PG&E 2012 Annual Report Download - page 115

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 15: COMMITMENTS AND CONTINGENCIES (Continued)
Utility. (See ‘‘Penalties Conclusion’’ below.) Although the Utility, the SED, and other parties have engaged in
settlement discussions in an effort to reach a stipulated outcome to resolve the investigations, the parties have not
reached an agreement. PG&E Corporation and the Utility are uncertain whether or when any stipulated outcome
might be reached. Any agreement regarding a stipulated outcome would be subject to CPUC approval.
The CPUC has concluded evidentiary hearings in each investigation. The CPUC administrative law judges
(‘‘ALJs’’) who oversee the investigations have adopted a revised procedural schedule, including the dates by which
the parties’ briefs must be submitted. The ALJs have also permitted the other parties (the City of San Bruno, The
Utility Reform Network, and the City and County of San Francisco) to separately address in their opening briefs
their allegations against the Utility, if any, in addition to the allegations made by the SED. The ALJs have ordered
the SED and other parties to file single coordinated briefs to address potential monetary penalties and remedies
(which could include remedial operational or policy measures) for all three investigations by April 26, 2013. After
briefing has been completed, the ALJs will issue one or more presiding officer’s decisions listing the violations
determined to have been committed, the amount of penalties, and any required remedial actions. Based on the
revised procedural schedule, one or more presiding officer’s decisions will be issued by July 23, 2013. The decisions
would become the final decisions of the CPUC thirty days after issuance unless the Utility or another party filed an
appeal, or a CPUC commissioner requested review of the decision, within such time.
CPUC Investigation Regarding the Utility’s Facilities Records for its Natural Gas Pipelines
In February 2011, the CPUC commenced an investigation pertaining to safety recordkeeping for Line 132, as
well as for the Utility’s entire gas transmission system. Among other matters, the investigation will determine
whether the San Bruno accident would have been preventable by the exercise of safe procedures and /or accurate
and technical recordkeeping in compliance with the law. In March 2012, the SED submitted testimony alleging that
the Utility committed numerous violations of applicable laws and regulations based on the findings of the SED’s
records management consultant and an engineering consultant. Among other findings, the consultants’ reports
concluded that: the Utility’s recordkeeping practices have been deficient and have diminished pipeline safety; the San
Bruno accident may have been prevented had the Utility managed its records properly over the years; and that the
Utility has been operating, and continues to operate, without a functional integrity management program. The Utility
submitted testimony to the CPUC that acknowledged that improvements are needed to its asset management system
and recordkeeping practices, but disputed many of the SED’s findings and allegations. The CPUC concluded
evidentiary hearings in this investigation in January 2013. Briefing on the issue of alleged violations is scheduled to
be completed on April 19, 2013.
CPUC Investigation Regarding the Utility’s Class Location Designations for Pipelines
In November 2011, the CPUC commenced an investigation pertaining to the Utility’s operation of its natural gas
transmission pipeline system in or near locations of higher population density. Under federal and state regulations,
the class location designation of a pipeline is based on the types of buildings, population density, or level of human
activity near the segment of pipeline, and is used to determine the maximum allowable operating pressure up to
which a pipeline can be operated. In its May 2012 investigative report, the SED cited the Utility’s admissions in
previous reports to the CPUC that it had failed to classify pipeline segments properly and to document past patrols
of transmission lines and concluded that these failures resulted in over three thousand violations of state and federal
standards. On July 23, 2012, the Utility submitted testimony in response to the SED’s report that acknowledged
deficiencies in the Utility’s past class location and patrol processes and described the efforts to improve those
processes. The CPUC concluded evidentiary hearings in this investigation in September 2012 and briefing on the
issue of alleged violations has been completed.
CPUC Investigation Regarding the San Bruno Accident
In January 2012, the CPUC commenced an investigation to determine whether the Utility violated applicable
laws and requirements in connection with the San Bruno accident, as alleged by the SED. In its January investigative
report, the SED alleged that the San Bruno accident was caused by the Utility’s failure to follow accepted industry
practice when installing the section of pipe that failed, the Utility’s failure to comply with federal pipeline integrity
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