesses about some pipelines.

PG&E says its inaccurate records did not lead to San Bruno blast

SAN BRUNO, Calif. - The gas pipeline explosion that killed eight people and destroyed 38 homes in San Bruno would have happened even if Pacific Gas and Electric Co. had kept accurate records of the line, the company told state regulators on April 19.

The rupture on the 30-inch transmission line that caused the Sept. 9 explosion took place at an incomplete weld on a pipe seam, metallurgists with the National Transportation Safety Board have concluded. PG&E's records showed that the pipe had no seams, and it never conducted inspections that might have detected a flawed seam weld.

However, the type of weld that ruptured does not have a record of failing, PG&E told the state Public Utilities Commission. As a result, it said, the company still would have picked an inspection technique best suited for finding the problem that PG&E considered the greatest threat to the line - corrosion - and not flawed welds.

"The question becomes whether the correct seam type information ... would have changed PG&E's assessment methodology" and "potentially prevented the Sept. 9, 2010, San Bruno pipeline rupture," the company said. "The short answer to that question is 'no.' "

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.

PG&E pushed controversial pipeline inspection plan

SAN FRANCISCO, Calif. - Pacific Gas and Electric Co. led a successful lobbying campaign to persuade federal regulators writing natural-gas safety rules seven
years ago to endorse a pipe inspection method many experts see as deficient - the technique used on the pipeline that later failed catastrophically in San Bruno.
A PG&E executive was one of the main industry proponents of the then-new testing regimen, interviews with people who were involved in the rule-writing process and a San Francisco Chronicle review of documents show.

The federal government's decision to allow the method - despite knowing it was seriously deficient in detecting problems - saved PG&E (and other pipeline companies) millions of dollars because the utility didn't have to upgrade its system to accommodate more effective inspection technology such as the use of smart tools.
The method PG&E used in San Bruno is called direct assessment, which involves records research, surface-level electronic testing and digging holes to spot-check small portions of buried pipelines. When the utility used it on the San Bruno transmission line in November 2009, it found no problems.
Ten months later, the line ruptured, causing an explosion and fire that killed eight people and destroyed 37 homes. The National Transportation Safety Board is investigating the blast and has not arrived at a cause, but said that it was looking into whether a weld on a lateral seam of the pipe had failed. (Source: Eric Nalder and Jaxon Van Derbeken, San Francisco Chronicle, Dec. 23, 2010)

PG&E says it may need $425 million for 300 automated shutoff valves

SAN FRANCISCO, Calif. - Criticized for its long delay in manually shutting off gas to the ruptured San Bruno pipeline, PG&E said on Oct. 25 that it has identified some 300 manual gas valves that may need to be replaced with faster automatic or remotely controlled shut-off technology, at a potential cost of up to $450 million.

U.S. Rep. Jackie Speier, D-San Mateo, hosted a meeting on Oct. 25 for PG&E officials to explain to mayors from across the Bay Area more about natural gas main shutoff valves and other pipeline details.

In its disclosures on Oct. 25, PG&E noted that the cost of replacing a manual valve with one that automatically closes after a drop in pressure from a pipe rupture or that can be remotely controlled by a human operator varies from $100,000 to $1.5 million, depending on such factors as how accessible the valve is for retrofitting. But it was vague about how many valves it has - manual or otherwise - as well as how long it might take to replace them all.
"The urgency is pretty obvious," said Speier, noting that PG&E told her earlier that a single valve replacement can take up to nine months. "