Tough Love

September 09, 2011   Elizabeth McCarthy

Original source: http://www.cacurrent.com/storyDisplay.php?sid=5614

I’m a cynic.

At least I thought so before hearing federal investigators’ scathing revelations about Pacific Gas & Electric’s natural gas explosion in San Bruno. I was taken aback by the extent of the National Safety Transportation Board’s findings last week that pointed the finger at the utility’s culture and decades of shoddy procedures, practices, and management integrity.

The feds also found a lack of regulatory oversight.

Despite that, the California Public Utilities Commission’s role should be kept intact.

We don’t need a new agency, which probably would amount to changing the agency form but not its substance.

The CPUC needs to use tough love.

The Sept. 9, 2010, explosion left eight dead, injured many more, and wreaked considerable property damage. Warnings from other gas pipe accidents, including one in Rancho Cordova that killed one person a year earlier, went unheeded.

I spoke with several industry insiders about the San Bruno explosion. Few were surprised by the Safety Board’s findings.

These true cynics’ response was, “What did you expect?”

I expected more, a lot more. So should state regulators, who have the authority to penalize PG&E.

Going forward, much more than admonitions and regulations are needed.

A spineless parent is as effective as a spineless regulator.

PG&E’s desire for surging profit must be countered by tough love.

It needs to be hit where it hurts.

A massive fine for corporeal punishment to start.

Regulators also should ratchet down PG&E’s potential for an 11.35 percent rate of return on investment to fix the pipeline system. A condition of an above-market rate of return should be safe gas and electrical operations and conditions.

The National Safety Board also concluded that state, as well as federal regulators, fell down on their oversight job.

The utility is far more culpable than its regulators largely because of the differences of financial wherewithal and influence pedaling.

Consider the disparity in agency and utility budgets. The CPUC’s is a fraction of that of the utility it’s charged with regulating. The specially-funded agency’s budget also faces annual attacks from the Legislature. Staff and resources have been hacked away at repeatedly.

Look at the disparity in the two entities other resources, including lobbying. The public agency also is subjected to far more political and lobbying pressure.

PG&E has a bevy of lobbyists at the Legislature. There may be one CPUC lobbyist at Legislative hearings, for example.

There are the regular PG&E lobbying trips to the commissioners’ office on the 5th floor at the CPUC headquarters in San Francisco. Add into that utility lobbyists’ visits to lawmakers’ offices and utility campaign contributions.

Appointed CPUC members are subjected to enormous political pressures from the governor who appoints them, as well as lawmakers that confirm them but sometimes receive campaign contributions from PG&E.

If a regulator makes a politically incorrect move they are out before confirmation.

It makes for a very lopsided playing field.

At the same time, PG&E should have to beef up its gas maintenance staff. One of the National Transportation Safety Board findings that got little air time was the slash in PG&E staff in the gas division.

A tough love strategy by regulators is the only shot w

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