The CPUC approved a $38 million fine against Pacific Gas and Electric Company (PG&E) as a result of a natural gas explosion and fire that occurred on December 24, 2008, in Rancho Cordova, Calif., which resulted in one fatality, other injuries, and property damage.
The CPUC determined that PG&E violated safety laws in several respects in connection with the Rancho Cordova explosion, which was caused by natural gas leaking from a PG&E distribution pipeline. Violations include:
- The September 2006 installation of pipe at Paiute Way was pipe that was not authorized for gas service;
- The pipe used in the repair at Paiute Way was not pressure tested in the manner required by law prior to reinstating gas service;
- The wall thickness of the gas pipe installed in Elk Grove, Calif., in October 2006 was thinner than allowed by gas piping specifications;
- PG&E failed to follow its internal procedures with respect to its October 2006 discovery of the installation of gas pipe with wall thickness below specifications in Elk Grove;
- PG&E did not administer drug and alcohol tests after the Rancho Cordova explosion to all employees whose performance on December 24, 2008, under the circumstances presented, could not be completely discounted as a contributing factor to the accident; and,
- PG&E's response to the neighborhood resident's December 24, 2008, telephone call reporting an outdoor gas leak odor on Paiute Way was unreasonably delayed and not effective.
A fine of $26 million was previously submitted by the parties to this proceeding for consideration by the Administrative Law Judge. That fine was rejected and a larger fine was put forth by the judge.
PG&E will not seek to recover from customers in rates any portion of the penalty and other costs associated with today's decision. The fine amount will be remitted to the state's General Fund.
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The CPUC has augmented its natural gas safety efforts by creating a citation program under which natural gas companies can be fined by CPUC staff for violating state and federal safety rules.
Under the citation program, CPUC staff now has the authority to issue a written citation to gas companies when during the course of an inspection a violation of General Order 112-E or federal standards is found. Each day of an ongoing violation may be counted as an additional offense. Each citation will assess the maximum penalty amount set forth under the Public Utilities Code. The maximum penalty amount is currently $20,000 for each offense, and this amount will increase to $50,000 under recently enacted legislation
Citations and appeals will be posted to the CPUC's website, and gas companies are required to notify local authorities within 10 days when a citation is issued in their jurisdiction. The CPUC will prepare a quarterly report that briefly lists the citations issued, the categories of those citations, any appeals that have been submitted, and whether staff has noted any trends in the violations for which the citations are issued.
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The CPUC will continue funding for energy efficiency, Research, Development, and Demonstration (RD&D), and renewable energy programs through 2012.
The CPUC in December 2011 authorized the Electric Program Investment Charge to fund renewables and RD&D programs. The rates and allocations for this program are at the same levels as for the soon-to-expire Public Goods Charge (PGC), after subtracting an energy efficiency component. The Electric Program Investment Charge is instituted on an interim basis, subject to refund, until program and allocation issues are decided in a future CPUC proceeding.
Separately, also in December 2011, the CPUC made funding available to backfill at the currently authorized level expiring funding for efficiency programs in 2012. The CPUC did not determine whether or which energy efficiency programs will require the current level of funding after 2012. The funding used to replace the PGC will be recovered just as the PGC would have been - on the basis of usage and not as a general rate, which ensures that utility energy efficiency programs will continue to have adequate funding to fulfill policy mandates.
The PGC was established in the wake of the 2000-2001 California energy crisis. The statute authorized the collection of funds for energy efficiency, renewables, and RD&D programs from January 1, 2002 to January 1, 2012. Because the current energy efficiency program cycle operates from 2010-2012, the 2012 programs are underfunded due to the Legislature not extending the January 1, 2012, deadline before the close of the 2011 legislative session. The action by the CPUC provides the necessary funding to complete the 2012 cycle year for energy efficiency programs along with the continued support for the renewables and RD&D programs.
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