PG&E Never Used $5 Million Rate Hike It Touted For Repairs To Fix Pipeline It Admitted Was ‘High Risk’

pg&e Last week, a natural gas pipeline exploded in a San Bruno, California, neighborhood. The explosion, which let loose “a thunderous roar heard for miles,” destroyed scores of homes and killed at least four people.

Now, a consumer advocacy group has discovered that the company that operated the faulty pipeline, Pacific Gas & Energy (PG&E), had classified it as “high risk” and failed to utilize the funds it had collected from a rate hike to repair it. The Utility Reform Network (TURN) has obtained documents detailing the energy giant’s request to the California Public Utilities Commission (PUC) for a rate hike in 2007. PG&E asked the PUC for permission for a $5 million rate hike to “replace a section of the same pipeline that blew up in San Bruno.” The PUC approved PG&E’s request, allowing it to hike its rates so that it could repair the line in 2009.

Yet the energy giant failed to go through with its scheduled repairs. And in 2009, it once again requested a rate hike from the PUC, again for $5 million. In its request, PG&E warned that if “the replacement of this pipe does not occur, risks associated with this segment will not be reduced. Coupled with the consequences of failure of this section of pipeline, the likelihood of a failure makes the risk of a failure at this location unacceptably high.” Despite these admitted risks, the company could only promise to make its repairs by 2013.

Local news station KTVU asked PG&E President Chris Johns why his company failed to make the repairs on schedule, despite recognizing that the pipeline was a considerable risk and using a rate hike on consumer to do it. “Some things happen when we’re going down, and a year later maybe some other item becomes more emergent that we need to fix,” replied Johns. “And so that’s why we will redirect funds to take care of the things that are urgent today, and then go back and say what are the things that are urgent tomorrow.”

While the company failed to spend the $5 million it took from customers in 2009 to repair the faulty pipeline, it did spend that exact same amount in the same year on bonuses for its executives, according to TURN. Many California families are worried about future pipeline disasters, but the company is refusing to reveal the locations of its other underground pipelines, citing possible terror threats. Assemblyman Jerry Hill (D-San Mateo) is considering legislation to force PG&E to reveal the locations.


Calitics notes that while PG&E failed to use the millions it charged consumers in rate hikes to repair its pipeline, it did manage to spend millions of dollars supporting Proposition 16, which would’ve allowed it to secure its monopoly over the power sector in the state.

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