PG&E's Professes a New Commitment
to Public Safety and Operational Excellence

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PG&E now claims, quite often, that safety is its primary concern. In its interactions with the press, PG&E frequently mentions its "commitment to public safety and operational excellence." When talking to the press about removing Mountain View trees, PG&E spokespeople always mention PG&E's new "commitment to public safety and operational excellence." Even the CEO, Anthony Earley, used this phrase recently.

Should the public take this "commitment" seriously? How serious do the experts think that PG&E really is about public safety?

On August 20, 2012, Raffy Stepanian gave testimony before the Consumer Protection and Safety Division (CPSD) of the California Public Utilities Commission (CPUC) in reply to prepared testimony by PG&E concerning the San Bruno explosion.

Raffy Stepanian is the Program Manager of the Electric Safety and Reliability Branch of the Consumer Protection and Safety Division of the CPUC. His primary responsibility is to oversee the safety and reliability of electric distribution, transmission and generation facilities and communication infrastructures in the state of California. His previous responsibility included oversight of gas distribution and transmission safety.

Link to the report

My comments follow in plain text. Some of the comments from that testimony follow, in emphasized text:

Prior to 1961, there were no formalized government regulations regarding safety in construction and maintenance. However, there was Section 451, which was in effect.

Section 451 requires all public utilities to provide and maintain "adequate, efficient, just, and reasonable" service and facilities as are necessary for the "safety, health, comfort, and convenience" of its customers and the public.

When PG&E built Pipeline 132, there were industry standards in place, and PG&E failed to follow them. In other words, PG&E did not even follow best practices of 70 years ago in building its pipeline.

PG&E considers the industry safety practices in existence prior to 1961 merely "guidelines" that are essentially "voluntary".

In effect, PG&E argues that that there were no enforceable safety rules prior to 1961.

PG&E is incorrect in claiming that industry safety rules in existence in 1956 were merely "guidelines" that created no duty for PG&E to follow them.

PG&E's claim is like a reckless driver exceeding the speed limit on the freeway and arguing that he/she should not receive a ticket because he/she has exceeded the speed limit previously and the CHP did not cite him/her at that time.

Look at some of PG&E's arguments for not being in violation, in this case for the thickness of the pipe wall.

PG&E discounts the wall thickness violation by claiming that the wall thickness of the pipe itself is different from the thickness of the seam weld. However, the seam weld is considered part of the pipe.

How about PG&E's Long-term Incentive Plan?

PG&E has not amended its metrics for the Long-term Incentive Plan (LTIP), which provides an incentive that links employee financial rewards to shareholder return.

What does he have to say about PG&E's claim to an Enhanced Focus on Public Safety and Operational Excellence?

PG&E continues to use marketing phrases such as "public safety and operational excellence" without definitions or metrics to measure progress.

PG&E continues to use meaningless phrases like "public safety and operational excellence" throughout its testimony and in its news releases.

PG&E has claimed numerous safety enhancements, but the CPUC is not buying it.

PG&E is being forced into a new safety paradigm. The improvements PG&E identifies are mostly mandated by CPUC Rulemaking (R.11-02-019) or by statute. PG&E cites to nothing that goes beyond new standards being developed and mandated by regulations or regulators.

Why would anyone think that PG&E cares most about money?

Since at least the 1970s, PG&E deferred safety- and reliability-related expenditures for cost reasons, even when the funds were provided for in the general rate cases and approved in PG&E's own long-term plan. Specifically, PG&E officers and its Board of Directors have known of the need to test and replace Line 132 yet consciously failed to do so as part of its overall commitment to profits over safety.

In conclusion...

PG&E says that its commitment to "safety and operational excellence" is backed by a financial commitment to achieving those important goals. However, PG&E has not financially committed to any of the proposals if it should fail to receive ratepayer cost recovery.

PG&E has not proposed to change its budgeting priorities, and it has not changed its management and employee reward mechanisms.

Most importantly, PG&E has not proposed to change its leadership structure.

It ends with...

Jingles and slogans aside, PG&E Company has not changed its focus from serving the board to serving its customers, captive ratepayers, and people of California. PG&E Company has not delivered real corporate culture change.