Ratepayers on the Hook for PG&E’s Neglect

Red tape marks a burned home in San Bruno. On September 9, a gas line rupture caused a large explosion killing four people and leveling dozens of homes. (AP Photo/Noah Berger).

By Ralph E. Stone

September 22, 2010

On Monday, Pacific Gas & Electric (PG&E) released a list of its top 100 “projects,” or aging pipelines, in need of replacement or repair. The San Bruno pipeline segment, which exploded on September 9, 2010 wasn’t even on the list. As Tuesday’s San Francisco Chronicle noted, regulators had approved PG&E’s request for $4.9 million to repair the South San Francisco segment of the pipeline, but PG&E spent the money elsewhere, and then in 2009 came back with a request for $5 million to do the job.

Who is going to pay for the aging infrastructure identified by PG&E?

Remember the 2003 record bankruptcy bailout that put ratepayers on the hook to pay PG&E’s creditors and resuscitate the corporation? It added to the $8 billion in previous bailout funds already paid to PG&E by its ratepayers since 1998, bringing the bailout total to over $16 billion. The bailout plan was approved by the Public Utility Commission despite accusations that PG&E’s officers siphoned $4 billion to its unregulated holding company, PG&E Corporation, out of the $8 billion in “Competition Transition Surcharge” funds already paid to PG&E by its ratepayers between 1998 and 2000.

And to add insult to injury, just weeks after handing out $50 million in bonuses while on the verge of financial collapse, PG&E received the judge’s permission to award $17.5 million in additional payouts to the management team that guided the utility into bankruptcy.

State Senator Mark Leno with help from consumer rights group The Utility Reform Network (TURN) is reportedly crafting a bill that would block publicly regulated utilities from seeking a rate increase to cover the cost from fires or other catastrophes that were the cause of their own negligence. Leno stated: “Ratepayers should not be on the hook to provide utilities with an open checkbook to cover excess expenses when catastrophic damages happen because the utility failed to do its job to protect the public.”

However, given PG&E’s history vis-a-vis the State, guess who’s going to pay for the repair of the aging infrastructure that PG&E neglected for decades? You guessed it. We ratepayers.

Ralph E. Stone

I was born in Massachusetts; graduated from Middlebury College and Suffolk Law School; served as an officer in the Vietnam war; retired from the Federal Trade Commission (consumer and antitrust law); travel extensively with my wife Judi; and since retirement involved in domestic violence prevention and consumer issues.

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