PG&E Fined for Delaying Weld Records

Tuesday, December 24, 2013 @ 02:12 PM gHale

Pacific Gas and Electric Co. (PG&E) is facing a fine of more than $14 million for the utility’s “delay and obfuscation” in revealing that its records for a natural-gas pipeline in San Carlos failed to show potentially risky welds, California regulators said.

However, the five-member California Public Utilities Commission also voted to allow PG&E to restore the line to nearly full pressure, accepting the company’s reassurances that the transmission pipe is safe.

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The commissioners, all of them gubernatorial appointees, took turns lashing out at PG&E at their meeting in San Francisco before fining the company $50,000 a day for the 229 days executives waited to disclose the records problem — $11.45 million in all. They added a $2.9 million fine against the company for filing a document with the state that allegedly downplayed the seriousness of the safety issues.

“This penalty is designed to serve as a deterrent,” said Commissioner Mark Ferron, who led the push to approve a larger fine than the $6.75 million recommended by an administrative law judge.

“This fine sends a strong message to PG&E and all utilities we regulate that delay and obfuscation will not be tolerated,” Ferron said.

Commissioner Catherine Sandoval also went after top management, particularly Earley, for characterizing the San Carlos situation not as a safety hazard, but as a case of PG&E failing to observe regulatory niceties.

“No explanation has been given for that very long time period” during which PG&E withheld its record-keeping problem, Sandoval said. “I’m particularly concerned that it reflects a lack of candor.”

If it hadn’t been for “eagle-eyed people with shovels,” she said, the problem might still be there.

PG&E’s records for the 3.8-mile transmission line, known as Line 147, showed certain segments had no seam welds. However, when a work crew dug up the line at Brittan and Rogers avenues in October 2012 for routine repairs on a water line, a PG&E engineer spotted a suspected leak. PG&E crews then discovered welds dating from the 1920s that implicated in several pipeline failures elsewhere.

There were obvious similarities to the situation in San Bruno before the September 2010 explosion of a transmission pipeline that killed eight people and destroyed 38 homes. That pipe failed at a weld that PG&E didn’t know was there because its records showed the line had no seams. As a result, PG&E had never tested the line for potentially bad welds.

A consulting engineer asked PG&E executives in a November 2012 email whether they were facing “another San Bruno situation” in San Carlos, where the company did not know what kind of pipe it had in the ground. He wondered whether PG&E may have made a hidden problem worse when it tested Line 147 with high-pressure water in 2011, without knowing the suspect welds were there.

PG&E didn’t report the concerns to the state utilities commission staff until this past March. In July, it filed paperwork with the commission that appeared to be a notification of harmless errors.

The utilities commission is likely to decide sometime next year how much PG&E should end up fined for the San Bruno explosion and problems that contributed to it. Estimates of the fine range up to $2.5 billion.

PG&E insisted its test on the San Carlos pipeline in 2011 would have revealed any weld problems and that the line is safe. The commission, which had ordered PG&E to cut pressure on the pipeline sharply in October, indicated that company experts’ testimony had been persuasive and voted to let the utility push pressure back to nearly full level.

PG&E officials said they were pleased with the vote to restore the pressure on Line 147 but said the $14.4 million fine was “excessive.”

“We acknowledge our communication efforts fell short of expectations in this instance,” PG&E executives said in a statement. “We are committed to improving the way that we communicate” with the commission.

The statement said PG&E had “no intent to mislead or deceive the commission or its staff regarding Line 147.”

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