Dive Brief:

• California Public Utilities Commission President Michael Picker’s testimony to the state Senate Energy, Utilities and Communications Committee this week contained a bombshell, the LA Times reports. The state's head utility regulator told lawmakers that Pacific Gas and Electric gave its executives raises with money collected from ratepayers for pipeline safety in the months leading up to the San Bruno pipeline explosion in 2010.
• Evidence of PG&E’s misallocation of funds derived from 2007 and 2010 charges to ratepayers for improve pipeline safety improvements, each amounting to $5 million. The details emerged in the 2012 investigation of the San Bruno gas pipeline explosion that killed eight, Picker said, calling the misallocation one of his "outstanding beefs" with the company.
• The ratepayer money was to pay for replacement of a high-risk section of 1950s-era 30-inch pipeline north of the San Bruno explosion. It was never replaced. The National Transportation Safety Board investigation of the explosion concluded the “organizational accident” directly resulted from deficient PG&E operational and managerial practices.

Dive Insight:

PG&E’s response to the Picker testimony was that it has always been committed to pipeline safety and, since the explosion, has spent or has committed to spend, $2.8 billion in shareholder funds to improve its natural gas delivery system.

Picker's public commitment to investigating the PG&E misuse of ratepayer money was applauded by San Bruno’s Mayor and state Senator as a change in the CPUC’s inclination to protect the utility under former President Michael Peevey who is now under scrutiny for unethical relationships with PG&E and Southern California Edison executives.

Picker called last week for PG&E to be fined $1.6 billion for the explosion, $200 million more than the fine proposed by the CPUC under Peevey. He also specified that, unlike the previous fine already approved by administrative law judges, $850 million should go to improve natural gas pipeline safety. The five-member commission will finalize one of the two penalty formulas in April. Picker said the increased severity of his penalty proposal stressed PG&E’s breach of the public trust.