Blogs

Since my last post, the California Public Utilities Commission (PUC) has made several interesting rulings on PG&E’s inability to provide documentation and records on their in-ground gas transmission pipelines. These rulings have subsequently put PG&E between a rock and a hard spot. The first ruling:

PG&E's regulators expand demand for pipeline proof

California regulators told Pacific Gas and Electric Co. on Monday to provide safety documents for most of its 5,700-mile gas transmission network, dramatically expanding an earlier order and forcing the company to undertake what one of its lawyers called a "huge" effort to comply.¹

As a quick recap, a PG&E gas pipeline exploded last September (2010) in a residential neighborhood. The explosion leveled the neighborhood and killed eight people. In a subsequent investigation, PG&E could not locate and produce records for the portion of the pipeline that exploded, and they could not produce documentation on similar pipeline in other geographical areas. PG&E was fined for non-compliance and later stated that PG&E mostly likely would never find those records and therefore asked the PUC to accept assumptions about the pipeline and how it was built.

Over the past few weeks, the PUC has rejected the idea of “assumptions” and last week (above) requested PG&E turn over what amounts to be all of their records on the pipelines in question. Joe Malkin, a PG&E lawyer, responded by saying that “the commission's order could overwhelm the company and asked the agency for a compromise." This is huge," he said, adding that the request amounts to "asking for almost the entirety of PG&E's records of its gas transmission system." “²

This week, the PUC said that:

Judge rules PG&E records not enough to prove safety

Pacific Gas & Electric Co. and other gas utilities in California must replace or use high-pressure water to prove the safety of hundreds of untested gas transmission lines across the state…The decision rejects any chance that PG&E could use records to vouch for the safety of its pipelines…In the ruling, Administrative Law Judge Maribeth Bushey rejected records-based analysis and assumptions to vouch for safe pressures, but nonetheless ordered records reviewto be completed as a guide for PG&E and regulators in deciding when and where to test pipes or cut pressure.³

So, here is the fix that PG&E is in as a result of not being able to produce documents and records for their gas transmission lines:

1. They will have to pressure test or replace any line in question without exception. Existing paper records have now been called into question and cannot be used as a substitute for testing. ($$$$!)
2. In addition to the testing, they will have to continue to literally dig through all of the existing documentation that relates to these pipelines – I’m assuming this is both paper records as well as electronic documents, AutoCad-type files, and any other file type that may contain relevant information. They may even unearth electronic files for which they have no current software application and will have to make their best effort to find the original application, load the file, and keep that file as a record. PG&E even asked retired employees, previous contractors, and suppliers that may have worked for PG&E to send them any pertinent records if they had them.
3. As a result of the inability to provide proper documentation, PG&E’s internal practices are being analyzed and exposed to inspection by the PUC (and by way of press, to the public). For example, one PG&E procedure for testing lines by “spiking” the pressure has now been “banned” by the PUC. What other “practices” may be reviewed changed as a result of this public airing?
4. I am assuming that because of this litigation, PG&E may not destroy any documents or records that may have any relevance. This would almost amount to a permanent retention of any possibly relevant documentation and, of course, any documentation that has already shown to be relevant. In order to secure these documents permanently, PG&E may have to go to the expense of having an area dedicated to the permanent retention of these documents.

Not being able to produce records should be a learning example for any company that thinks the cost of a document and records management system does not equal the “risk” of having a problem (Gee, I’ve never had a problem, never been sued, so my risk is very low. Why spend a million plus on a system when I’m retiring in two years anyway.).

PG&E said that even if they had good records for the pipeline that exploded, it would have exploded anyway and therefore having the records would not have prevented the explosion. But….if they had accurate records of all the pipelines in question, they would not now (perhaps) be forced to undergo the lengthy and expensive testing and/or replacement of those lines; they would not have had to haul 100,000 boxes of records (1.5 million documents by their estimate) out of storage to be pawed through; their CEO would not have resigned; their whole company would not be under scrutiny; and, perhaps most importantly, they would not have lost the trust of the PUC and maybe the public.

1. Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/05/09/MNA41JDTL3.DTL#ixzz1M9zG46Ef

2. Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/05/09/MNA41JDTL3.DTL#ixzz1MA8nVJaQ

3. Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/05/10/MN1J1JEJFO.DTL#ixzz1MAAjRqf2
 

Bud Porter-Roth
www.erms.com