V. COMMISSION INVESTIGATION

PG&E is a large combined natural gas and electric utility. PG&E owns and operates major and technically complex facilities that transport large quantities of electricity and gas over significant distances. PG&E also operates electric generating facilities and underground natural gas storage facilities. All of these activities are potentially dangerous to the general public and to PG&E employees. Members of the public as well as PG&E employees are entitled to expect that PG&E will transport and distribute natural gas as safely as reasonably possible. Public Utilities Code Section 451 requires Commission-regulated utilities to operate safely.

Because PG&E is entrusted to promote and protect the safety of its significant and complex engineering operations, the Commission expects PG&E to employ good safety engineering practices in operating and maintaining its potentially dangerous natural gas pipelines. The Commission's expectation applies to design, construction, operations, testing, maintenance, inspection, risk assessment, and pipe replacement.

The Commission and the public have legitimate cause to be concerned about the safety of PG&E's management of its gas transmission system. The NTSB and CPSD have stated quite clearly that they believe PG&E's inactions, omissions, and failures to be at the root cause of the San Bruno incident and its tragic consequences. Both the NTSB Report and the IRP Report identified deficiencies in our regulations and oversight that may have also contributed to the incident.

The NTSB, IRP, and CPSD reports have presented us with sufficient information and good cause to commence a formal investigation, to ascertain whether safety violations have occurred with respect to PG&E before, during and after the San Bruno incident, and if so, the proper remedies for such violations.

We therefore initiate this formal investigation of the September 9, 2010, San Bruno explosion and fire, to determine whether PG&E has violated Section 451 of the California Public Utilities Code, General Order 112, or any other applicable federal or state statute, law, general order, rule, regulation, industry safety standard, or Commission decision.

The Commission observes that Public Utilities Code Sections 311, 313, and 314, authorize each of the Commissioners, the Executive Director, the Assistant Executive Directors and the Administrative Law Judges to issue subpoenas requiring the attendance of witnesses and production of documents for examinations under oath, even prior to the initiation of formal proceedings. This is similar to the investigatory authority before hearings under Government Code Sections 11180-11191. In this regard, even without the compulsion of a subpoena, the Commission hereby confirms that under Public Utilities Code Sections 313, 314, 314.5, 315, 591, 582, 584, 701, 702, 1794, and 1795, the Commission staff may obtain information from a public utility like PG&E, and that staff is already deemed to have the general investigatory authority of the Commission.

If, after hearings, we find that PG&E's practices and policies contributed towards, or increased the likelihood of, violations of law that adversely affected public safety, the Commission would have an obligation to consider the imposition of statutory penalties pursuant to Sections 2107 and 2108 of the California Public Utilities Code, and other appropriate remedies under the law. The Commission is prepared to impose very significant fines if the evidence adduced at hearing establishes that PG&E's policies and practices contributed to the loss of life, injuries, or loss of property that occurred at San Bruno. We also note that it appears, based on the allegations in the CPSD report, that PG&E's violations of safety law and standards may have occurred over long periods of time. If the Commission finds this allegation supported by the evidence, the Commission will consider ordering daily fines for the full duration of any such violations, even if this encompasses a lengthy period of time.

The Commission intends to hold public hearings to address these matters. The Commission directs PG&E to cooperate fully with staff's inquiries, and to preserve all records as required by prior Commission orders. The Commission also invites and encourages interested parties to actively participate in this proceeding, as it involves important safety and other policy matters. The record in this proceeding and the Commission's ultimate disposition will benefit from the expertise, participation, and evidence of other parties.