Tag Archives | PG&E

CPUC PG&E Chicanery? California Commission Sudden Halt into PG&E Gas Pipeline Safety Raises Serious Questions, San Bruno Says

San Francisco, Calif. – The City of San Bruno today criticized a decision by the California Public Utilities Commission to halt its investigation into thousands of missing Pacific Gas & Electric Co. pipeline strength test records – a sudden and shocking reversal that’s prompted concerns of a possible backroom deal brokered between PG&E and the state agency tasked with regulating it.

 

The CPUC’s Safety Enforcement Division this week quietly halted its inquiry into the safety of 435 miles of gas pipelines across California after PG&E refused to turn the information over to regulators— causing speculation that PG&E may have applied outside pressure to compel the regulatory agency to end its investigation.

 

San Bruno officials are now calling upon the CPUC to immediately re-open the investigation to force PG&E to produce accurate strength test records for 23,761 segments of pipe covering more than 435 miles – records that PG&E explicitly told the CPUC it would produce by 2013.

 

State and federal investigators identified PG&E’s faulty recordkeeping as a leading cause of the fatal 2010 pipeline explosion and fire in San Bruno that killed eight, injured 66 and destroyed 38 homes.

 

“PG&E continues to play a lethal game with the lives of the public. We are deeply concerned by their persistent failure and unwillingness to produce accurate pipeline records, without which we cannot know whether our communities remain at risk for the same devastating and fatal explosion that we experienced in San Bruno,” said San Bruno Mayor Jim Ruane. “Yet even more troubling is the CPUC’s decision to not pursue an investigation of these missing records even after preparing a motion to do so.”

 

“We question the CPUC’s sudden decision this week and are concerned it may be the result of inappropriate pressure applied by PG&E at the expense, once again, of public safety,” Ruane said.

 

The CPUC’s latest inquiry came about as part of the ongoing penalty proceeding to determine how much PG&E will be forced to pay for its gross negligence that caused the fatal explosion and fire in San Bruno. The CPUC’s administrative law judges are now considering penalties and fines against PG&E of up to $2.45 billion.

 

Yet, following unsuccessful attempts to obtain missing strength test records for more than 435 miles of pipeline directly from PG&E, the CPUC’s safety and enforcement division submitted a motion on May 30 to re-open the penalty proceeding’s record for the sole purpose of forcing PG&E to produce the documents.

 

San Bruno strongly supported the CPUC’s motion and its inquiry of the missing records, which city officials say are critical to instilling the public’s confidence in the safety of PG&E’s embattled pipeline system. San Bruno filed its own motion officially supporting the safety enforcement division’s request to obtain the missing records.

 

City officials are now questioning the division’s sudden decision to withdraw the motion and suspend the inquiry – a decision the city can only speculate as resulting from outside attempts by PG&E and its proxies to influence the CPUC’s actions.

 

“We are concerned that this decision is just further evidence of the cozy relationships that continue to jeopardize the CPUC’s ability to objectively regulate PG&E,” Ruane said.

 

San Bruno officials say this latest incident further underscores the need for an Independent Monitor, who would serve as a vigilant third-party watchdog over both PG&E and the CPUC.

 

“Only an independent monitor – free of the CPUC’s conflicts of interest and cozy relationships with PG&E that have jeopardized pipeline safety – can help guarantee that PG&E maintains good records and ensure that the CPUC provides the adequate and consistent oversight needed to keep our communities safe so that what happened in San Bruno never happens again,” Ruane said.

 

Ironically, PG&E has been spending millions of dollars on advertising its new “culture of safety,” with advertisements that stress the utility’s gas pipeline safety improvements since the San Bruno explosion and fire.  Yet, Ruane said, the utility can’t back up their advertising with proof that what they are telling the public is true.

 

Also this week, PG&E revealed that the U.S. Federal Prosecutor’s office expects to file additional legal actions against the utility for its gross negligence in the San Bruno case.  In April, the federal government charged PG&E with 12 felony violations of federal safety laws.

 

Is there a dirty deal between CPUC Michael Peevey and PG&E Executives?

Is there a dirty deal between CPUC Michael Peevey and PG&E Executives?

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PG&E Attempt to Improperly Influence California PUC Should Result in Penalty, City of San Bruno Demands in Legal Filing

Jack Hagan, CPUC Safety HeadElizaveta Malashenko

Jack Hagan and Elizaveta Malashenko of the CPUC Safety Enforcement Division made allegedly illegal deal with PG&E

San Bruno, Calif. – An attempt by Pacific Gas & Electric Company to broker what appears to be a secret deal with a California Public Utilities Commission staffer should result in significant penalties and fines for the utility company and the creation of an independent monitor to ensure transparency and accountability of the CPUC, San Bruno demanded in a legal filing with the CPUC today.

The apparent backroom deal, revealed in a report by Jaxon Van Derbecken San Francisco Chronicle newspaper, detailed how PG&E hoped to quietly pay  a $375,000 fine to avoid paying a proposed $2.5 billion in penalties and fines for the 2010 San Bruno explosion and fire that killed eight, injured 66, destroyed 38 homes and left a giant hole in the center of the city.

In a legal motion filed with the CPUC on Friday, San Bruno officials demanded that PG&E face a significant fine for violating CPUC rules when, in December, it paid a $375,000 fine imposed by the CPUC’s safety enforcement division – and then quietly asked that the fine count against the multi-billion-dollar penalty it faces for violations stemming from the San Bruno pipeline disaster.

It was revealed that no parties involved in the more than three-year San Bruno penalty proceeding were made aware of PG&E’s secret payment. Instead, the CPUC withdrew the fine and refunded the $375,000 payment amid concerns that PG&E had attempted to broker a backroom deal that could have triggered a form of regulatory double jeopardy, preventing the CPUC’s administrative law judges from levying a sufficient future penalty.

“Instead of being transparent and forthcoming, PG&E appears to have consciously elected to conceal an ill-fated attempt to quietly settle for the fatal and tragic pipeline disaster in San Bruno,” said San Bruno Mayor Jim Ruane. “We believe PG&E should be fined and reprimanded for trying to undermine the ongoing penalty investigation and possibly jeopardizing more than three years of work to ensure that what happened in San Bruno never happens again, anywhere.”

“This attempt to circumvent the legal and public process also raises troubling questions about the CPUC safety division and its staffer who attempted to conceal this backroom deal,” representatives for the city added. “This action is just the latest attempt by the PG&E and some members of the CPUC safety division to hide from public view the unholy alliance and power PG&E has with our State’s regulatory agency.  That is why San Bruno demands an independent monitor to ensure the CPUC is operating properly and transparently.”

The $375,000 fine was originally levied in December by the CPUC’s safety enforcement division in response to a 2012 audit, which concluded that for more than four decades PG&E lacked the proper procedures to monitor its gas-transmission pipelines. Reliable reports indicate that CPUC safety division deputy director Elizaveta Malashenko, who made this deal with PG&E, has a longstanding personal relationship with PG&E outside of her CPUC job.

Because the infraction related directly to the ongoing San Bruno-related penalty proceeding, it should have been handled as part of that process. Instead, it was handled and paid separately, without notification to any parties and in violation of CPUC’s own procedures.

San Bruno officials say they suspect that a backroom deal, involving illegal ex-parte communications between PG&E and the CPUC, played a role in this mishap. Attorneys for San Bruno have filed a public records request to determine whether PG&E officials spoke directly with CPUC leadership to arrange for the fine that PG&E paid – and later tried using to reduce their overall penalty.

In December, the CPUC fined PG&E $14 million for failing to disclose faulty pipeline records in San Carlos to both the CPUC, the public and the City of San Carlos for nearly a year, creating a possibly dangerous public safety issue that one of its own engineers likened to possibly “another San Bruno situation” in an internal email to PG&E executives.

San Bruno officials say this latest attempt to undercut its obligation to the public further underscores the need for an Independent Pipeline Safety Monitor to serve as a vigilant third-party watchdog over both PG&E and its regulator, the CPUC.

“The Commission lacks the resources to effectively comprehend and oversee PG&E’s compliance,” said the city’s filling. “An Independent Monitor would partner with and provide additional resources to the Commission in order to have more robust regulatory oversight necessary to protect the safety of the public.”

The San Bruno filing came on the same day as the announcement that CPUC Commissioner Mark Farron will be resigning from the Commission to concentrate on beating prostate cancer.

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California PUC to Consider Historic Fine Against PG&E and Orrick Herrington Law Firm Attorney in Faulty Gas Line Case

Joseph M. Malkin

PG&E and its Orrick Herrington Attorney are Facing Historic Fines and Legal Sanctions for Misleading the California Public Utilities Commission

The California Public Utilities Commission will vote on historic sanctions and a fine of up to $17 million against the Pacific Gas & Electric Corp. Thursday, Dec. 19 for failing to disclose faulty pipeline records in San Carlos to both the CPUC, the public and the City of San Carlos for nearly a year, creating a possibly dangerous public safety issue that one of its own engineers likened to possibly “another San Bruno situation” in an internal email to PG&E executives.

PG&E and its attorney Joseph M. Malkin of Orrick Herrington & Sutcliffe LLP law firm are facing a fine of up to $17 million for violating CPUC rules and discreetly filing an “errata” – the legal term for a minor correction – on the status of two pipelines, located in San Carlos and Millbrae, nearly a year after a gas leak unexpectedly revealed faulty records for those pipelines.

Pipelines listed as “seamless,” as in the case of the line that ruptured in San Bruno, were in fact a 1929 vintage welded and reconditioned gas pipe with a strength test less than records showed. The legal correction was made quietly on the afternoon of July 3, 2013, a day before the CPUC took off for the July Fourth holiday, disclosing the fact that PG&E had relied on faulty records to determine the specifications for those pipelines to handle gas at high pressure.

The Commission will make this decision three weeks after PG&E CEO and Chairman Tony Earley made a special presentation before the CPUC in an attempt to convince commissioners and the public of the company’s renewed commitment to safety. Earley was met with a skeptical commission, which challenged PG&E’s credibility in the face of mounting recordkeeping errors and threats to public safety. “We find ourselves here today with a public that doesn’t believe you and in many respects doesn’t believe us,” Commissioner Mike Florio said to Earley at the hearing.

City of San Bruno officials have agreed with the proposed fine against PG&E and are calling on the CPUC to uphold proposed sanctions against PG&E for deliberately covering up the facts after it used faulty records to determine that two Bay Area pipelines could safely operate – a decision demonstrating the continued problem with PG&E record keeping practices. Bad record keeping was one of the causes of the 2010 PG&E disaster in San Bruno and continues to threaten public safety.

Calling the July 3 PG&E filing a “brazen and calculated act of damage control,” San Bruno attorneys say PG&E’s legal maneuver illustrates PG&E’s ongoing attempts to cover its tracks as it continues to use natural gas pipelines at inappropriate operating pressures, without accurate records and with the same flawed materials that caused a tragic explosion and fire in San Bruno that killed eight, destroyed 38 homes and damaged scores more.

City officials were shocked to discover that, after gross negligence and bad recordkeeping by PG&E resulted in the fatal tragedy in San Bruno, PG&E paid its legal team to perpetuate their deception at the risk of public safety. They are now calling on the CPUC to issue sanctions and send the strong message that such behavior will not be tolerated. Officials question how many communities must endure tragedy before PG&E and our state utility regulators wake up and put safety first.

Faulty recordkeeping was found to be a major contributor to the explosion and fire in San Bruno after federal and state investigators found that PG&E had maintained bad or nonexistent pipeline safety records for much of its 1,000+ miles of urban natural gas transmission lines. As a result, state regulators required PG&E to lower pressure on its other Peninsula gas pipelines until safety records could be verified.

In 2011, PG&E declared that the pipeline construction records were accurate for both Line 101, which runs from Milpitas to San Francisco, and Line 147, which runs in the San Carlos area. Based on PG&E’s representations, the CPUC allowed PG&E to increase the pressure back to pre-explosion levels.

In reality, PG&E’s pipelines were not rated to operate at higher pressure, as revealed after an October 2012 corrosion-related leak in San Carlos revealed seams in the pipeline previously not thought to exist. Yet, it took nine months for the company to admit – by way of the subtle “errata” filing — that the records it had relied on to make that determination were faulty.

At previous CPUC hearings, regulators pressed PG&E over the “profoundly troubling” oversight, which occurred despite “the expenditure of hundreds of millions of dollars for record review and validation.” PG&E now faces fines of up to $17 million, on top of a possible $2.25 billion penalty and fine stemming from the fatal 2010 explosion and fire in San Bruno.

San Bruno officials say this is just the latest example of PG&E expending millions on top attorneys – more than $120 million by PG&E’s own admission – to subvert the truth and put profits over people.

 

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CPUC Should Fine PG&E, Orrick Law Firm Millions for Gas Pipeline Safety Cover-Up Says City of San Bruno

CPUC Should Sanction and Fine PG&E and its law firm Orrick Herrington & Sutcliffe and Attorney Joseph M. Malkin in Public Gas Line Safety Cover-up

San Francisco, Calif. – City of San Bruno officials this week called on the California Public Utilities Commission to sanction Pacific Gas & Electric’s legal team for deliberately covering up for PG&E after it used faulty records to determine that two Bay Area pipelines could safely operate – a decision demonstrating the continued problem with PG&E record keeping practices. Bad record keeping was one of the causes of the 2010 PG&E disaster in San Bruno and continues to threaten public safety.

In a filing late Sept. 26 with the CPUC in response to an order to “Show Cause Why It Should Not Be Sanctioned,” San Bruno asked that PG&E’s legal team, including top attorney Joseph M. Malkin of Orrick, Herrington & Sutcliffe, be sanctioned for discreetly filing an “errata” – the legal term for a minor correction – on the status of two pipelines, located in San Carlos and Millbrae, nine months after a gas leaked revealed those pipelines. The legal correction was made quietly on the afternoon of on July 3, 2013, a day before the CPUC took off for the July Fourth holiday, as a strategy to hide the fact that PG&E had relied on faulty records to determine the specifications for those pipelines to handle gas at high pressure.

Calling the July 3 filing by Malkin a “brazen and calculated act of damage control,” San Bruno attorneys say PG&E’s latest legal maneuver illustrates PG&E’s ongoing attempts to cover its tracks as it continues to use natural gas pipelines at inappropriate operating pressures, without accurate records and with the same flawed materials that caused a tragic explosion and fire in San Bruno that killed eight, destroyed 38 homes and damaged scores more.

“Gross negligence and bad recordkeeping by PG&E resulted in a fatal tragedy in our community, and now we’re discovering that PG&E is paying its legal team to perpetuate their deception at the risk of public safety,” said San Bruno Mayor Jim Ruane. “PG&E and its lawyers continue to play Russian roulette with people’s lives, and we are calling on the CPUC to issue sanctions and send the strong message that this behavior will not be tolerated. How many communities must endure tragedy before PG&E and our state utility regulators wake up and put safety first?”

Faulty recordkeeping was found to be a major contributor to the explosion and fire in San Bruno after federal and state investigators found that PG&E had maintained bad or nonexistent pipeline safety records for much of its 1,000+ miles of urban natural gas transmission lines. As a result, state regulators required PG&E to lower pressure on its other Peninsula gas pipelines until safety records could be verified.

In 2011, PG&E declared that the pipeline construction records were accurate for both Line 101, which runs from Milpitas to San Francisco, and Line 147, which runs in the San Carlos area. Based on PG&E’s representations, the CPUC allowed PG&E to increase the pressure back to pre-explosion levels.

In reality, PG&E’s pipelines were not rated to operate at higher pressure, as revealed after an October 2012 corrosion-related leak in San Carlos revealed seams in the pipeline previously not thought to exist. Yet, it took nine months for company attorneys to admit – by way of the subtle errata filing — that the records it had relied on to make that determination were faulty.

At a Sept. 6 hearing at the CPUC, state regulators pressed PG&E attorney Joseph Malkin over the “profoundly troubling” oversight, which occurred despite “the expenditure of hundreds of millions of dollars for record review and validation.” PG&E now faces fines of up to $250,000 for its mistake, on top of a possible $2.25 billion penalty and fine stemming from the fatal 2010 explosion and fire in San Bruno.

San Bruno officials say this is just the latest example of PG&E expending millions on top attorneys – more than $120 million by PG&E’s own admission – to subvert the truth and put profits over people.

At the Sept. 6 hearing, the PG&E legal team was selectively unresponsive to questions posed by the CPUC’s administrative law judges, invoking “attorney-client privilege,” which allowed them to dodge tough questions. Attorneys for San Bruno are asking that the CPUC conclude that PG&E waived its attorney-client privilege.

“Enough is enough. San Bruno will not sit by and watch PG&E willingly take advantage of public trust any longer,” Ruane said. “Three years after tragedy struck our community, we will continue to serve as a vigilant watch dog for public safety so that what happened in our community never happens again anywhere.”

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Did PG&E CEO Tony Earley Lie to Bloomberg News on Bankruptcy Statement on CPUC San Bruno Fine?

 

Did PG&E CEO and Chairman Tony Earley Knowingly Mislead Bloomberg News and Wall Street?

 

Pacific Gas & Electric Company CEO Tony Earley’s statement to Bloomberg News this week has landed the utility executive between a rock and hard place.

The City of San Bruno today criticized statements by the top executive of Pacific Gas & Electric Company who told Bloomberg News on Tuesday that a proposed penalty and fine by the California Public Utility Commission (CPUC) for the deadly 2010 PG&E gas pipeline explosion in San Bruno could force the utility into bankruptcy – statements that contradict the sworn legal testimony of PG&E’s own finance expert.

PG&E Chairman and Chief Executive Officer Tony Earley told Bloomberg in a news interview the proposed $2.25 billion penalty and fine for the Sept. 9, 2010 explosion in San Bruno that killed eight, destroyed 38 homes and damaged the community could not be funded with equity alone. He told the news service the penalty would require PG&E shareholders to sell billions in additional stock and, if shares failed to sell, could land PG&E in bankruptcy.

San Bruno city officials said these comments contradict the findings of multiple experts, including PG&E’s own paid finance consultant.

“Mr. Earley’s comments are inconsistent with the company’s own sworn testimony made before the CPUC on March 5 this year,” said San Bruno Mayor Jim Ruane. “PG&E’s own expert said the company has the financial capability to withstand a penalty of this magnitude. We are deeply concerned that these comments could mislead the market, shareholders, and the public, and we hope these were not made in a deliberate attempt to influence the outcome of the ongoing penalty process.”

Earlier this year, PG&E’s paid expert, Eric O. Fornell of Wells Fargo Securities, said during a penalty proceeding under oath that it was “doable” for PG&E to issue equity or raise enough capital to cover a $2 billion penalty. His statements followed a separate, impartial report by Overland Consulting, independently commissioned by the CPUC in 2012, which similarly found that PG&E would be able to afford a $2.25 billion penalty without hurting its creditworthiness.

Meanwhile, PG&E stock prices remain strong. PG&E Corp.’s second-quarter earnings rose 39 percent as the utility reported stronger revenue and lower charges related to its natural-gas pipeline efforts, among other items.

The company’s solid financial footing and multiple expert findings are partly what guided the $2.25 billion recommendation of the CPUC’s safety division, which issued its revised penalty proposal in July. The proposed $2.25 billion penalty would fund ongoing safety improvements and include a $300 million fine to PG&E shareholders, which is not tax deductible and would be paid directly to the State of California’s general fund. In addition, the proposal also curtails PG&E’s ability to deduct “credits” for safety repairs made since the 2010 explosion and fire – a provision San Bruno has advocated strongly for.

San Bruno officials said they support elements of the CPUC’s proposed penalty, but given the scope and magnitude of PG&E’s misconduct, they are pushing for a penalty of $3.8 billion, which would amount to $2.45 billion in after-tax dollars. This penalty would also fund ongoing safety improvements and give no credits for past expenses. San Bruno based its recommendation on the Overland report, which determined that PG&E could bear a maximum financial consequence of $2.45 billion and remain solvent.

San Bruno said it will also continue pushing the CPUC to direct PG&E to adopt and fund a series of remedial measures that will ensure systemic regulatory change in the future. These include $5 million per year for a “California Pipeline Safety Trust,” an Independent Monitor to make sure PG&E follows its own safety plan in the face of possible lax enforcement and the installation of lifesaving Automated Shutoff Valves.

The CPUC’s five-member commission is expected to issue its final recommendation in coming months.

“As we approach the three-year anniversary of this devastating tragedy, we remain firm in our belief that the only way to prevent future accidents is by penalizing PG&E to the maximum,” Mayor Ruane said. “The independent experts – even PG&E’s – have agreed that PG&E is financially able to weather a penalty of this magnitude—and then some. We are now looking to the CPUC to do the right thing and penalize PG&E in order to send a strong message that public safety cannot be compromised by the bottom line.”

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CPUC Filing by City of San Bruno Calls for PG&E to Pay Maximum Penalty without Credits for San Bruno Blast and Fire

San Francisco—The City of San Bruno filed legal arguments this week calling for the California Public Utilities Commission to levy the maximum penalty against the Pacific Gas & Electric Co. without granting it hundreds of millions in past repair credits for its gross negligence that caused the explosion of PG&E’s line 132 in San Bruno on Sept. 9, 2010.

San Bruno’s motion filed late Monday calls on the CPUC to strike the vague “credit” concept altogether from the CPUC safety division’s so-called penalty proposal of $2.25 billion – which has been revealed to provide significant tax benefit rewards in addition to huge credits to PG&E – and to prohibit PG&E from deducting an ill-defined list of safety improvements made to date since the 2010 explosion and fire.

“These credits would let PG&E off the hook for more than 50 years of  systematic safety failures that caused the 2010 explosion and fire, which took the lives of eight citizens of our city, destroyed 38 homes, and left a hole in the heart of San Bruno,” said Mayor Jim Ruane. “We ask that this ill-defined provision be struck completely from the penalty recommendation so that PG&E can be held accountable for this tragic disaster and justice for the victims of San Bruno can finally be served.”

The concept of allowing PG&E to deduct for past safety repairs made since the 2010 explosion and fire surfaced first in the so-called penalty recommendation of Jack Hagan, director of the CPUC’s safety division.  That recommendation is now mired in controversy after it was revealed to be 100 percent tax-deductible and littered with credits and perks to benefit PG&E, amounting in a net penalty of almost nothing for PG&E.

Senior attorneys on the CPUC’s safety division refused to sign the proposal – calling it “unlawful” and “contrary to what our team had worked to accomplish in the last two and a half years” – and, bowing to political pressure, the lead attorney on the case, Frank Lindh, a former PG&E attorney, has since recused himself entirely from the investigation.

San Bruno city officials contend that allowing PG&E to reduce its penalty by amounts already spent on safety improvements since 2010 will result in a calculation that is an “untested, unaudited, unverified back of the envelope calculation of alleged PG&E shareholder expense,” according to San Bruno’s filing with the CPUC.

“To award PG&E a massive, and in San Bruno’s view, undeserved ‘credit’ against the significant fines, penalties and remedies warranted by PG&E’s decades of irresponsible and deadly mismanagement in this manner does not comport with due process or offer the residents of San Bruno any measure of justice,” the filing states.

San Bruno has instead called for PG&E to be penalized a total of $3.8 billion – or $2.45 billion in after-tax dollars – the maximum financial consequences that the CPUC safety division experts determined it can bear without giving PG&E the benefit of significant state and federal tax breaks and no credits for past expenses.

San Bruno has also demanded that the CPUC direct PG&E to adopt and fund a series of remedial measures to ensure systemic regulatory change in the future. These include funding  for a California Pipeline Safety Trust advocacy organization, an Independent Monitor to make sure PG&E follows its own safety plan in the face of possible lax enforcement, and the installation of lifesaving fully Automatic Shutoff Valves.

“The concept of granting so-called credits for safety improvements that PG&E should have been making for the past 50 years is a slap in the face to the residents of San Bruno and the citizens of California who place trust in our public utility system to keep our gas lines functioning safely,” Ruane said. “We ask that the CPUC do the right thing by eliminating this onerous credit concept and by penalizing PG&E so that we can ensure this tragedy never happens again, anywhere.”

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