Proceeding Number I.14-11-008 PACIFIC GAS AND ELECTRIC COMPANY’S RESPONSE PURSUANT TO RULE 14.4(D) OF THE CALIFORNIA PUBLIC UTILITIES COMMISSION RULES OF PRACTICE AND PROCEDURE TO THE APPEALS OF THE SAFETY AND ENFORCEMENT DIVISION AND CITY OF CARMEL-BY-THE-SEA

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 PACIFIC GAS AND ELECTRIC COMPANY’S RESPONSE PURSUANT TO RULE 14.4(D) OF THE CALIFORNIA PUBLIC UTILITIES COMMISSION RULES OF PRACTICE AND PROCEDURE TO THE APPEALS OF THE SAFETY AND ENFORCEMENT DIVISION AND CITY OF CARMEL-BY-THE-SEA and APPENDIX A PG&E’s Measures to Continue to Improve Gas Distribution Recordkeeping and Promote Safety and APPENDIX B  PG&E’s Responses to Proposed Remedial Measures document copies are embedded. 

INTRODUCTION Pursuant to Rule 14.4(d) of the California Public Utilities Commission (Commission) Rules of Practice and Procedure, Pacific Gas and Electric Company (PG&E) hereby submits this joint response to the Appeals of the Presiding Officer’s Decision (POD)1 filed by the Safety and Enforcement Division and the City of Carmel-by-the-Sea.

Third, PG&E explains why SED’s and Carmel’s proposals for calculating higher fines for specific incidents, including the Carmel incident, are inappropriate. SED’s and Carmel’s alternative proposals largely involve a mechanical application of fines at the top of the statutory range, while giving no consideration to the fact-specific criteria that must be considered under the Public Utilities Code and Commission precedent when determining an appropriate penalty. PG&E submits that the decision in this proceeding should consider the evidence of record and the relevant criteria for assessing a penalty—including factually comparable precedents, the relative severity of the incidents, PG&E’s commitment to continuous improvement, and the objective measures demonstrating PG&E’s general compliance with regulations.

Fourth, PG&E explains how SED and Carmel misconstrue the evidentiary record and the POD’s findings in challenging the fine imposed regarding the De Anza leak repair records.
CONCLUSION PG&E has an unwavering commitment to continuously improving not only its gas distribution system recordkeeping practices but also the safety of its distribution system, and complying with all applicable rules, regulations, and statutes. PG&E is also committed to continuing to work with the Commission to pursue these important goals. The many initiatives PG&E has undertaken to build state-of-the-industry infrastructure, achieve recordkeeping best practices, and minimize the risk of incidents on its gas distribution system demonstrate the durability and sincerity of PG&E’s commitment. 

PG&E acknowledges that more work remains to be done and that, at times in the past, its conduct has not measured up to the high expectations that the Company sets for itself. PG&E intends to continue doing exactly what it has been doing—focusing on safety, finding and fixing issues as they arise, and searching for innovative, effective, and technologically advanced solutions to the challenges that remain.
For the reasons stated above, PG&E submits that the arguments advanced on appeal by SED and Carmel for increasing the penalties imposed in the POD are unsupported by or contrary to the evidence of record, inconsistent with the governing legal standards, and accordingly should be rejected by the Commission. PG&E looks forward to working cooperatively with SED and the Intervenors in the meet-and-confer process to identify and consider further opportunities to continue improving its recordkeeping and other practices to better serve the public and promote the safety of its system.

Pg&e Company's Response i.14!11!008 7-18-16 by L. A. Paterson on Scribd

FILED 7-18-16
PACIFIC GAS AND ELECTRIC COMPANY’S RESPONSE PURSUANT TO RULE 14.4(D) OF THE CALIFORNIA PUBLIC UTILITIES COMMISSION RULES OF PRACTICE AND PROCEDURE TO THE APPEALS OF THE SAFETY AND ENFORCEMENT DIVISION AND CITY OF CARMEL-BY-THE-SEA

Pg&e Appendix a 7-18-16 by L. A. Paterson on Scribd

APPENDIX A

PG&E’s Measures to Continue to Improve Gas Distribution Recordkeeping and Promote Safety

Pg&e Appendix b 7-18-16 by L. A. Paterson on Scribd

APPENDIX B
PG&E’s Responses to Proposed Remedial Measures

Proceeding Number I.14-11-008 MODIFIED PRESIDING OFFICER’S DECISION REGARDING INVESTIGATION OF PACIFIC GAS AND ELECTRIC COMPANY’S GAS DISTRIBUTION FACILITIES RECORDS

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
Summary

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.
Conclusion
For the violations of federal and state law and regulations set forth above, PG&E shall pay a total fine of $25,626,000.

Violation	Amount of Fine
Failure to Minimize Possibility of Recurrence – Plastic Inserts	$10,800,000
Failure to Analyze and Minimize Possibility of Recurrence – Missing DeAnza Records	$12,052,000
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
TOTAL	$25,626,000

 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.

SOURCE: D.15-04-024
Date of Issuance
April 9, 2015
DECISION ON FINES AND REMEDIES TO BE IMPOSED ON PACIFIC GAS AND ELECTRIC COMPANY FOR SPECIFIC VIOLATIONS IN CONNECTION WITH THE OPERATION AND PRACTICES OF ITS NATURAL GAS TRANSMISSION SYSTEM PIPELINES

Modified Presiding Officer’s Decision Regarding Investigation of Pg&e's Gas Distribution Facilitie...

8/18/16
DRAFT
MODIFIED PRESIDING OFFICER’S DECISION REGARDING INVESTIGATION OF PACIFIC GAS AND ELECTRIC COMPANY’S GAS DISTRIBUTION FACILITIES RECORDS

NOTE: In the CITY OF CARMEL-BY-THE-SEA OPENING BRIEF, attorneys for the City calculated VIOLATION CALCULATIONS TOTAL FINES FOR ALL six incidents equal to $651.770 million.

Proceeding Number I.14-11-008 PRESIDING OFFICER’S DECISION

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 PRESIDING OFFICER’S DECISION document copy is embedded.

Summary
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 $24,310,000 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 $35,160,000. This proceeding is closed.

Conclusion

For the violations of federal and state law and regulations set forth above,

PG&E shall pay a total fine of $ 24,310,000.

Violation	Amount of Fine
Failure to Minimize Possibility of Recurrence – Plastic Inserts	$10,800,000
Failure to Analyze and Minimize Possibility of Recurrence – Missing DeAnza Records	$ 10,786,000
Failure to Provide Safe and Reliable Service – Milpitas 1	$ 1,974,000
Specific Incidents $ 750,000	$ 750,000
TOTAL	$24,310,000

Incident Description Carmel, March 3, 2014, PG&E crew welded a tapping tee into a 2 inch steel distribution main with unmapped plastic insert, natural gas migrated into the unoccupied residence, collected and exploded hours later.

Harm Caused Residence destroyed, value = $302,000

Presiding Officer Determination $100,000

2 violations @ $50,000 each

Citation for $10.8 million already paid to General Fund.

(also part of failure to minimize recurrence fine)

 IT IS ORDERED that:

1. Within 30 days of the effective date of this order Pacific Gas and Electric Company must pay a fine of $24,310,000 by check or money order payable to the California Public Utilities Commission and mailed or delivered to the Commission’s Fiscal Office, 505 Van Ness Avenue, Room 3000, San Francisco, CA 94102. Write on the face of the check or money order “For deposit to the General Fund per Decision _____.”
2. Pacific Gas and Electric Company (PG&E) shall convene, support, and report on a meet and confer process to consider and develop additional remedial measures necessary to address the issues identified in today’s decision. The objective of this process will be a comprehensive compliance plan that includes all feasible and cost-effective measures necessary to improve PG&E’s natural gas distribution system record-keeping. The participants shall begin their review with Exhibit E to D.15-04-024 to evaluate those remedial measures to determine whether more or different requirements are needed for the gas distribution system. All parties to this proceeding shall be invited to participate as well as all parties to the most recent general rate case and Investigation 11-02-016. The Commission’s Safety and Enforcement Division shall participate and monitor this process. No later than 120 days after the effective date of this order, PG&E shall file and serve its initial compliance plan.
3. Investigation 14-11-008 is closed.
This order is effective today.

 NOTE: City of Carmel-by-the-Sea

The City stated that PG&E was fined $10.8 million dollars for blowing up a home in Carmel two years ago because its practices, records and safety protocols failed in a catastrophic manner. Carmel contended that PG&E's gas transmission system was not safe and operated in violation of Section 451 of the Public Utilities Code and it records system was, and arguably still is, incompetent to run a gas utility in the 21st century.
The City explained that almost two years after the explosion, Carmel's City Council and residents are still fearful for their safety when PG&E crews are working in City streets and are fearful of what dangers lie below in PG&E's labyrinth of underground pipelines.
Carmel supported SED’s position, and found PG&E's arguments and witnesses' testimony presented at the evidentiary hearings in an effort to show the utility did not violate the law to ring hollow and were in bad faith; so much so that Carmel believed PG&E submitted misrepresentations to the Commission. Carmel concluded with the hope that the Commission would see through PG&E's too-little-too-late excuses and promises regarding the safety of its distribution system.
Carmel proposed fines of up to $651 million, with supporting calculations. Carmel also recommended linking executive compensation to safety objectives, appointing independent monitors for PG&E’s system, and ordering PG&E to compensate Carmel for its expenses.

Presiding Officer’s Decision i1411008 6-01-16

Filing Date 6-01-16
PRESIDING OFFICER’S DECISION
including Attachment A
Adopted Remedies Proposed by CPSD in I.11-02-016
(Recordkeeping OII)

ADDENDUM:

Decision on Fines and Remedies to Be Imposed on Pg&e 4-09-15

Filing Date 4-09-15
DECISION ON FINES AND REMEDIES TO BE IMPOSED ON PACIFIC GAS AND ELECTRIC COMPANY FOR SPECIFIC VIOLATIONS IN CONNECTION WITH THE OPERATION AND PRACTICES OF ITS NATURAL GAS TRANSMISSION SYSTEM PIPELINES