The profits of gas utilities would be directly tied to their safety records if new legislation inspired by the 2010 San Bruno pipeline explosion becomes law.
State Assemblyman Jerry Hill, whose San Mateo County district includes the site of the explosion and fire that killed eight people, introduced the legislation Monday after a news conference on the steps of the California Public Utilities Commission in San Francisco.
“Until we tie profits and until we tie the rate of return to safety, there’s no carrot,” Hill said.
The commission sets a utility’s rate of return, or how much it can return to its shareholders in profits. Hill’s proposed legislation would require the agency to take safety records into consideration when determining this rate.
Hill cited a trade journal article that said PG&E reported 2010 profits in the top 3 percent of all regulated gas and electric utilities nationwide.
“With their behavior and their actions and their history, they don’t deserve to be at that place,” Hill said. “If you’re an unsafe private company, you’re not going to make the profits. You’re going to go out of business. But we’re stuck with them because they have a monopoly.”
Hill said he also hopes to get two other bills that he introduced last year passed into law this year. One would force the CPUC to adopt pipeline safety recommendations from the National Transportation Safety Board or issue a written explanation if it decides not to do so. Another would protect whistle-blowers who work for utility companies.
CPUC spokesman Andrew Kotch said the agency was already working on implementing the safety board’s recommendations. The commission also already had scheduled a workshop Wednesday to discuss how it should consider safety when setting rates.
“We welcome Assemblyman Hill’s interest in our ongoing safety efforts,” Kotch said.
PG&E replaced its chief executive and executive vice president for gas last year, a move that utility spokesman Brian Swanson said was part of an overall effort to improve safety. He said the utility already has an internal whistle-blower protection program and has already implemented several recommendations issued by the NTSB after its investigation into the San Bruno blast.
“In general, we are supportive of any efforts to enhance public safety,” Swanson said.
But he added that the utility would not support Hill’s new legislation.
“We believe CPUC has many other mechanisms to regulate our performance on safety,” he said. “The rate of return is not the appropriate vehicle for this regulation.”