PG&E Ratepayers to Foot Bill More Than Half of $2.2 Billion Pipeline Project

The approval angered officials from San Bruno, where a pipeline explosion killed eight people in 2010.

By Bay City News Service

The California Public Utilities Commission on Thursday approved a plan that will allow PG&E to charge ratepayers for more than half of a $2.2 billion project to upgrade its natural gas pipelines.

The approval of the plan, with a last-minute change removing a requirement that the utility take lower profits for five years, angered officials from San Bruno where a ruptured pipeline resulted in an explosion that killed eight people and destroyed 38 homes in 2010.

PG&E's project includes pressure testing 783 miles of natural gas pipelines, replacing 186 miles of pipelines while upgrading another 199 miles and installing 228 automatic shutoff valves.

The plan approved by the CPUC at its meeting in San Francisco
today requires PG&E ratepayers to foot the bill for roughly 55 percent of the
projects while the utility's shareholders will fund the rest.

An initial ruling had initially put ratepayers on the hook for roughly 49 percent of the project and initially included a five-year term in which PG&E's rate of profit on its improvement investments would be reduced to 6.05 percent as part of a judge's recommendation.

But Wednesday evening, regulators amended the plan to disallow that recommendation and raise the rate to about 11 percent, giving what San Bruno Mayor Jim Ruane said equated to a $130 million "Christmas present" to PG&E.

"It's a slap in the face," Ruane said. "They blew up our town, they killed eight people, and here we are giving them cash."

State Sen. Jerry Hill, D-San Mateo, said the change showed that "PG&E owns the state of California and the PUC."

Hill said, "It's shameful that they would allow PG&E to profit from their behavior, their negligence, their poor maintenance."

Thomas Long, legal director for the watchdog group The Utility Reform Network, said many of the pipelines in the project are only being replaced because PG&E lost the records for them.

"They had no idea if these pipelines were operating at safe pressures," Long said. "PG&E loses records, we should pay for it?"

PG&E spokeswoman Brittany Chord said the utility's shareholders have already spent $1.5 billion since 2010 on work to meet previously existing regulations and that "this proposed plan was put forward to address new safety expectations that were set by the CPUC."

Chord said, "We know we made a lot of mistakes, and we know we have a lot of work to do."

She said PG&E had sought to have ratepayers fund a higher percentage of the pipeline project — which is expected to add about $2 to the average monthly residential utility bill — but they were rebuffed by the CPUC.

In announcing the commission's decision, Commissioner Mike Florio said the project was "about moving forward and creating the safest natural gas infrastructure in the nation."

Florio said the ruling was a balance between the requests of PG&E and those of San Bruno officials and survivors of the blast.

"We have to make sure PG&E isn't rewarded for the past ... but we can't expect PG&E in the past to meet standards that didn't exist until now," he said.

What do you think? Should ratepayers be asked to help pay for the upgrades to the gas transmission lines?  Tell us in comments.

Copyright © 2012 by Bay City News, Inc. -- Republication, rebroadcast or any other reuse without the express written consent of Bay City News, Inc. is prohibited.

Bob Ratto December 21, 2012 at 05:41 PM
This is a very bad decision. Ratepayers should not be charged the costs associated with this tragic event, the equity holders should be charged, as they are the owners. If I make a mistake in my businesses, I eat it, I don't charge the other customers more. The relationship between the PUC and PGE is far too "cozy"
janna nikkola December 22, 2012 at 02:31 AM
PG&E does not deserve the monopoly of providing gas and electric services in California. It's not just their negligence in not maintaining the gas pipelines in San Bruno that caused the explosion that killed eight people and destroyed an entire community (and this explosion caused by PG&E'S negligence in not maintaining gas pipelines is only one of many -- it just happens to be the worst in recent history). It's not just that they're constantly seeking rate increases through the PUC (and seem to have the PUC in their pocket or on their payroll). It's not just that PG&E makes huge billion dollar profits and pays no federal income taxes. It's not just that they installed highly controversial an potentially hazardous SMART meters on homes without the homeowners' knowledge or permission and are now trying to charge these homeowners to have the meters removed. It's not that every PG&E monthly statement I receive includes literature about another request for a rate increase. It's just that they don't deserve our business and should be replaced. I'm all for the various local movements for communities to start their own power company in order to get away from PG&E. They deserve to be put out of business.
Jerome J Ghigliotti Jr December 22, 2012 at 10:23 PM
How come I tell the truth and I am "Pending Approval", and you tell the truth and get printed without censorship?


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