PG&E's Actions Getting Scrutiny

A public menace:

Pacific Gas and Electric Co. diverted more than $100 million in gas safety and operations money collected from customers over a 15-year period and spent it for other purposes, including profit for stockholders and bonuses for executives, according to a pair of state-ordered reports released Thursday.

...The documents link a deficient PG&E safety culture - with its "focus on financial performance" - to the pipeline explosion in San Bruno on Sept. 9, 2010, that killed eight people and destroyed 38 homes.

The "low priority" the company gave to pipeline safety during the three years leading up to the San Bruno blast was "well outside industry practice - even during times of corporate austerity programs," said the audit by Overland Consulting of Leawood, Kan.

...By cutting back on pipeline-replacement projects and maintenance, laying off workers, using cheaper but less effective inspection techniques and trimming other pipeline costs, PG&E saved upward of 6 percent of the money designated for pipeline safety, maintenance and operations programs, the Overland audit said.

Meanwhile, on the revenue side, transmission pipeline operations were "very profitable" for PG&E since March 1998, the audit said.

Assemblyman Jerry Hill, D-San Mateo, whose district includes San Bruno, called the company's diversion of customers' money "criminal behavior."

"When you divert funds intended for maintenance and safety to profits, there is nothing clearer," Hill said. "It is criminal."

..."It is truly unconscionable that PG&E was allowed by the CPUC to steal ratepayer monies that should have been spent on safety and, instead, was put in the pockets of PG&E shareholders," said Rep. Jackie Speier, D-Hillsborough, who represents the devastated San Bruno neighborhood. "All these monies identified in the audit should be returned to ratepayers, presumably as a credit against the work that PG&E should have done, but didn't."

...Before PG&E "seeks additional ratepayer funds," the commission said, it should:

-- Allocate $95.4 million that the company under-spent on capital expenditures since 1997 - including pipeline replacement - for those purposes.

-- Use the $430 million in additional revenue it collected since 1999 "to fund future transmission and storage operations."

-- Use $39.3 million that it collected but failed to spend for pipeline-transmission operations and maintenance since 1997 for those purposes.

...A Chronicle investigation published in March revealed that in 2000, PG&E sharply curtailed a program started in the mid-1980s to replace hundreds of miles of aging gas-transmission pipe. Records obtained by The Chronicle showed the decision was made by PG&E and approved by the utilities commission's safety chief.

The Overland audit noted that PG&E's replacement of transmission pipelines for safety purposes all but ceased in 2000.

...Some key revelations in reports by the California Public Utilities Commission and auditors hired to investigate the deadly 2010 explosion of a Pacific Gas and Electric Co. gas pipe in San Bruno.

Testing: PG&E violated U.S. law by not conducting pressure-test inspections of the San Bruno pipeline after the company spiked gas levels in 2003 and 2008. Such tests would have revealed the substandard condition of the pipe and averted the 2010 disaster.

Video: PG&E destroyed a video of events at its gas-control center in Brentwood the night of the explosion, violating a state order.

Upkeep: PG&E diverted over the years more than $100 million collected from customers for pipe maintenance, replacement and safety to other purposes, including profit and executive bonuses.

Money: PG&E's gas transmission and storage operations collected $430 million over what the PUC authorized from 1998 to 2010.