New PGE Gas Safety Plan Proposes Its Customers Foot The Bill

In an effort to prevent a disaster as horrific as the deadly San Bruno pipeline explosion from occurring again, Pacific Gas & Electric (PG&E) is proposing a $5 billion gas safety plan that will increase pipeline safety throughout California.

The company’s proposal is currently being considered by the California Public Utilities Commission (CPUC). The plan to boost safety aims at elevating the priority of leak surveys, pressure reductions and transmission line safety tests. Tom Bottorff, a senior vice president at PG&E, said that the focus is to provide citizens with “a gas system that’s safer and more reliable than anything this country has ever seen.”

But such a safety plan does not come without a price. And in this case, PG&E is proposing to pass most of the project’s price tag onto its customers. The cost to upgrade pipelines throughout the state will cost an estimated $5 billion. Under the proposal being considered by CPUC, PG&E’s customers would cover about 84 percent of the cost of the upgrades through increased pricing.

San Bruno assemblyman Jerry Hill was quick to point out that under the proposal PG&E would also earn a sizeable profit. Under the proposal, the gas company would be guaranteed 11.35 percent interest on all of its capital expenses. The assembly man noted, “They’re profiting from what has occurred in San Bruno and that’s what I will fight against. We shouldn’t be paying for that, and they shouldn’t be profiting from this.”

Following the September 2010 explosion, the CPUC implemented the requirement that state utilities have to replace untested segments of their gas pipelines, or provide an explanation of how they would pressure test those lines. The pipeline that exploded in San Bruno was part of an untested segment.

The CPUC is currently reviewing proposal from PG&E and other state utilities. No new safety requirements will be set until all proposals have been considered.

Source: Insurance Journal, “PG&E Says New Gas Safety Plan Will Cost $5B,” 3/1/12.