V. COMMISSION INVESTIGATION OF WHETHER PG&E VIOLATED THE LAW

PG&E is a large, combined natural gas and electric utility. PG&E owns and operates major and technically complex facilities that generate electricity and that transport large quantities of electricity and gas for significant distances. These activities are potentially dangerous to the general public and to PG&E employees, especially when the transmission facilities are located in populated areas. Both members of the public and PG&E employees are entitled to expect that PG&E will transport gas as safely as reasonably possible. California law requires Commission-regulated utilities to operate safely. Section 451 of the Public Utilities Code in part reads: "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."

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 to its potentially dangerous natural gas pipelines. The Commission's expectation applies to design, construction, operations, testing, maintenance, inspection, and risk assessment and pipe replacement.

The NTSB's investigation and findings to date represent a significant moving cause for the Commission's commencement of this investigation. Based on public statements by the NTSB, this Commission cannot now assure the public-- that entrusts its safety to utilities and to their good engineering practices, and relies on our oversight of utilities-- that PG&E has conducted good and safe engineering practices in compliance with the law, and has accurate and up-to-date knowledge of critical aspects of its transmission pipeline system. Therefore, we commence this investigation, limited for now and until further order, to the aspects of safety and possible law violations pertaining to PG&E's recordkeeping. We consider this quite a broad based subject, however, because we will review evidence to determine whether deficient recordkeeping may adversely affect and reduce safety in 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 assets. Federal safety agency experts at the NTSB have stated quite clearly that they believe PG&E's data, as presented to NTSB, may be inaccurate and too incomplete to make sound transmission pipeline risk assessment and operational decisions. These findings by the NTSB foster our concerns that for Line 132 and other transmission pipelines in populated areas, inaccurate, incomplete, and poorly organized and retrievable data may have contributed to past unsound and unsafe PG&E risk assessment and operational decisions.

This proceeding will provide PG&E a full opportunity to demonstrate whether our concerns are unfounded. The Commission at this time has reached no conclusion and makes no finding that PG&E has violated any statutory responsibilities, general orders, decisions, or other legal requirements or standards. The NTSB's reports have presented us with sufficient information and good cause to commence a formal investigation to ascertain whether such violations have occurred with respect to PG&E recordkeeping, and if so, the proper remedy for such violations.  We remain open to PG&E's evidence and explanations pertaining to both the facts and law.

The Commission conducts this investigation of PG&E's recordkeeping, to determine whether PG&E has violated Section 451 of the California Public Utilities Code, or any other applicable statute, law, general order, or Commission decision. The Commission's focus will be to ascertain by evidence at hearings whether PG&E's gas safety recordkeeping has been conducted in a manner that violates the general provisions of Section 451 or of any other applicable law. We define "gas safety recordkeeping" in this context to mean PG&E's acquisition, maintenance, organization, safekeeping, and efficient retrieval of data that the Commission finds is necessary and appropriate under the circumstances for PG&E to make good and safe gas engineering decisions, and thus to promote safety as required by Section 451 of the Public Utilities Code.

Utility's approach to recordkeeping often stems from corporate-level management policies and practices, although the Commission remains open to evidence that employees failed to follow clear utility management directives. If, after hearings, the Commission were to find that management practices and policies contributed towards recordkeeping violations of law that adversely affected safety, the Commission would have an obligation to consider the imposition of statutory penalties pursuant to Section 2107 of the California Public Utilities Code, and other appropriate relief under the law. The Commission is prepared to impose very significant fines if the evidence adduced at hearing establishes that PG&E's recordkeeping policies and practices contributed to the loss of life and injuries that occurred at San Bruno. We also note that it appears that any PG&E recordkeeping violations of safety law and standards found by the Commission may have occurred over long periods of time. If supported by the evidence, the Commission will consider ordering daily fines for a significant period of time.

The Commission intends to hold public hearing to address these matters, and also to direct Respondent PG&E to reply to specific questions.  The Commission also invites interested parties to actively participate in this proceeding as it involves important safety and other policy matters that will benefit from the expertise, participation, and evidence of other parties.

This proceeding shall:

(1) Determine whether PG&E violated any provisions of the Public Utilities Code, general orders, Commission decisions, federal gas safety regulations and laws that the federal government has authorized the Commission to enforce in California, or whether PG&E has violated other recordkeeping-related rules, or requirements, regarding its procedures, training, and supervision, linked to gas service at San Bruno and to other transmission pipelines in PG&E's service territory.

(2) Determine the remedy or remedies for any proven violation, in compliance with the law.

(3) At an appropriate time after the NTSB has completed its investigation and issued a final report, the Commission will consider other possible violations of law, besides recordkeeping, associated with PG&E's transmission lines and with the San Bruno line in particular.