Regulators scrutinize proposed PG&E settlement

A settlement characterized by critics as a “backroom deal” between PG&E and its regulator was blasted in a hearing Monday, both for its content and how it came to be.

Among the harshest critics were members of the commission being asked to approve the deal next month. If they don’t do so, PG&E could be forced to defend itself against contempt charges.

The deal struck between PG&E and employees of the California Public Utilities Commission would resolve a conflict over whether the utility disregarded an order to submit documentation about pipeline safety. If approved, PG&E would pay a fine of $3 million to $6 million, but not admit guilt.

Commissioner Timothy Simon described the deal as a disappointing surprise.

“I am deeply concerned that my office was not at least notified of the fact that settlement discussions were in place and that a settlement had been adopted,” said Simon, who was appointed by Gov. Arnold Schwarzenegger.

Simon said the potential $6 million penalty — $3 million of which may never be paid if PG&E meets its deadlines — was exceedingly low, considering that a top PG&E executive recently received a $3.2 million severance package. He also complained that PG&E’s deadline for complying with the settlement is not sufficiently rigorous.

“Why will it take nearly a year after the San Bruno explosion for PG&E to demonstrate to the commission and the public that it’s not putting neighborhoods at risk of an explosion?” Simon said.

After a pipeline exploded in San Bruno and killed eight people, the commission ordered PG&E to re-evaluate the operating pressure of some 1,800 miles of gas transmission pipelines. Specifically, it asked for proof that PG&E’s pipelines could withstand their current operating pressures.

PG&E filed its documentation by the March 15 deadline. But within a day, CPUC executive director Paul Clanon accused the utility of contempt for failing to provide the required information, threatening to fine the company up to $1 million a day. The settlement stemmed from the negotiations that resulted.

PG&E attorney Joseph Malkin said Clanon’s letter took the utility by surprise, claiming that a “failure of communication” between the company and the agency’s staff led it to conclude that its submission was fine. Clanon said his staff never gave such assurances.

The deal itself came under fire from Commissioner Catherine J.K. Sandoval for giving PG&E too much flexibility and not providing the commission with enough oversight. The commissioner, a recent appointee of Gov. Jerry Brown, also griped that PG&E would not be obligated to comply with recommendations of the commission’s staff.

Malkin said PG&E is motivated to comply with such recommendations, but didn’t want to explicitly agree to it in the document.

“We didn’t want the power to go to anybody’s head,” he said.


What they said at the hearing on a proposed settlement with PG&E

“This isn’t simply a question of whether or not PG&E has turned in its homework on time.”

Stephanie Chin, The Greenlining Institute


“We shouldn’t be waiting to do actual improvements until we have all the records, and particularly when it’s going to take a very long time to get all of the records together.”

Theresa Mueller, S.F. deputy city attorney


“I can’t control the irresponsibility of some in the political world or in the media who refuse to characterize properly what the stipulation sets forth.”

— CPUC President Michael Peevey, criticizing the characterization of the settlement between PG&E and the CPUC as being too easy on PG&E

Arnold SchwarzeneggerBay Area NewsJerry BrownLocal

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