PG&E customers are being asked to pay again for more than $175 million in pipeline improvement projects that they had apparently already paid for in a rate hike three years ago.
The revelation comes amidst questions of why Pacific Gas & Electric Corp. delayed work on a pipeline that runs through San Bruno, work it initially scheduled to complete in 2009. The work was to be done within miles of where the pipe exploded into a tower of flames on Sept. 9, killing at least eight people and reducing dozens of homes to ashes.
PG&E originally said it would pay for that fix with money from a 2008 rate hike, which was granted. But the company came back and asked for the same project to be funded by a 2011 rate hike.
This incident was hardly isolated. A partial analysis of the rate-hike documents show that there were at least 18 cases that were paid for in the 2008 rate hike that are again listed as in need of funding for the 2011 rate hike. Ratepayers already paid some $220 million for those projects, and are being asked for $177 more for the same
State regulators at the California Public Utilities Commission said they were unaware of these double charges, in part because they don’t have the staff to pore over the documents. However, a spokeswoman for the CPUC noted there is nothing improper about this practice.
“Once PG&E has its revenue … it can make decisions that it believes are appropriate for the safety and reliability of its system, including switching out one project for another,” CPUC spokeswoman Susan Carothers said in an e-mailed statement.
Some of those projects have been deferred because other, more important projects came up, PG&E spokesman Joe Molica said. If a project is deemed more important to safety and reliability than the ones listed in the work papers, it takes precedence, and some projects are deferred, he noted.
“Our policy is to spend the funds where they can best be used to further the safety and the reliability of the system and best serve our system,” Molica said.
Molica noted that PG&E’s policy is to respond to every safety concern immediately, and many of the projects were not related directly or immediately to safety.
Indeed, many of the deferred projects did not directly relate to safety, such as expanding a pipeline in San Jose that is expected to reach capacity in the future. But other projects clearly did have potential risks associated with deferring them.
For example, PG&E asked for money in 2008 to replace a section of pipeline in Humboldt County that “travels through several areas prone to landslides and several known earthquake fault zones.” Now, PG&E has asked for funding for the project again, noting that “if no mitigation is to occur, the probability of losing large customers and line rupture would remain high.” This line is a main feed into the Eureka area and the Humboldt Bay Power Plant.
Joe Como, acting director of CPUC’s Division of the Ratepayer Advocate, described the double-charging practice as “curious,” and said it raises questions about both deferred maintenance and oversight.
“Why did they feel they needed the money in the first place if they didn’t spend it on that?” he said.
He said the CPUC does not “micromanage” its expenditures, but when PG&E fails to do a project its say it was going to do, it should at least receive a justification.
As it stands, nobody is checking whether promised projects are actually completed, Como said.
“Frankly, that would require a much bigger staff,” Como said.
He said this may change, as a panel is looking at ways the CPUC can improve its oversight of
Mindy Spatt, of The Utility Reform Network, a consumer advocacy group, said she was unaware of the “double charges” and couldn’t comment on the specifics, but she said customers deserve to know they’re “getting the safety that they’re paying for.”
“PG&E talks a good game when time comes to raising rates,” she said, “but it’s not clear they’re actually following through and delivering the safety we’re paying for.”
San Mateo project still unfinished
Among the projects that ratepayers are likely to pay for twice involves a pipeline in San Mateo.
As part of a rate hike in 2008, ratepayers paid $1.4 million aimed at moving 2,000 feet of 24-inch line that runs right next to the railroad tracks in San Mateo, to make way for a new Caltrain station.
In documents filed with the 2008 rate-hike request, the project was scheduled to be completed in 2009.
But the project was one of dozens that were deferred, according to a San Francisco Examiner analysis.
According to documents filed with 2011 rate-hike requests, the project apparently still needs $1.2 million in funding, and is now scheduled to be mostly completed by next year.
— Katie Worth
Projects that PG&E ratepayers are being asked to fund again, in millions of dollars:
|Replace emergency standby generator at Burney compressor Station||Burney||$1.5||$2.4|
|Evaporation pond liner replacement||Topock||$3.0||$1.8|
|Replace two compressor stations at Delevan||Colusa County||$50.0||$9.1|
|Rebuilding compressor units at Topock||Topock||$52.0||$81.1|
|vaporation pond replacement at Hickey compression plant||Mojave desert||$4.0||$4.8|
|6,100 feet of 10-inch gas transmission pipeline to serve new power point||Fresno||$1.8||$2.0|
|Expanded capacity for Blossom Hill distribution main||San Jose||$2.9||$3.3|
|Extend the Merced distribution system up M Street to the Bellevue Ranch development||Merced||$1.7||$1.8|
|Install 2.5 miles of 6-inch pipelines west of Galt||North of Lodi||$3.2||$2.6|
|Extend 30-inch gas transmission||Yolo||$75.0||$46.3|
|Replace 10,000 feet of 23-inch pipeline||Bakersfield||$5.0||$6.1|
|Replace 1.7 miles of 12-inch pipeline||Modesto||$2.0||$2.0|
|Replace 1 mile of 12.75-inch pipeline that crosses faults||Eureka||$1.3||$1.6|
|Replace 1.4 miles of 24-inch pipeline, within miles of Sept. 9 explosion site||South San Francisco||$4.9||$5.0|
|Relocate a 24-inch gas line to make way for regional light-rail project||Sacramento||$2.5||$2.2|
|Relocate a 24-inch gas line through Bay Meadows to make way for new Hillsdale Caltrain station||San Mateo||$1.4||$1.2|
|Upgrade 24 miles of 10-inch pipe to allow inspections||Redding||$4.2||$3.6|
|Replace 24-inch pipe where crosses Hayward Fault||San Pablo||$4.0||$1.0|