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Pipeline Errors Could Cost PG&E $6.75M

Tuesday, November 5, 2013

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Pacific Gas & Electric Co. is facing a proposed $6.75 million fine after a California judge ruled that the embattled utility delayed and attempted to mislead regulators when it revealed record-keeping errors for two of its pipelines.

The natural gas pipelines—Line 147, running under San Carlos, CA, and Line 101, extending from San Francisco to Milpitas—were found to be operating at pressures based on incorrect PG&E records about pipeline seams and decades-old pressure tests.

Although PG&E inspectors reportedly discovered the errors in October 2012, it did not publicly file a correction until July, and then "created a false impression of insignificance" by filing the errors as an "errata," Maribeth Bushey, the California Public Utilities Commission administrative law judge, wrote in the proposed decision, filed Wednesday (Oct. 30).

'Disheartening' Rule Violations

The management and legal decision-making regarding the treatment of discovered errors is "profoundly disheartening in that it reflects a lack of candor and appreciation of public interest," Bushey said in the proposed decision.

PG&E pipelines
City of San Carlos

A California Public Utilities Commission judge wants PG&E to pay a $6.75 million fine for not promptly correcting pipeline record errors and allegedly attempting to mislead regulators about the significance of the errors.

Bushey called PG&E's record-keeping flaws "distressingly similar" to the problems that contributed to the utility's fatal 2010 pipeline explosion in San Bruno, CA, adding that PG&E's system safety has been one of the CPUC's highest priorities for the last three years.

The decision alleges that PG&E violated the ethics rule (Rule 1.1) of the CPUC's Rules of Practice and Procedure by not promptly correcting and properly notifying regulators about incorrect records and for "mischaracterizing the correction when filed as a routine and non-substantive correction."

PG&E's poor record-keeping and inadequate inspections came under fire after investigators traced the San Bruno blast to the use of a substandard, poorly welded pipe section that could have been discovered by appropriate records and testing.

A PG&E spokesperson said the utility is reviewing the proposed decision.

Emails Raise Concerns

In July, lawyers representing PG&E presented a document to file with the CPUC that stated that the information PG&E filed in October and November 2011 to justify its request to lift operating pressure restrictions on Lines 147 and 101 contained errors. 

The commission's docket office rejected the the July document, calling it "untimely to the extent that it sought to make a substantive change to issues in a previously filed document which the Commission had resolved by decision."

The document, titled, "Errata to Pacific Gas and Electric Company’s Supporting Documentation for Lifting Operating Pressure Restrictions on Line 101 and 147," said that in 2011, PG&E records showed that Line 147 was seamless, or contained double submerged arc welds, but the July document revealed that the pipeline actually had single submerged arc welds, which affected the maximum allowable operating pressure. 

Line 147 was taken out of commission for most of October after San Carolos city officials learned of internal emails written by PG&E engineers in November 2012 that raised concerns about the pipeline thinning and showing signs of corrosion.

In one email, an engineer wrote, "Are we sitting on another San Bruno situation?" the San Francisco Appeal reported.

The July document also stated that the maximum allowable operating pressure for Line 101 relied on a 1989 pressure test, which PG&E said it should not have relied on.

Records are 'Extraordinarily Controversial'

In August, the CPUC's chief administrative law judge and assigned administrative law judge issued their "Ruling Directing Pacific Gas and Electric Company to Show Cause Why It Should Not be Sanctioned for Violation of Rule 1.1 of the Commission's Rules of Practice and Procedure."

San Bruno pipeline explosion
San Bruno Fire Department

PG&E's record-keeping flaws are "distressingly similar" to the problems that contributed to the utility's fatal 2010 pipeline explosion in San Bruno, CA, an administrative judge wrote in the proposed decision.

In their ruling, the judges said that PG&E's July document "raises procedural and substantive issues" because parties are not allowed to file pleadings to correct minor typographical or computational errors in previously filed applications.

By titling its document an "errata," PG&E appeared to be revealing a substantial error in a "routine-appearing document," which could be seen as an attempt to mislead the commission, the judges wrote.

"Attempting to correct and application eighteen months after the Commission issued a decision appears to be an unreasonable procedural choice and could be interpreted as attempting to create an inaccurate impression of a routine correction," the judges wrote. "The timing of the attempted filing, the day before a summer holiday weekend, also raises questions."

The judges said the accuracy of PG&E's pipeline records "has been and remains an extraordinarily controversial issue in which the public has an intense interest."

PG&E was ordered to appear at a Sept. 6 hearing to show cause for why it should not be sanctioned for violating the rules. At the hearing, PG&E contended that it had submitted an errata as "a good faith attempt to provide formal notice of the error" and its July filing was "not a purposeful, reckless or grossly negligent attempt to mislead."

Breakdown of Proposed Fines

According to the proposed decision, PG&E became obligated to inform the commission of its errors on March 20, 2013, and proposed that the utility be fined $50,000 for each day that it delayed filing its errors—105 days, for a fine of $5.25 million.

Additionally, Bushey wrote that a $50,000 per day fine should be levied for each day that the "misleadingly titled document" remained pending at the commission when PG&E could have retrieved and corrected it—another 30 days and $1.5 million in fines.

The proposed fine will go before the entire commission at either its Dec. 5 business meeting or a later date, at which point it may adopt all or part of the decision, amend or modify it, or prepare its own decision. The decision does not becoming binding until the commission acts.

   

Tagged categories: Corrosion; Explosions; Health and safety; Laws and litigation; Pipelines

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