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Hill Urges PUC to Adopt Plan That Will Save PG&E Ratepayers Over $700 Million

PUC to vote on ratepayers’ share of the $2.2 billion PG&E gas pipeline repair plan.

What: Sen. Jerry Hill, D-San Mateo, who led the effort after the deadly San Bruno explosion to reduce how much Pacific Gas & Electric Co. ratepayers will pay to repair hundreds of miles of gas pipelines, will speak before the California Public Utilities Commission (CPUC) votes Thursday on PG&E’s $2.2 billion safety plan.  Hill will urge the CPUC to adopt the administrative law judges’ recommendation that ratepayers pay only 55 percent of the cost compared to PG&E’s original request that customers pay over 90 percent. 

In July 2011, PG&E proposed saddling ratepayers with more than 90 percent of the costs, a share that Hill said would be grossly unfair to the utility’s customers while rewarding PG&E – which should have been maintaining the pipeline system – for cutting costs to maximize shareholder profits.

For more than a year, Hill – joined by the CPUC’s Division of Ratepayer Advocates, The Utility Reform Network and the cities of San Bruno and San Francisco – waged public and administrative battles to reduce the ratepayer amount.

In October,  an administrative law judge ruled that ratepayers should pick up 55 percent of the costs and PG&E the remaining 45 percent, a decision the CPUC’s staff has recommended the commission approve at its monthly meeting.

“By forcing PG&E to pay a more equitable share, we have saved ratepayers over $700million dollars,” said Hill, who represents San Bruno.  “I urge the CPUC to adopt the judges’ ruling and make sure that PG&E doesn’t profit from the San Bruno tragedy.”

When:  Thursday, Dec. 20, at 9 a.m.  Public Testimony

Where:  California Public Utilities Commission. 505 Van Ness Avenue, San

Contact:  Aurelio Rojas, communications director, 916-747-3199 cell or 916-651-4013 office or Leslie Guevarra, 415-298-3404 cell or 650-688-6384 office

Background:  Administrative law Judge Maribeth Bushley, in a ruling that must be approved by the commission, found that PG&E should pay a larger share of the cost of its pipeline safety plan because the company allowed its pipeline system to deteriorate.

The draft ruling requires PG&E to test 783 miles of pipeline using high-pressure water and replace another 186 miles over the life of the program. PG&E will also install 228 automated shutoff valves on gas lines and modify 199 miles of pipeline so they can be inspected by in–line tools known as smart pigs.

The administrative law judge ruled that PGE&E shareholders will have to pay for all water-pressure testing on gas lines that the company installed after 1955 and for which it has no records attesting to the pipes’ strength.

Under her ruling, ratepayers will pay the more than $881 million she allowed PG&E to bill for pipeline replacement, along with more than $300 million for valve replacements and other costs. But ratepayers will not be responsible for the millions of dollars it will cost to update the company’s pipeline records.

Citing the company’s “long-standing avoidance of sound, safety engineering-based decision making in favor of financially motivated nominal regulatory compliance,” Bushley slashed the guaranteed return that PG&E normally receives on its capital investments from 11.35 percent to 6.05  percent for five years.

Nate Solov  Office of Senator Jerry Hill




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