Court upholds PG&E penalty for San Carlos failures

An appeals court has upheld state regulators’ US$14.35 million fine against Pacific Gas & Electric Co. for taking more than seven months to report defects in a natural gas pipeline in San Carlos.

The utility, which now faces a separate US$1.6 billion penalty for the San Bruno blast, argued that the fine issued by the California Public Utilities Commission for San Carlos was excessive and should not have been imposed at all for what it described as an inadvertent mistake that harmed no one. The First District Court of Appeal in San Francisco rejected those arguments.

PG&E said it would not appeal. “We accept the court’s ruling,” said company spokesman Donald Cutler.

The commission voted in April to penalise PG&E US$1.6 billion for the September 2010 pipeline explosion in San Bruno that killed eight people, injured 58 and destroyed 38 homes.

The company has also been indicted on federal criminal charges that carry potential multibillion-dollar fines.

After the explosion, the commission ordered PG&E to improve its record-keeping and reporting of potential pipeline safety problems. In July 2013, the utility revealed, in an apparently routine one-page filing, that a 3.8 mile transmission line in San Carlos contained seam welds, like those implicated in failures of other pipelines, and could not be operated safely at the maximum pressure level the commission had previously approved.

Details of the latest San Carlos ruling

In the 63 page order, the First District Court of Appeal determined the fine, the largest ever imposed by the PUC for a violation of its ethics rule, was not unconstitutionally excessive.

The commission's calculation was based on a $50,000-per-day penalty running from the time PG&E discovered its error to the day it was formally corrected to the agency's satisfaction by PG&E's lead counsel at Orrick, Herrington & Sutcliffe.

"Although the amount is large, so is the real and potential harm caused by PG&E's inaction," Justice James Richman wrote in a decision joined by J. Anthony Kline and Marla Miller. "PG&E does not argue that it lacks the ability to pay the fine."

Edited from various sources by Elizabeth Corner

Sources: SF GateThe Recorder

Published on 17/06/2015

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