Opponents of Pacific Gas & Electric's proposed settlement over its locate-and-mark practices, including two offices with the California Public Utilities Commission, are concerned that PG&E customers could end up footing the bill for the utility's failure to comply with the law.
The CPUC's Office of the Safety Advocate, the Public Advocates Office, The Utility Reform Network and the City of San Francisco filed comments against the proposed $65-million locate-and-mark settlement, saying it might not ensure that PG&E's shareholders pay for the utility's violations, according to lawyers for the City of San Francisco in a Nov. 18 filing.
PG&E is required by law to "locate and mark" its underground facilities in order to identify their locations and thereby prevent customers from digging into them. The company's violations of these requirements took place from about 2012 to 2017, during which utility employees undercounted the number of late tickets in its program, according to a CPUC investigation. Up to 135,000 locate-and-mark requests were incorrectly counted, the settlement proposal says. PG&E admits that these errors resulted in 67 dig-ins that likely could have been prevented, according to lawyers for San Francisco, including one that caused serious injuries to a City of San Jose employee.
PG&E, the Coalition of California Utility Employees and the CPUC's Safety and Enforcement Division filed the proposed settlement on Oct. 3. However, lawyers for the City of San Francisco said the commission "should require the settling parties to modify the agreement to require PG&E to complete its [safety and system] enhancements using only shareholder funds."
"San Francisco supports the request by [the CPUC PAO] and TURN that the commission require PG&E to provide ratepayers a credit against general rate case revenues authorized by the commission for gas distribution operations and maintenance," the lawyers said. "Only in this way, can the commission be certain that PG&E shareholders, not ratepayers, will be responsible for these costs."
Administrative Law Judge Peter Allen during an evidentiary hearing on Oct. 21 asked PG&E Senior Director and Special Counsel Alejandro Vallejo what would happen if PG&E used up its shareholder penalty funds—about $60 million out of the total $65 million proposed—prior to completing the utility's required safety and personnel upgrades.
"I think we would have to figure out what the right [accounting] mechanism would be," Vallejo said. "If it's a midyear between GRC periods, I think we'd have to figure out a mechanism by which to either seek recovery or not."
PG&E agreed as part of the settlement to spend about $41 million to hire 63 additional locate-and-mark employees through 2022. However, the utility also said it has "no existing mechanism in place to ensure that the $41 million . . . does not duplicate funds authorized in PG&E's GRC," according to San Francisco lawyers. In its 2020 GRC, PG&E asked the commission to approve about $44 million in expenses for its locate-and-mark program.
Because fewer than all of the parties support the proposed settlement, the CPUC must determine whether the "settlement taken as a whole is in the public interest," San Francisco lawyers said.
The Office of the Safety Advocate in September left the proceeding's settlement discussions because the office had raised concerns that were "not being addressed" (see CEM No. 1557). The OSA proposed to add the following additional requirements to the settlement: that PG&E develop, implement and maintain a comprehensive safety-management system to manage public, worker, property and environmental safety; that PG&E designate an accountability officer to ensure it provides adequate human and financial resources to establish, implement and maintain safety programs; and that PG&E develop an executive-level safety office to address safety-culture issues within the organization.
TURN and the City of San Francisco supported the OSA's recommendations.