PG&E Corp. (PCG) on Friday proposed spending $769 million over three years to test its natural gas pipelines as part of a $2.2 billion pipeline safety program, following a deadly pipeline explosion last year.
PG&E said it will pressure-test all of its untested pipe segments and expand use of automated pipeline shut-off valves. The utility has proposed passing on the cost of the project to its customers, with a $250 million rate increase in 2012 and subsequent increases of $30 million and $80 million in 2013 and 2014, respectively.
Overall, the utility said it plans to spend $2.2 billion through 2014 on pipeline safety costs.
In June, the California Public Utilities Commission ordered PG&E and the state’s other natural gas utilities, owned by Sempra Energy (SRE), to file by Friday plans to test or replace their gas transmission pipelines that haven’t been tested with high-pressure water techniques.
The plans are part of the CPUC’s effort to beef up the state’s pipeline safety regulations and improve its own oversight over the state’s thousands of miles of natural gas pipelines.
On Sept. 9, a PG&E pipeline in San Bruno, Calif., exploded, igniting a fireball that killed eight people, injured several others and destroyed 38 homes.
The National Transportation Safety Board, which has been investigating the cause of the explosion, is scheduled to issue a final report on its findings Aug. 30.
The NTSB has suggested in interim reports that poor record-keeping and a lack of safety tests by PG&E likely masked manufacturing defects in the 55-year-old San Bruno pipeline. The agency also found that the company didn’t provide the local fire department and other emergency responders with information they needed to react properly to the pipeline explosion.
The U.S. Department of Justice has been leading a criminal investigation into the explosion, and several lawsuits have been filed against the utility.
In June, an independent panel of experts concluded that PG&E had a “dysfunctional culture” that gave little heed to public safety or the high level of technical expertise needed to safely operate a gas pipeline system.
The CPUC has launched a separate probe to determine whether PG&E’s poor record-keeping violated any rules or laws that might warrant penalties. The CPUC also is considering new pipeline-safety rules for PG&E and other pipeline operators in the state and has promised to beef up its oversight of PG&E and the state’s pipelines.
Earlier this month, PG&E announced it hired a new chief executive, Anthony Earley, to replace former CEO Peter Darbee, who left the company in the wake of the disaster.
The company has said damage claims from the accident could total as much as $400 million, and that other costs associated with the accident could total $1.1 billion through 2012.
In July, credit rating company Fitch Ratings lowered its outlook on the company, saying continued fallout from the accident has added uncertainty to its credit status.
The utility said Friday it will enhance electronic monitoring of its gas system to quickly identify ruptures and replace segments in need of new piping. It also plans to transition to electronic records from paper documents to streamline the testing and repair process.
“This plan represents a clear break with the way PG&E and other gas utilities once approached pipeline safety,” Nick Stavropoulos, PG&E’s new executive vice president of gas operations, said in a statement.