Until recently, if there was a problem with a large gas pipeline — say, if it was likely to rupture in an earthquake — the only people who would know would be a handful of Pacific Gas & Electric engineers.
And if the utility corporation asked the state for permission to raise rates to pay to fix that problem, and then decided to wait a few years to do that, it never had to inform the state of that decision.
All that could change with legislation introduced Monday, which would tighten regulatory control over California’s utilities in the wake of the devastating explosion of a gas transmission pipeline in San Bruno on Sept. 9. That explosion and the fire it set killed eight people and destroyed dozens of homes.
The cause is still unknown and under investigation by federal officials, but nonetheless the event has inspired careful scrutiny of the utility’s practices and its relationship with its regulator, the California Public Utilities Commission.
The legislation, introduced by State Assemblyman Jerry Hill, D-San Mateo, would require a number of things from PG&E, which has a monopoly over almost all of Northern California, and the handful of other utilities in the state.
Any pipeline problems identified, and any conditions requiring repair, would have to be reported to the CPUC each year under the new legislation. And if a project was used as a reason to increase rates, the CPUC would be required to track that project to ensure it happens on time. If it doesn’t, PG&E must make a public filing justifying the change.
Utilities would be required to prioritize pipeline projects near seismically unstable areas.
Ratepayers would also be protected from having to pick up the costs of problems stemming from negligence by the utility — instead, the money would come from PG&E’s profits. PG&E would also be required to pay any penalties or fines assessed by CPUC out of profits, rather than ratepayer funds.
The legislation would also require utilities to install automatic or remote shutoff valves on pipelines where it’s technically feasible, and upgrade pipelines to allow modern inspections.
Mindy Spatt, spokeswoman for The Utility Reform Network, said she had not seen the legislation, but said the agency "strongly agrees that ratepayers should not be held responsible for this explosion" and that costs associated with the explosion should come from profits.
"We know that PG&E has huge profits, and with their profits should come some responsibility," she said.
PG&E officials said they were reviewing Hill’s legislation.
"We’re committed to working with Assemblyman Hill and other legislators to develop and pass robust pipeline safety legislation," said spokesman Denny Boyles.
Legislation proposed Monday would impose much stricter regulations on PG&E and other utilities in the state.
Inspections: All pipelines would be modernized by 2020 to allow for modern corrosion inspections.
Pipeline problems: Utilities must prepare annual reports regarding any pipeline problems and any conditions requiring repair.
Penalties from profits: Utilities would have to pay for fees and penalties out of their own profits, not from ratepayer money.
Emergency education: Starting 2012, utilities must educate the public about their emergency response plans.
Earthquake zones: Pipelines near seismically active areas would be given more safety oversight.
Quick shutdowns: Automatic or remote shutoff valves would be required where technically feasible.
Tracking fixes: Regulators will track projects that PG&E receives rate hikes for. When the money is diverted to a different project, the utility must make a public filing justifying the change.