CPUC: PG&E, Not Customers, to Pay Majority of Costs to Upgrade Pipelines

In issuing the preliminary decision about PG&E's proposed gas pipeline safety plan, the CPUC said this is only the beginning of a permanent change that has to take place with PG&E and other pipeline operators throughout the state.

The CPUC issued a preliminary decision today to approve PG&E's new safety plan that would modernize its pipeline system, but PG&E will have to absorb two-thirds of the cost.

PG&E initially proposed that the upgrades to its natural gas transmission operations, which came in the wake of the 2010 San Bruno fire, would cost about $2.2 billion over several years.

The utility wanted ratepayers to pick up 85 percent of the tab because the billions PG&E would be spending represents costs to meet new, industrywide standards set by the California Public Utilities Commission.

According to the plan, PG&E requested $768 million in rate increases through 2014 to cover initial costs. However, the CPUC only authroized $277 million, or 36 percent, of the amount PG&E requested because of the utility's previous mismanagement of pipeline safety.

The decision, which still has to be approved by the five-member commission, also stated:

  • PG&E shareholders will bear the costs of pressure testing pipeline for which pressure test records are missing.
  • PG&E must continue its gas pipeline record management improvement project; however, due to past deficiencies in document management, the costs of this project and the proposed new computer database may not be recovered from ratepayers.
  • PG&E’s shareholders must bear the risk of cost overruns because PG&E’s past management decisions led to the need to undertake the massive project on an expedited schedule.
  • Shareholder return on equity for all safety enhancement capital expenditures is reduced from 11.35 percent to 6.05 percent for five years.

The commenting period is now open for members of the public to respond to the CPUC's proposal. Comments by parties involved in the proceeding are due by Nov. 13, and comments from the public are due by Nov. 26.

A copy of the preliminary decision can be found on the CPUC's website.

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Kevin Gove October 14, 2012 at 08:59 PM
Talisa, I try to avoid feeding the trolls that are pervasive on this forum. They are easy to identify....spewing their views and ready to pounce if anyone offers a different viewpoint. It wouldn't be so bad if they didn't feel necessary to shout down, and resort to ad hominem attacks to support their opinions.
Dalamar October 14, 2012 at 09:44 PM
Hello David, There's no confusion as I've already posted at 10:31am today. In addition, yes there should be a discussion of closing the tax loopholes for corporations as well as the top 4% (or anyone else for that matter) who pay little or no taxes. Yes I do understand tax codes, liabilities, deductions, credits, etc etc. Which is exactly why in no uncertain terms would I support a flat tax. Here's a good read why not Alan Blinder: The Folly of the Flat Tax - WSJ.comonline.wsj.com/.../SB10001424052970204358004577032311 And however you want to define tax breaks, tax incentives or subsidies... We The People (govt) do provide 'free' security through the U.S. military to the U.S. oil industry. What do we get in exchange for providing the 'free' security? Ironically, the U.S. military is the biggest consumer of the same oil it protects especially during war time. And we are in last place among industrialized countries when it comes to alternative energy. Read- US Could Learn Plenty from European Energy Policy | Common ...https://www.commondreams.org/view/2010/07/02 Why are we last? Circular logic. It costs too much to build the infrastructure to harness renewable energy. But the 'costs' are really an investment which will pay near endless amounts of dividends for everyone, not just a select few. And because the select few will not see the profits they see now with fossil fuel, renewable energy is labeled 'unprofitable' and therefore unuseable.
Dalamar October 14, 2012 at 09:57 PM
Other good reads about Europe's success in renewable energy. Renewable energy in the EU: which countries are set to reach their ...www.guardian.co.uk › News U.S. lags Europe, Indonesia in producing clean energycontent.usatoday.com/communities/.../us...europe...energy
David October 15, 2012 at 06:56 PM
"Green energy" leader Germany facing power shortages, oh, and rates are going up 50%: http://www.telegraph.co.uk/news/worldnews/europe/germany/9609777/Germany-facing-power-blackouts.html
Kevin Gove October 16, 2012 at 06:54 PM
David. I’m not sure what your position is regarding Green Energy and why you think this article supports your views? You may also want to read the article again because your assessment is not correct. Electricity rates are not increasing by 50%. The special assessment that is assigned to support green energy suppliers is. And the shortages are not caused by green energy anymore than the shortages that we experience are caused by non-green energy. It is a supply and demand question right? My take away from the German experience is that all forms of energy should be considered and it is important to be transparent in what the government is doing. In my opinion, Green energy has to be explored for any number of reasons (environmental, economic etc.) and it is prudent that government encourage the research/development that leads us away from carbon based fuels.


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