San Bruno blast may cost billions

December 2010 Vol. 65 No. 12

As reported in The Mercury News, PG&E's costs related to the San Bruno, CA, gas-line explosion could climb to more than $1 billion, according to data the utility made public in November, fueling fears over how much of the tab its customers may end up paying.

PG&E revealed in a regulatory filing that the cost of repairing the devastated neighborhood,
compensating victims, re-inspecting its natural gas pipes and other related expenses could total $550 million. That's on top of the $450 million it may need to spend to replace valves on those pipelines. Then there is the as-yet-unspecified amount required for major renovations to its gas network that it recently proposed in a vague plan dubbed "pipeline 2020."

The report goes on to say that one major upgrade under consideration is replacing about 300 manual gas shut-off valves with automatic or remotely controlled valves that can be closed more quickly. That stems from criticism that it took nearly an hour and a half to shut two manual valves feeding gas to the San Bruno fire.

Depending on how easily those valves can be installed and other considerations, the company has said the retrofit could cost from $30 million to $450 million. Assuming the upper end of that range, one industry analyst estimated the work could add a little less than $1 to the average gas customer's $44 monthly bill.
That monthly charge could more than double if ratepayers get hit with all the other San Bruno-
related expenses that are beginning to pile up for PG&E.

For example, the company has agreed to move the San Bruno pipe section that ruptured Sept. 9, killing eight people and destroying 35 homes, to another location. In addition, its 2020 plan calls for upgrading key gas transmission pipeline segments in heavily populated areas, in part so those segments can accommodate state-of-the-art inspection devices known as pigs, or pipeline inspection gauges.
The Market News says that PG&E declined to estimate what those improvements might cost, it stands to profit by making them, consumer advocates note. To promote energy efficiency, utilities generally are limited on how much money they can make from the electricity or gas their customers use. But the companies often get to bill their customers extra for system improvements.