The Safety and Enforcement Division of the California Public Utilities Commission (CPUC) recommended that the CPUC impose a total $2.25 billion penalty against Pacific Gas and Electric Company (PG&E) for three penalty cases arising from the Sept. 9, 2010, PG&E pipeline rupture in San Bruno, Calif. If the recommendation is adopted by the CPUC, it would be the largest penalty ever levied by a state regulator.
The recommended penalty payment would encompass monies PG&E already has been ordered to spend on safety enhancements, as well as future safety investments. Under the Safety and Enforcement Division’s recommendation, the $2.25 billion penalty would be directed toward Phase I and Phase II of PG&E’s Pipeline Safety Enhancement Plan. The money would come out of shareholder funds and would not be paid by ratepayers. Likewise, any capital investments by PG&E would be excluded from the utility’s rate base, for ratemaking purposes.
Since the September 2010 pipeline rupture, PG&E has said that it has invested upwards of $1 billion in safety activities such as pipeline test or replacement, installation of safety values, verification audits and inspections, and development of safety management systems. The recommended penalty amount would include these expenditures plus future safety expenses, up to a total of $2.25 billion. Under the recommendation made today, PG&E also would be subject to audits to ensure the company does not under-spend in any other areas of their operations that effect safety to off-set any of these expenditures. The recommendation calls for an independent third-party to oversee the funds to ensure they are spent wholly and appropriately. CLICK HERE for the opening brief of the CPUC Consumer Protection and Safety Division.