Question of the week: I heard the California Public Utilities Commission levied a fine of $1.6 billion dollars against PG&E for pipeline safety violations relating to the terrible San Bruno pipeline explosion in 2010. Do you think this will make a difference and improve PG&E’s safety? Is that all that will happen?
Reflections on San Bruno, PG&E and the CPUC
In case you missed it, last week, the California Public Utilities Commission (CPUC) levied a fine of $1.6 billion dollars against PG&E for violations of the state pipeline safety regulations, violations identified following the failure and explosion of one of PG&E’s natural gas transmission lines in San Bruno, California in 2010. That explosion killed 8 people and injured many more, destroyed an entire neighborhood and laid bare a multitude of shortcomings and outright failures of natural gas pipeline safety regulation in California. The City of San Bruno undertook a monumental effort on several fronts, seeking out every possible forum where PG&E might be held to account, and where regulatory change might be made so that no other community needlessly suffer from another completely preventable pipeline failure.
Whether or not one believes the utility’s and the regulator’s exclamations of intent to reform, whether or not one gives credence to the much-publicized efforts to operate more safely or to oversee more carefully, there is plenty of evidence that there remains a long way to go. The report of the National Transportation Safety Board following the explosion described a utility that didn’t know what pipes it had in the ground, and didn’t have adequate records or integrity programs. And it described a regulator that had apparently ignored those shortcomings of which it was aware, and simply hadn’t looked very hard to find others. Since the NTSB report, the media has been filled for nearly 5 years now with seemingly endless disclosures of cronyism between the regulator and the utility, the misappropriation of ratepayer funds collected in the name of safety upgrades but spent elsewhere, descriptions of yet another home destroyed and community disrupted because PG&E’s records did not accurately reflect what pipes were in the ground, and numerous reports and audits suggesting that the CPUC is not yet capable of adequately regulating.
While the fine imposed against PG&E is of record size, the company’s stock price recovered and closed higher on the day after the penalty was announced. This, in spite of the company’s 2013 protestation that a fine of that magnitude would surely force a bankruptcy or some other catastrophic result. In fact, PG&E has recently announced that it will not appeal the CPUC fine and decision.
Meanwhile, the aftermath of the failure continues in a variety of forums: Rulemaking efforts on the federal level that might respond to some of the concerns raised by the NTSB in its report on the PG&E failure have been bogged down for years. We continue to wait for a proposed rule to be released and open to comment, review by the Technical Advisory committees and perhaps one day become new regulations. State legislation has strengthened some California gas safety rules, and proposed legislation may alter the allocation of the fine levied by the CPUC to further benefit pipeline safety rather than the state’s general fund. The cronyism exposed by the dogged efforts of the City of San Bruno to obtain emails and other documents has resulted in changes in personnel in high levels both within PG&E and within the CPUC. The federal prosecutor impaneled a grand jury that last year returned criminal indictments against PG&E. The State Attorney General has opened a criminal investigation of PG&E and its relationship with the CPUC, seeking evidence of wrongdoing on the part of the CPUC, its former president, and perhaps others. These criminal proceedings are still in the very early stages. The legacy of the San Bruno tragedy will continue for some time, and we can only hope, for all our sakes, that it eventually results in significant safety improvements, regulatory capacity, and some small measure of justice.