Friday, August 19, 2016


ABSTRACT: Re: BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Investigation And Order to Show Cause on the Commission’s Own Motion into the Operations and Practices of Pacific Gas and Electric Company with Respect to Facilities Records for its Natural Gas Distribution System Pipelines, the MODIFIED PRESIDING OFFICER’S DECISION REGARDING INVESTIGATION OF PACIFIC GAS AND ELECTRIC COMPANY’S GAS DISTRIBUTION FACILITIES RECORDS document copy is embedded
Today‘s decision finds that Pacific Gas and Electric Company failed to comply with applicable law and regulations in maintaining accurate records of its natural gas distribution system. These inaccurate records were relied on for locating and marking underground facilities in anticipation of excavation. The inaccurately mapped and consequently inaccurately marked facilities led to excavators damaging the distribution system in several instances. Release of natural gas, service interruptions and, in one case, significant property damage resulted. Today‘s decision first separates the violations into systemic failures and isolated mistakes in an otherwise compliant system, and imposes substantial fines for systemic failures and graduated fines for the isolated instances. Total fines of $25,626,000 are assessed for the systemic violations and incidents found in today‘s decision. With the Citation previously assessed for the Carmel incident, the total fine imposed on Pacific Gas and Electric Company for distribution system incidents is $36,476,000. This proceeding is closed.
For the violations of federal and state law and regulations set forth above, PG&E shall pay a total fine of $25,626,000.
Amount of Fine
Failure to Minimize Possibility of Recurrence – Plastic Inserts

Failure to Analyze and Minimize Possibility of Recurrence – Missing DeAnza Records

Failure to Provide Safe and Reliable Service – Milpitas 1

$ 1,974,000
Specific Incidents
$ 750,000
Service failure to City of Carmel-by-the Sea
$ 50,000
 Appeal of the Presiding Officer’s Decision 
SED and the City of Carmel-by-the-Sea filed appeals of the Presiding Officer‘s Decision on July 1, 2016. PG&E filed its response to both appeals on July 18, 2016. The grounds on which each party contended that the Presiding Officer Decision was unlawful or erroneous are analyzed below. Where noted in today‘s decision, the Presiding Officer‘s Decision has been revised in response to the appeals. In all other respects, the appeals are denied.
In today‘s decision, we add the omitted $50,000 Carmel fine to the total fine and revise the De Anza missing records per-day fine from $834.95 to $1,000 per day. The additional De Anza amount of $1,266,000 plus $50,000 brings the total fine to $25,626,000, as compared to the total fine of $24,310,000 in the Presiding Officer‘s decision.
Corrected Sum of Fine Assessed
SED contends and PG&E48 agrees that the sum of fines assessed on page 55 of the Presiding Officer‘s Decision incorrectly omits the $50,000 fine for PG&E‘s service failures to City of Carmel-by-the-Sea. This error has been corrected in today‘s decision.
Total Fine Amount and Carmel Incident
SED argued that the Presiding Officer Decision erred in setting the fine too low and that the fine for the Carmel incident should be increased by $20.73 million. As set forth above, the Commission had previously upheld a citation of $10.85 million for that incident and SED did not dispute the Presiding Officer‘s Decision holding that an additional fine of $10.8 million should be assessed against PG&E for failing to prevent recurrences of leaks caused by unmapped plastic inserts (the cause of the Carmel explosion).
SED argued the Proposed Decision erred in adopting a fine of only $21.65 million and an additional fine of $20.73 million should be imposed. PG&E stated that a total fine of $42.38 million would be “disproportionate to the harm that resulted” and “unprecedented. “
SED cited to no Commission precedent with a fine of this magnitude for similar violations nor aggravating circumstances that would justify such a departure from Commission precedent. SED has shown no error or unlawful determination in the Presiding Officer‘s Decision.
Per Incident Fines and Additional Incidents
SED argued that the maximum fine for each incident should be imposed and that additional incidents should be included. PG&E responded in opposition that the Commission has discretion to tailor the fines to specific facts of each violation and that additional incidents are not within the scope of this proceeding.
The City of Carmel-by-the-Sea also contended that the Commission was without discretion to decide, based on the specific facts of each violation, whether to apply Public Utilities Code § 2108 to uncorrected violations.
In its Appeal, SED acknowledged that the Commission has the discretion to decline to impose daily fines pursuant to § 2108.55 PG&E agreed with SED and cited to D.15-04-024.56
We find that the additional incidents were outside the scope of this proceeding and that the Commission has substantial discretion to tabulate and impose fines based on the specific facts of each violation. SED and the City of Carmel-by-the-Sea have demonstrated no error in the Presiding Officer‘s Decision.
City of Carmel-by-the-Sea’s Other Requests
The City requested reimbursement from PG&E for its expenses. The Commission‘s policy choice to decline to use its equitable powers to order PG&E to reimburse governmental entities for their litigation costs was set forth in D.15-04-024 at 168-170. The City has presented no reason to depart from that policy choice.
The City also recommended linking executive compensation to safety performance; a similar proposal was also examined and found duplicative or unsupported in D.15-04-024 at 167. Finally, the City of Carmel-by-the-Sea sought appointment of an independent monitor. That proposal was also considered in D.15-04-024 at 155– 60, where the Commission authorized another $30 million in reimbursement for experts for SED in addition to the $15 million awarded in Rulemaking 11-02-019, and otherwise denied the requested independent monitor.
Finally, the parties agree that the fines ordered in today‘s decision may not be included in regulated revenue requirement nor recovery sought from ratepayers in any manner.
The City of Carmel-by-the-Sea brought the unique perspectives of local government and first responders to this proceeding. The efforts of the City to bring forth these perspectives added greatly to the development of a complete evidentiary record and assisted the Commission in discharging its duties.
NOTE: Under Pub. Util. Code § 1802(b)(2), state, federal and local governmental agencies are not eligible for intervenor compensation, and recent legislative attempts to expand intervenor compensation to government entities were unsuccessful. (See, Senate Bill 1364 (Huff, 2012) and Senate Bill 1165 (Wright, 2012).) 
Cities, counties and other governmental agencies regularly participate in Commission proceedings with no expectation of compensation for their litigation expenses. In many cases they have made very significant contributions to important Commission decisions, and have received no compensation.

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