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Has PGE breached its duty of care?

January 29, 2011

UPDATE TO THIS BLOG – 2/20/2011 – San Francisco Chronicle


“Dealing with September’s pipe explosion in San Bruno will cost PG&E as much as $300 million this year, double the amount it had estimated earlier, the utility said last week.  The higher expenses stem from record verification and possible additional testing and inspections.  Total costs my be as much as $763 million, including $400 million in liability claims, PG&E Chief Financial Officer Kent Harvey said Thursday.  Federal investigators have yet to determine the cause of the rupture, which killed eight people and destroyed 38 homes.”

What is the role of regulation?  In the aftermath of the financial melt-down, the theorists who opined that less regulation would create free market expansion are witnessing the effects of Wall Street’s self-policing.  Similarly, with PG&E specifically and other energy companies generally, a permissive regulatory system has created the environment for the San Bruno explosion.

 PGE is responsible for inspecting 48,580 miles of natural gas pipelines plant .  However, the federal Pipeline and Hazardous Materials Safety Administration and the National Transportation Safety Board (“NTSB”) only inspect PG&E records not the quality of the actual inspections.  PGE and its lobbyists argued against more comprehensive inspections that would have allowed for improved inspections, particularly on older pipelines like the pipeline in San Bruno.

The reality is that not only did PGE advocate for an inadequate inspection procedure but “in the two audits that the CPUC performed, state investigators found that PGE had poor record keeping and problems identifying threats to its pipelines.  Moreover, PGE has inspection records in several locations.

 The real problem is that PGE is still insisting that its inspection procedures are adequate, although it stated that it did lower the pressure in all older pipelines.  Increased pressure in the pipeline may have led to the San Bruno explosion but to date the NTSB has yet to determine a cause.  But we do know this, there are miles of pipelines similar to San Bruno and not only does PGE need to step up its inspection procedures but also commit to repairs to retrofit where necessary to allow for improved inspection procedures.


PGE is a running business and as recently as 2001 declared bankruptcy.  Is PGE’s insistence on lesser inspection measures and poor record keeping based on the cost to “do it right” or do they really believe that their business practices are the best for public safety?

San Bruno is not PGE’s first major disaster, Hinkley, California had its groundwater contaminated with hexavalent chromium from a PG&E natural gas compressor plant resulting in a legal case and multi-million dollar settlement that was dramatized in the movie Erin Brockovich.

The public and businesses, no matter the industry, need to place safety foremost in their objectives, however, oftentimes safety costs more than cutting corners.  Making sure that companies in all industries adhere to what is best for the public is the role of regulation.  Advocates for a permissive system will advocate that stricter regulations stifle growth and innovation but after the financial melt-down and San Bruno disaster we all need to challenge those assumptions now that we have lived with the results of looser regulations.

 What is PGE duty to public safety? 

 Does PGE have a duty to impose more stringent inspection and improved reporting as good business or alternatively to be better to avoid another San Bruno?

 What is PGE social responsibility to its ratepayers and the general public?

 So what if PG&E doesn’t have the resources to bring their plant up to a safe level based on SoCal Edison and other energy companies.  It was not that long ago that PG&E was bankrupt.  So who pays for PG&E safety?  We are already crying out that ratepayers are paying for some of the damage from the San Bruno fire but what if collectively as a community we required PG&E to make their plant safe but it can’t do it? What then?

5 Comments leave one →
  1. January 29, 2011 4:40 pm

    Your blog covers a lot of ground, subject wise. You’re free to use any of my stuff – Pilant’s Business Ethics Blog.
    However, considering your content, you might consider going to The Business Ethics Blog,
    It belongs to Chris MacDonald. He’s a Canadian Business Ethics professor, hardcore academic. You’ll find his postings tailor made for business classes.
    Best wishes!
    James Pilant

  2. February 26, 2011 6:42 am

    I really like your blog, the way you create posts and topic you covered are simply fantastic. I understand how tough it can be to get the visitors interested. I have made the decision to add your blog to my blog list.


  1. Has PGE breached its duty of care? (via talklawblog) « Pilant's Business Ethics Blog

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