PG&E 2010 Annual Report Download - page 115

topics: metallurgy, operations, human performance,
survival factors, fire scene, and meteorology. It is expected
that these reports will be made publicly available on the
NTSB’s website as each report is released.
As part of the CPUC’s investigation, the CPUC’s staff
will examine the safety of the Utility’s natural gas
transmission pipelines in its northern and central
California service territory. The CPUC staff reviewed
information about the Utility’s planned and unplanned
pressurization events where the pressure has risen above the
maximum available operating pressure (“MAOP”) in several
of the Utility’s gas transmission lines. On February 2, 2011,
the CPUC ordered the Utility to reduce operating pressure
twenty percent below the MAOP on certain of its gas
transmission pipelines, and also ordered the Utility to
reduce operating pressure on other transmission lines that
meet certain criteria. The Utility has complied with the
CPUC’s order and also has reported to the CPUC that the
Utility has identified a number of instances where it had
either exceeded MAOP by more than ten percent or had
raised the pressure to maintain operational flexibility,
including several instances in which the highest pressure
reading exceeded MAOP by a few pounds, but not more
than ten percent. The CPUC also has appointed an
independent review panel to gather and review facts, make
a technical assessment of the San Bruno accident and its
root cause, and make recommendations for action by the
CPUC to ensure such an accident is not repeated. The
report of the independent review panel is expected in the
second quarter of 2011.
Several parties have requested that the CPUC institute a
formal CPUC investigation into the San Bruno accident.
The Utility has filed a response stating that it welcomes the
CPUC’s investigation. The CPUC may consider this
request at its meeting to be held on February 24, 2011. If
the CPUC institutes a formal investigation, the CPUC may
impose penalties if it determines that the Utility violated
any laws, rules, regulations, or orders pertaining to the
operations and maintenance of its natural gas system. The
CPUC is authorized to assess penalties of up to $20,000
per day, per violation. PG&E Corporation and the Utility
anticipate that the CPUC will institute one or more formal
investigations regarding these matters. PG&E Corporation
and the Utility are unable to estimate a potential loss or
range of loss associated with penalties that may be imposed
by the CPUC in connection with the San Bruno accident.
In addition to these investigations, as of February 8,
2011, 59 lawsuits on behalf of approximately 177 plaintiffs,
including two class action lawsuits, have been filed against
PG&E Corporation and the Utility in San Mateo County
Superior Courts. In addition, five lawsuits on behalf of
11 plaintiffs have been filed by residents of San Bruno in
the San Francisco County Superior Court against PG&E
Corporation and the Utility. These lawsuits seek
compensation for personal injury and property damage and
seek other relief. The class action lawsuits allege causes of
action for strict liability, negligence, public nuisance,
private nuisance, and declaratory relief. Several other
residents also have submitted damage claims to the Utility.
The Utility has filed a petition on behalf of PG&E
Corporation and the Utility to coordinate these lawsuits in
San Mateo County Superior Court. In its statement in
support of coordination, the Utility has stated that it is
prepared to enter into early mediation in an effort to
resolve claims with those plaintiffs willing to do so. A
hearing is scheduled for February 24, 2011.
The Utility recorded a provision of $220 million in 2010
for estimated third-party claims related to the San Bruno
accident, including personal injury and property damage
claims, damage to infrastructure, and other damage claims.
The Utility currently estimates that it may incur as much as
$400 million for third-party claims. This estimate may
change depending on the final determination of the causes
for the pipeline rupture and responsibility for the personal
injuries and property damages and the number and nature
of third-party claims. As more information becomes
known, including information resulting from the NTSB
and CPUC investigations, management’s estimates and
assumptions regarding the amount of third-party liability
incurred in connection with the San Bruno accident may
change. It is possible that a change in estimate could have a
material adverse impact on PG&E Corporation’s and the
Utility’s financial condition, results of operations, or cash
flows.
The Utility maintains liability insurance for damages in
the approximate amount of $992 million in excess of a $10
million deductible. Although PG&E Corporation and the
Utility currently consider it likely that most of the costs the
Utility incurs for third-party claims relating to the San
Bruno accident will ultimately be recovered through this
insurance, no amounts for insurance recoveries have been
recorded as of December 31, 2010. PG&E Corporation and
the Utility are unable to predict the amount and timing of
insurance recoveries.
CPUC Investigationof the December24, 2008 Natural
Gas ExplosioninRancho Cordova, California
On November 19, 2010, the CPUC began an investigation
of the natural gas explosion and fire that occurred on
December 24, 2008 in a house in Rancho Cordova,
California (“Rancho Cordova accident”). The explosion
resulted in one death, injuries to several people, and
property damage. The CPUC’s Consumer Protection and
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