Hill to slam PG&E payment proposal for new pipelines

October 19, 2011 12:00:00 AM PDT
PG&E wants your money, but a state lawmaker is trying to keep that cash in your wallet. He hopes to prevent the power company from passing along the lion's share of the costs to upgrade its natural gas pipeline system.

PG&E recently filed a proposal and the Public Utilities Commission won't take it up until it hears from a long line of people for and against it. Assm. Jerry Hill, D- San Mateo, wants to be the first in line to slam the proposal and he plans to do that on Thursday morning.

Reports following the San Bruno pipeline explosion that killed eight people in Sept. 2010 reveal PG&E was negligent in the maintenance of its natural gas system. Now, PG&E says it is working aggressively to modernize its transmission lines, but it wants its customers to pay 90 percent of the more than $2 billion cost.

"A billion dollars a year in profit they make and that money, I think, should be used or portions of that should be used to cover the costs of their negligence," said Hill.

Hill says it's unconscionable that PG&E would pass 90 percent of the cost to its customers. But a PG&E spokesperson explained to ABC7: "That's how we recover costs for this type of work. The share holders normally would have paid less than the 10 percent it's proposing to pay. In fact, normally it would have been all covered by customer rates."

Hill also points out that PG&E receives an 11.35 percent rate of return on its work -- one of the highest in the country.

"Perhaps we should look at that rate of return and see if that's appropriate today because they will, with that new rate of return, with the fact that the liability insurance that we paid the premiums for will cover their costs, they could conceivably and probably would make a profit on the destruction of San Bruno, last year," said Hill.

And Hill says $350 million of the $2.2 billion upgrade is for unanticipated costs.

"About $350 million of the $2.2 billion is for contingency? Well, we shouldn't be paying upfront if they miss-estimate the costs, they could come back and get those funds and show that they deserve those funds after the fact," said Hill.

During the next few months, the Public Utilities Commission will be holding a series of hearings to determine how much PG&E can charge its customers to modernize its transmission lines.

Also, the San Francisco Chronicle is reporting that the California Public Utilities Commission has uncovered documents showing that PG&E installed salvaged or junked transmission line pipe in its natural gas system in the 1940s and 50s.

A commission attorney says the documents clearly raise safety concerns -- especially since PG&E cannot certify that these deficient pipes are no longer in use. PG&E told ABC7News that they are trying locate salvaged lines and replace them.

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