Consumer Federation of California

The state Public Utilities Commission
unanimously approved a pair of fines Thursday totaling nearly $20
million against Pacific Gas and Electric Co. for failing to check for
gas-line leaks in seven East Bay communities and for missing a deadline
to turn over pipeline safety records.

The larger of the two fines, $16.8 million, stems from the company’s
acknowledgement in December that it did not conduct federally mandated
leak surveys for years on nearly 14 miles of gas distribution lines in
Concord, Danville, Antioch, Pittsburg, Brentwood, Byron and Discovery
Bay.

Last month, a commission administrative law judge turned down the
company’s appeal of the fine. PG&E wanted the fine to be cut to
$400,000, in part because it had disclosed the problem itself.

"PG&E’s offenses were severe," Judge Burton Mattson said, and "potential public harm from these violations was great."

Mattson cited the PG&E pipeline explosion in 2010 in San Bruno
that killed eight people and one in 2008 that killed a homeowner in a
Sacramento suburb as evidence that the company had plenty of warnings
signs about problems in its gas system.

"Any quality-control procedures PG&E may have had in place clearly failed," Mattson said.

PG&E is supposed to check neighborhood gas distribution lines
for leaks every five years, but some lines in the Contra Costa County
cities had not been checked since 1993, the company said.

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

PG&E later admitted that it had failed to survey another 9 miles
elsewhere in its system, but has yet to be cited or fined for any
related regulatory violation. Commission officials say the matter is
still under investigation.

Nick Stavropoulos, PG&E’s executive vice president for gas operations, said Thursday that the fine was overly harsh.

"PG&E understands that when we make a mistake, we must own up,"
he said in a statement. "That’s what happened when our employees brought
the missed leak survey maps to our attention last year. As we stated in
our appeal, we believe the penalty amount is excessive because we did
the right thing – by promptly self-reporting the violation."

The commission also voted to accept a $3 million settlement that
PG&E and regulators agreed to in March 2011 for the company’s
failure to meet a deadline to find gas system-related safety records.

The deal was held up after critics of the company denounced it as too
lenient, and the commission balked at provisions that appeared to limit
the state’s authority.

In the end, the $3 million penalty was approved with no strings attached.

The fines are the second- and third-largest the state has ever levied
against PG&E for gas-safety problems, behind only the $38 million
fine for the 2008 fatal accident in Rancho Cordova (Sacramento County).

They pale in comparison to what the company is likely to pay for
other problems that contributed to the San Bruno disaster. PG&E
executives recently said they expected state fines for gas-safety and
record-keeping problems to top $200 million.

Timothy Alan Simon, one of the five commission members, said Thursday
that the most recent fines were justified, but that the process has
become slow and cumbersome. He said he favors a single resolution of all
the issues involving PG&E’s gas safety deficiencies.

"I think the time and discussion on these issues have gone on ad nauseum, and it’s time to move forward," Simon said.