Consumer Federation of California

A state Public Utilities Commission administrative law judge has rejected Pacific Gas and Electric Co.’s appeal of a $16.8 million fine for failing to check gas pipes for leaks in seven Contra Costa County communities, saying the danger the company created justified the penalty.

In a sternly worded decision handed down this week, Judge Burton Mattson turned down PG&E’s appeal proposing that it be fined $400,000 or less for failing to conduct required leak surveys in neighborhoods in Pittsburg, Antioch, Concord, Danville, Discovery Bay, Brentwood and Byron.

PG&E argued that it should be fined the lesser amount because it disclosed the problem itself in December.

"PG&E’s offenses were severe," Mattson said in his ruling, and the "potential public harm from these violations was great."

The five-member utilities commission will decide next month whether to uphold Mattson’s decision.

Citing PG&E pipeline explosions in 2010 in San Bruno that killed eight people and in 2008 that killed a homeowner in a Sacramento suburb, Mattson said the company’s failure to check the East Bay pipelines was part of a pattern of safety problems.

"PG&E missed each opportunity," he said. "Any quality control procedures PG&E may have had in place clearly failed."

PG&E is supposed to check neighborhood gas distribution lines for leaks every five years. Some of the Contra Costa lines had not been checked since 1993, PG&E conceded.

The utility conducted emergency surveys after it went public with the problem in December and discovered 23 leaks, one of which required emergency repairs. Regulators levied a $16.8 million fine for a total of 838 safety violations in January.

PG&E challenged both the fine and the number of violations, saying they should total just 21 – one violation per line per five years of missed surveys.

The Public Utilities Commission’s safety division had tallied one violation for each month PG&E failed to do the leak surveys. Mattson rejected PG&E’s interpretation as "unpersuasive and unreasonable."

"The duty to conduct a leak survey does not expire for five years once a survey date has passed," Mattson said. "To the contrary, the responsibility to conduct a leak survey continues every day after the missed survey date until the survey is conducted. Each missed day is a violation."

He noted that had penalties been issued daily, as the law allows, the total fine could have topped $500 million for more than 25,000 violations.

The final fine of $16.8 million struck a balance, given PG&E’s size, safety responsibility and self-reporting of the violations, Mattson concluded.

PG&E had also asked the commission in its appeal to exempt it from any more fines for violations that the company reports. It said big fines "may well cause employees to wonder in the future if they should simply fix problems and not bring them to the attention of management."

Mattson was not persuaded.

"We recognize this action and commend PG&E" for the disclosure, Mattson said. But he added, "This is the baseline conduct expected of public utilities, the costs for which we include in commission-authorized rates paid by ratepayers. Nothing less than an unswerving commitment to safety with quick responses is acceptable."

PG&E spokesman David Eisenhauer said the utility was reviewing Mattson’s ruling, but that the company still believes a multimillion-dollar fine "for being open, transparent and accountable is disappointing."