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PG&E chairman announces company will spend millions on improvements

Utility to spend nearly $400 million on gas and electrical infrastructure in an effort to repair its tarnished reputation.

Acknowledging that the company’s reputation is “in tatters,” PG&E’s new Chairman and Chief Executive Officer Anthony Earley announced Thursday the utility will spend $400 million over the next two years to improve its electrical and natural gas infrastructure.

Earley, who took charge of PG&E in August, spent an hour with the Editorial Board of The Tribune outlining the changes he plans to make to restore customer trust in the utility in the aftermath of the deadly natural gas pipeline explosion in San Bruno and questions about the seismic safety of Diablo Canyon nuclear power plant.

“We have to delight our customers,” he said. “Our reputation is in such tatters that we cannot afford to just satisfy our customers.”

Earley estimated it will take three to five years to restore trust in the utility “one customer, one constituency at a time.”

He also met with Diablo Canyon employees and urged them not to become complacent about safety.

Earley said the utility plans to hire a new chief nuclear officer who will focus solely on Diablo Canyon. Current chief nuclear officer John Conway also oversees electrical generation and splits his time between Diablo Canyon and company headquarters in San Francisco.

The new nuclear officer will be stationed at Diablo Canyon and will fill an intermediary position between Conway and plant manager Jim Becker. Earley did not say when the position would be filled, but said the utility is looking at candidates both inside and outside the company.

While management of the utility’s largest asset, Diablo Canyon, is ranked among the best in the nation, the company’s level of customer satisfaction, distribution system maintenance and speed of service are among the third and fourth quartiles of the industry, Earley said.

Chief among PG&E’s woes is the September 2010 pipeline explosion in San Bruno that killed eight people. Investigations have since revealed that the company’s pipeline record keeping was a shambles; the utility just recently admitted further gaps in its pipeline survey maps.

“As the San Bruno tragedy showed, if you don’t invest in infrastructure, you are going to have very serious problems,” he said. PG&E does not deliver natural gas in San Luis Obispo County; Southern California Gas Co. does.

Concerning Diablo Canyon, seismic safety and storage of highly radioactive used reactor fuel are two of the community’s biggest concerns. The utility is in the midst of performing $64 million in seismic studies to determine the earthquake potential of the faults surrounding the plant.

Earley said he supports the recommendations of a federal committee that has proposed the establishment of several temporary regional storage sites to take spent fuel from the nation’s 104 nuclear reactors. With abandonment of plans to build a federal repository at Yucca Mountain in Nevada, Diablo Canyon’s spent fuel will be stored onsite for the foreseeable future.

Citing the nuclear industry’s need to coordinate with federal regulators, Earley declined to make any promises that PG&E would lower the density of fuel assemblies stored in Diablo Canyon’s spent fuel pools by accelerating their transfer to dry casks. The pools are near their storage capacity, and PG&E has considered as a safety precaution reducing the density — possibly as low as 600 assemblies per pool — but not to their original, low-density configuration of 270 assemblies.

Earley also wouldn’t promise that the utility would meet a summer deadline to sign over property it owns in Wild Cherry Canyon behind Avila Beach to create a 65 percent addition to Montaña de Oro State Park.

“The concept is great,” he said, but added he has not had enough time to get up to speed on the project.

PG&E is the largest private employer in San Luis Obispo County with 1,500 employees. Approximately 1,400 of these work at Diablo Canyon. The utility has nearly 15 million customers in Northern and Central California.

SOURCE: http://www.sanluisobispo.com/2012/01/19/1914608/pge-chairman-announces-improvements.html

PG&E Proposes Spending $769M To Test Gas Pipelines, $2.2B Overall

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.

SOURCE: http://online.wsj.com/article/BT-CO-20110826-714596.html