PG&E 2012 Annual Report Download - page 28

Corporation and the Utility have incurred total cumulative charges to net income of $1.83 billion related to natural
gas matters.
2012 2011 2010 Total
(in millions)
Pipeline-related expenses(1) ........ $ 477 $ 483 $ 63 $ 1,023
Disallowed capital expenditures(1) ... 353 ——353
Accrued penalties(2) ............. 17 200 — 217
Third-party claims(3) ............. 80 155 220 455
Insurance recoveries(3) ............ (185) (99) —(284)
Contribution to the City of San
Bruno(4) .................... 70 ——70
Total natural gas matters ......... $ 812 $ 739 $ 283 $ 1,834
(1) See ‘‘CPUC Gas Safety Rulemaking Proceeding’’ below.
(2) See ‘‘Pending CPUC Investigations and Enforcement Matters’’ below.
(3) See ‘‘Third-Party Claims’’ below.
(4) On March 12, 2012, the Utility and the City of San Bruno entered into an agreement under which the Utility contributed
$70 million to support the city and the community’s recovery efforts.
Pending CPUC Investigations and Enforcement Matters
The CPUC is conducting three investigations of the Utility’s natural gas operations that relate to (1) the Utility’s
safety recordkeeping for its natural gas transmission system, (2) the Utility’s operation of its natural gas transmission
pipeline system in or near locations of higher population density, and (3) the Utility’s pipeline installation, integrity
management, recordkeeping and other operational practices, and other events or courses of conduct, that could have
led to or contributed to the San Bruno accident. (See Note 15 of the Notes to the Consolidated Financial
Statements.) Although the Utility, the CPUC’s Safety and Enforcement Division (‘‘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 of these investigations. 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. (See ‘‘Penalties Conclusion’’
below.)
Other Potential Enforcement Matters
California gas corporations are required to provide notice to the CPUC of any self-identified or self-corrected
violations of certain state and federal regulations related to the safety of natural gas facilities and the corporations’
natural gas operating practices. The CPUC has authorized the SED to issue citations and impose penalties based on
self-reported violations. In April 2012, the CPUC affirmed a $17 million penalty that had been imposed by the SED
based on the Utility’s self-report that it failed to conduct periodic leak surveys because it had not included 16 gas
distribution maps in its leak survey schedule. (The Utility has paid the penalty and completed all of the missed leak
surveys.) As of December 31, 2012, the Utility has submitted 34 self-reports with the CPUC, plus additional follow-
up reports. The SED has not yet taken formal action with respect to the Utility’s other self-reports. The SED may
issue additional citations and impose penalties on the Utility associated with these or future reports that the Utility
may file. (See ‘‘Penalties Conclusion’’ below.)
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