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Judge was too lenient in PG&E record-keeping case, CPUC safety division says

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Judge was too lenient in PG&E record-keeping case, CPUC safety division says

Calling PacificGas and Electric Co.'s gas distribution record-keeping system "farfrom safe," the California utility regulator's safety division charged thata judge was too lenienton the utility for its shortcomings.

The judge's proposeddecision in the California Public Utilities Commission's investigationsaid a "system that works over 99% of the time is not a system in need of improvement."The CPUC's Safety and Enforcement Division, however, said in a July 1 appeal ofthe ruling that the judge overlooked a great deal of important factors in drawingthis conclusion.

The utility's system has numerous mapping mistakes, even if notall of them have led to incidents like the ones that precipitated the investigation,the safety division contended. In the second half of 2014 alone, there were nearly400 documented mapping errors, and the commission also cannot be sure that it iseven aware of all the mapping errors that are out there, the division's appeal filingsaid. PG&E employees estimated that the company has installed tens of thousandsof plastic service lines in the past couple of decades without the pieces neededto locate the pipes, among other problems, the division noted.

"Finally, it should be noted that a system that is 99% safeshould still be improved," the Safety and Enforcement Division wrote in itsfiling with the CPUC. "If an airline company boasted a 99% flight success rate,it would have difficulty securing customers. If an automobile brake manufacturerhad a 99% stopping rate, a recall would be enacted. A company, such as PG&E,that delivers natural gas, a naturally dangerous commodity, should not be held toa lower standard."

PG&E operates roughly 42,000 miles of gas distribution pipe,according to the company's website.

Given these factors, the division argued, the administrativelaw judge's proposed $24.3 million fine was far below what it ought to have been.

The Safety and Enforcement Division in February recommended a$111.9 million fine, in part because the company's record-keeping violations lastedfor months or years. The division July 1 again recommended that penalty amount butnoted that even if the commission declines to impose sanctions of that magnitude,there are other justifiable penalties that would be appropriate and higher thanthe one the judge recommended. PG&E itself said that the maximum appropriatepenalty in the proceeding should be $33.6 million, which exceeded the judge's recommendation.

"The fact that the [presiding officer's decision] outcomewas significantly lower than PG&E's recommended 'maximum appropriate penalty'sends the wrong signal to PG&E regarding the need for improvement in its gasdistribution recordkeeping," the division's appeal said.

The Safety and Enforcement Division recommended that the CPUCgo above and beyond the company's proposed maximum penalty by punishing PG&Efor the actions of its contractors and by incorporating longer time periods duringwhich violations occurred, among other things. Using this methodology, the divisionwould recommend that the commission impose a roughly $55.5 million penalty.

The CPUC opened the investigationin November 2014 after the Safety and Enforcement Division presented six PG&Enatural gas distribution system incidents as evidence of the utility's unsafe operations,including a March 2014 house explosionin Carmel, Calif.

Carmel, which is also a party in this proceeding, recommendeda $652 million fine inthe case.