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Commission Debates Who Should Pay for Pipeline Upgrades

TURN demanding shareholder accountability for PG&E's mistakes

SAN FRANCISCO—Assemblyman Jerry Hill and consumer advocates spoke out against a proposed PG&E plan Monday that they say would dump much of the cost of pipeline maintenance and upgrades onto PG&E customers.

"All these years we've been paying our monthly gas bills assuming that PG&E was providing a safe, well-managed system," said Hill, D-San Mateo, at a news conference outside the California Public Utilities Commission meeting in San Francisco Monday morning.

"Now PG&E wants its customers to pay higher gas bills for 50 years for service we thought we were paying for all along," Hill said.

Hearings on PG&E's Pipeline Safety Enhancement Plan began Monday before the CPUC. Work has been under way since last year, but PG&E says it is only seeking to recover costs for projects carried out between 2012 and 2014.

"We're not seeking any costs from prior projects," PG&E spokeswoman Brittany Chord said. "We're taking a massive effort on taking a closer look at our system."

PG&E says the work that is being done is in response to new regulations that have taken effect since the San Bruno explosion in September 2010.

According to Hill, PG&E's proposal will only put 5 percent of the overall cost of the plan on PG&E, with the rest of it falling onto PG&E customers.

"Forcing customers to now pay for work PG&E was neglecting all these years is also not fair," Hill said.

Phase 1 of the plan began last year and runs through the end of 2014. The proposal in front of the CPUC is looking to recoup most of the cost of that phase, but the utility is not seeking ratepayer money to cover work performed last year.

PG&E shareholders paid more than $220 million in 2011 to cover the costs of replacement and repairs to pipelines, Chord said.

Phase 2 of the project does not have a fiscal plan laid out yet, but PG&E will be presenting a proposal for that when the planned 2015 start date nears, the company's website states.

Phase 1 is estimated to cost $2.1 billion over its duration, and PG&E is looking to recover more than $1.9 billion, the utility company said.

This would result in a gas service rate increase this year of 4.26 percent for residential customers, or an average $1.85 per month, Chord said.

She said businesses could see an average bill increase of $14.33.

"For us this is about building a gas transmission system that is safe, reliable, and affordable for our customers," Chord said.

PG&E has been heavily criticized since the San Bruno explosion, which killed eight people and destroyed 38 homes.

The utility recently settled with the city of San Bruno and agreed to pay $70 million in restitution.

Representatives of The Utility Reform Network, a consumer advocacy group, also spoke prior to today's hearing, claiming that PG&E could potentially profit over the course of the plan.

Hill said the utility could make a hefty profit because of a CPUC policy that allows it to collect a "generous" return on capital investments.

TURN executive director Mark Toney said, "The staff attorneys for TURN are in the proceeding and have worked very hard to demonstrate that PG&E is responsible for fixing these pipes, for paying for it... because of the pattern of the investigations that have shown PG&E to be negligent."

Toney also said PG&E has also been misusing funds meant for pipeline maintenance and has turned some of it into profits for shareholders.

"We have over $100 million that's been documented went into corporate profits," Toney said. "Our issue is that every penny of money that a company receives for pipeline safety is supposed to go to pipeline safety. We already see that not only did the money not go there but what the terrible consequences of not fixing the pipes are."
Date: March 18, 2012
Source: KTVU 2


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