PG&E May Face $17.5M For Misleading Pipeline Records
SAN FRANCISCO (CBS SF) -- A California Public Utilities Commission member on Monday proposed a fining PG&E Co. $17.25 million—about two and one-half times the amount proposed by a hearing officer—for a late and misleading correction of records on a natural gas pipeline in San Carlos.
"We simply cannot allow such deliberate and calculated dishonesty," Commissioner Mark Ferron wrote in a proposed decision.
Ferron added in a separate statement, "The sanctions I propose today are intended to send a clear message to the top corporate management of PG&E that the CPUC will not tolerate being misled."
The commissioner's unusual action provides an alternative to a proposed decision issued last week by CPUC Administrative Law Judge Maribeth Bushey, who recommended a $6.75 million fine for the delay and mischaracterization of information on Line 147.
The alternative proposal also exceeds a $12.7 million penalty urged by a consumer group, The Utility Reform Network, or TURN.
Ferron's and Bushey's proposals will go together before the full five-member commission in San Francisco for a final decision, most likely at the panel's Dec. 5 meeting, according to CPUC spokeswoman Terrie Prosper.
The incorrect information had to do with the type of seams in the 3.8-mile Line 147, which runs under Brittan Avenue, and affected the maximum pressure the CPUC allowed in the pipe.
PG&E spokeswoman Brittany Chord said, "Our goal is to be transparent and forthcoming at all times.
"We are disappointed that, in this instance, our efforts fell short in the eyes of the commission, and we are committed to doing more to ensure that we achieve this objective in the future," Chord said.
Line 147 has been the subject of concern in San Carlos since officials learned last month of internal PG&E emails written nearly a year earlier that raised worries about inaccurate records.
In one email in November 2012, a consulting engineer asked, "Are we sitting on another San Bruno situation?"
The reference was to the 2010 pipeline rupture, fire and explosion in San Bruno that killed eight people. The San Bruno line was incorrectly recorded as seamless in PG&E records.
PG&E told the commission in 2011 that four sections of Line 147 were either seamless or had double-arc welds, and won permission to operate the line at a pressure of 365 pounds per square inch.
According to commission records, the utility began learning in October 2012 that its records were inaccurate, but waited until July 3 to submit a correction saying those four segments had single-arc welds that would require a lower pressure.
PG&E also labeled the correction "errata," a term usually used for rectifying minor mistakes such as typographical errors.
Ferron wrote that PG&E managers must have recognized the record discrepancies "as a significant safety matter in the public's interest," but "chose to wait several months to correct information that they knew to be false and that they knew the commission relied on."
The brief "errata" document was misleading, Ferron said, because it did not clearly convey the nature or significance of the correction.
"It is not credible that PG&E's engineers and executives did not recognize the provocative nature of these facts in light of the intense public interest in natural gas pipeline safety," Ferron wrote.
The correction also concerned Line 101, which extends from San Francisco to Milpitas. PG&E said it had improperly relied on a 1989 test to justify the maximum pressure in the line.
The utility said in filings that it lowered the pressure in both lines to safer levels after learning of the mistakes, but before informing the commission.
Ferron's and Bushey's proposed decisions focus almost entirely on the delay in correcting the Line 147 records.
The difference between the two proposed fines stems from the length of the penalty periods calculated.
Ferron calculated a fine of $50,000 per day, or a total of $14.35 million, from Nov. 16, 2012, when he said PG&E managers had become aware of a serious discrepancy in Line 147 records, to Aug. 30, 2013, when the utility filed a detailed timeline stating what it knew and when it knew it about the data.
He calculated an additional $50,000 per day, or a total of $2.9 million, between July 3 and Aug. 30 for submission of a misleadingly titled and factually incomplete document.
Bushey calculated the first portion of the fine as $5.25 million for the period between March 20, when PG&E first informed commission staff in a phone call, but not the commission itself, of errors, and July 3, the date PG&E attempted to file a correction.
She calculated the second portion as $1.5 million, running from July 3 to Aug. 2, the date the commission officially rejected the errata document as being an improper procedure for correcting substantive information the commission had relied on.
In a separate proceeding, the CPUC is currently looking into the safety of Line 147 and has ordered PG&E to operate the line at reduced pressure of 125 pounds per square inch for the time being.
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