VI. THE SCOPE OF THE COMMISSION'S PROCEDURE IN THIS INVESTIGATION

The first phase of the investigation will be limited to (1) whether PG&E's gas transmission pipeline recordkeeping and its knowledge of its own transmission gas system, and in particular the San Bruno pipeline, was deficient and unsafe, and (2) whether PG&E thereby violated the law and safety standards to which California regulated public utilities are subject.

If, after hearings, the Commission determines that PG&E violated safety law standards with respect to its gas system recordkeeping, the Commission will schedule a later phase or phases to determine whether penalties pursuant to Public Utilities Code section 2107 and 2108 are warranted, and if so the amount appropriate to the facts and the law. We serve notice to PG&E that this phase will determine, among other matters, whether the San Bruno tragedy would have been preventable by the exercise of safe procedures and/or accurate and effective technical recordkeeping in compliance with the law.

The Commission understands that its staff's investigation of the San Bruno pipeline rupture is far from complete, and that the NTSB investigation of the incident is also unfinished. If staff later believes it has cause to assert a PG&E violation other than for recordkeeping, staff may bring the matter to the Commission's attention and request that it be included in this investigation, or if a good reason exists for it, by commencement of a separate proceeding. The Commission's limitation of the first phase of this investigation to recordkeeping and its effects is designed solely to reflect the state of information currently available. The limitation does not create a Commission inference or implication that PG&E has either violated the law or complied with the law with respect to its pipelines at San Bruno or anywhere else in its system.

This Commission often seeks in its formal investigations to address both the past and the future. In this investigation we will limit our review to PG&E's past actions and omissions, to determine whether PG&E has violated laws requiring safe utility gas system practices. Under California Public Utilities Code § 451: "Every public utility shall furnish and maintain such adequate, efficient, just, and reasonable service, instrumentalities, equipment, and facilities ... as are necessary to promote the safety, health, comfort, and convenience of its patrons, employees, and the public."

The Commission is also charged with responsibilities under Public Utilities Code Sections 451, 761 and federal pipeline standards that we are certificated and authorized by the federal government to enforce (49 U.S.C. Section 60105, and General Order 112-E). The Commission bears a responsibility both to enforce laws utilities may have violated in the past, and to prevent future unsafe utility practices. We therefore intend to quickly and thoroughly address, in a separate rulemaking proceeding to commence soon, any systematic utility recordkeeping deficiencies and other possible safety deficiencies. For that reason, the investigation we direct today will be limited to ascertaining and understanding PG&E's past practices, determining whether they were unsafe and violated the law, and determining whether those practices contributed to the San Bruno rupture and tragedy. In the rulemaking the Commission may analyze findings and lessons learned after hearings and a decision in this investigation of PG&E's past practices. However, future recordkeeping or other safety rules is not the focus of this investigation. The Commission recognizes the possibility that the current investigation may find matters singular to PG&E that cause the Commission to consider PG&E safety-related remedies for future safety under section 761 of the Public Utilities Code.

The Commission also intends to establish promptly whether PG&E agrees to reimburse the state for the cost accrued by the Commission staff or by its consultants for its San Bruno investigation of recordkeeping and for any other matters pertaining to San Bruno, and for prosecution of the investigation. The Commission staff has devoted major resources to the investigation of the San Bruno rupture and expects to continue so doing, and has informed us that they will seek outside experts. The facts and circumstances presented to the Commission provide us no justification to conclude that taxpayers or that any entity other than PG&E should bear the costs of the investigation of San Bruno explosion and its causes, regardless of whether the investigation pertains to recordkeeping or to other possible issues. If PG&E disagrees, the company is directed to provide its support for a contrary view. PG&E shall file its position by March 11, 2011 and is directed to state its agreement or objection to pay for costs of the Commission staff investigation. If PG&E does not agree on March 11 to bear these costs, the Commission will set a prompt procedure to hear PG&E and interested parties to this proceeding, and to decide the matter quickly.

If the Commission directs PG&E to pay for investigation and prosecution costs, we also intend at an appropriate time to decide whether PG&E ratepayers or shareholders, or both, should bear the costs. The Commission places PG&E on notice that we have seen no facts or circumstances to date to convince us that it is appropriate to charge PG&E ratepayers for the cost of the San Bruno investigation or for the cost of prosecution that may follow.

Finally, we place PG&E on notice that the Commission will decide in the rulemaking proceeding whether PG&E ratepayers or shareholders, or both, will pay for PG&E testing, pipe replacement, or other costs. Some costs may stem from the San Bruno pipe rupture or from recordkeeping deficiencies. Both past and future costs will be significant. We also place PG&E on notice that in the rulemaking the Commission may take note of the record evidence in this investigation.