The Pacific Gas and Electric Company (PG&E) is an investor-owned utility (IOU) with publicly traded stock that is headquartered in the Pacific Gas & Electric Building in San Francisco. PG&E provides natural gas and electricity to most of the northern two-thirds of California, from Bakersfield almost to the Oregon border which represents 5.2 million households. PG&E is overseen by the California Public Utilities Commission. It is the leading subsidiary of the holding company PG&E Corporation which has a market capitalization of $29.37 billion. It was founded by George H. Roe during the period after California's Gold Rush and by 1984 was the United States "largest electric utility business". PG&E is one of three regulated, investor-owned utilities (IOU)s in California--the other two being Southern California Edison and Sempra Energy's San Diego Gas & Electric.
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History
Early history
San Francisco Gas
In the 1850s, manufactured gas was introduced in the United States as a means of lighting. Gasworks were built in the larger eastern American cities, but there was no gas industry in the West, however. In San Francisco, street lighting was available only on Merchant Street, in the form of oil lamps.
Three brothers--Peter, James, and Michael Donahue--became interested in gas manufacturing while running the foundry that later became Union Iron Works, the largest shipbuilding operation on the West Coast. Joseph G. Eastland, an engineer and clerk at the foundry, joined them in gathering as much information on gas making as they could find. In July 1852, James applied for and received from the Common Council of the City of San Francisco a franchise to erect a gasworks, lay pipes in the streets and install street lamps to light the city with "brilliant gas". The council specified that gas should be supplied to households "at such rates as will make it to their interest to use it in preference to any other material". The Donahue brothers and Eastland incorporated the San Francisco Gas Company on August 31, 1852, with $150,000 of authorized capital. The company became the first gas utility in the West. Its official seal bore the inscription "Fiat Lux"--let there be light--the same slogan later adopted by the University of California. There were 11 original stockholders, and the three Donahue brothers subscribed for 610 of the 1,500 shares.
The original location for the gas works was bounded by First, Fremont, Howard and Natoma streets south of Market, on the then shore of the San Francisco Bay. Work on the plant started in November, 1852, and it was ready for operation only a few months later. On the night of February 11, 1854, the streets of San Francisco were for the first time lighted by gas. To celebrate the event, the company held a gala banquet at the Oriental Hotel. Gas lighting quickly gained public favor. In the first year of operation, there were 237 customers. That number more than doubled the next year, to 563. By the end of 1855, the company had laid more than 6 ½ miles of pipe and 154 street lamps were in operation.
The growing popularity of gas light led to the establishment of competing gas companies, including Aubin Patent Gas Company and Citizens Gas Company. These smaller companies were quickly acquired by the San Francisco Gas Company. However, one rival provided serious competition. The City Gas Company was founded in April 1870 by the Bank of California to compete with the gas monopoly held by the Donahue brothers' operation. City Gas began operation in 1872 and initiated a price war with the San Francisco Gas Company. In 1873, the companies negotiated their consolidation as a compromise and the Bank of California gained part ownership of "the most lucrative gas monopoly in the West". On April 1, 1873, the San Francisco Gas Light Company was formed, representing a merger of the San Francisco Gas Company, the City Gas Company, and the Metropolitan Gas Company.
San Francisco Gas and Electric
Gas utilities, including San Francisco Gas Light, faced new competition with the introduction of electric lighting to California. According to a 2012 PG&E publication and their 1952 commissioned history, in 1879, San Francisco was the first city in the U.S. to have a central generating station for electric customers. To stay competitive, the San Francisco Gas Light Company introduced the Argand lamp that same year. The lamp increased the light capacity of gas street lamps, but proved to be an expensive improvement and was not generally adopted. Meanwhile, the demand for electric light in the stores and factories of downtown San Francisco continued to grow. The first electric street light was erected in 1888 in front of City Hall, and the electrical grid supporting it was gradually extended. A second generating station was constructed in 1888 by the California Electric Light Company to increase production capacity.
New competition also emerged in the 1880s in the form of water gas, an improved illuminant patented by Thaddeus Lowe. The United Gas Improvement Company, a water gas manufacturer organized after purchasing the Lowe gas patents, acquired a lease and then an interest in San Francisco's Central Gas Light Company on November 1, 1883. United was acquired by the Pacific Gas Improvement Company in 1884. Under the management of president Albert Miller, Pacific Gas Improvement developed into a formidable competitor to San Francisco Gas Light. Horace A. Miller, Secretary and C. O. G. Miller (Christian Otto Gerberding Miller), President, owned and controlled not only the Pacific Gas Improvement Company but also the Pacific Gas Lighting Company (Pacific Lighting Company). C.O.G. Miller is buried in a Pyramid mausoleum at Mountain View Cemetery, Oakland CA. Horace Miller built an enormous mansion in Piedmont, CA at 445 Mountain Avenue in 1913, designed by Arthur Brown, famous San Francisco architect.
In 1888, San Francisco Gas Light built its own water gas plant at the Potrero gas works. The manufacturing of water gas proved successful due to the increased availability of inexpensive petroleum. The company decided to construct a modern gas works with both updated water gas manufacturing technology and a modern coal-gas plant as a hedge against shortages in the supply of oil. In 1891, the North Beach Gas Works was completed under the direction of San Francisco Gas Light president and engineer Joseph B. Crockett. The facility was the largest gas holder in the U.S. west of Chicago.
In 1896, the Edison Light and Power Company merged with the San Francisco Gas Light Company to form the new San Francisco Gas and Electric Company.Consolidation of gas and electric companies solved problems for both utilities by eliminating competition and producing economic savings through joint operation. Other companies that began operation as active competitors but eventually merged into the San Francisco Gas and Electric Company included the Equitable Gas Light Company, the Independent Electric Light and Power Company, and the Independent Gas and Power Company. In 1903, the company purchased its main competitor for gas lighting, the Pacific Gas Improvement Company.
Pacific Gas and Electric Company
According to PG&E's 2012 history timeline on their webpage, the San Francisco Gas and Electric Company and the California Gas and Electric Corporation merged to form the Pacific Gas and Electric Company (PG&E) on October 10, 1905. The consolidation provided the California Gas and Electric Corporation with access to the large San Francisco market and a base for further financing. The San Francisco Gas and Electric Company, in turn, was able to reinforce its electric system, which until then had been powered entirely by steam-operated generating plants, and could not compete with lower cost hydroelectric power. After the merger was formally completed, engineers and management from both organizations formulated plans for coordinating and unifying the two gas and electric systems. However, the two firms maintained separate corporate identities until 1911.
PG&E began delivering natural gas to San Francisco and northern California in 1930 through the longest pipeline in the world, connecting the Texas gas fields to northern California with compressor stations that included cooling towers every 300 miles (480 km), at Topock, Arizona, on the state line, and near the town of Hinkley, California. With the introduction of natural gas, the company began retiring its polluting gas manufacturing facilities, though it kept some plants on standby. Today there is a network of eight compressor stations linked by "40,000 miles of distribution pipelines and over 6,000 miles of transportation pipelines" serving "4.2 million customers from Bakersfield to the Oregon border."
In the 1950s and 1960s, at both Topock and Hinkley compressor stations, hexavalent chromium in the form of an additive was used in rust-prevention in "the cooling towers that prepared the gas for transportation through PG&E's pipeline to northern and central California." These cooling waters were then disposed of "adjacent to the compressor stations."
In 1952 Charles M. Coleman--who worked for PG&E's publicity department--completed his book entitled P. G. And E. of California: The Centennial Story of Pacific Gas and Electric Company, 1852-1952.
The 1906 San Francisco earthquake
PG&E was significantly affected by the 1906 San Francisco earthquake. The company's assorted central offices were damaged by the quake and destroyed by the subsequent fire. Its San Francisco Gas and Electric Company subsidiary in particular suffered significant infrastructure loss, as its distribution systems--miles of gas mains and electric wires--were dissevered. Only two gas and two electric plants, all located far from the city, survived the destruction. These functioning facilities--including the new 4,000,000-foot crude oil gas works at Potrero Point--played critical roles in San Francisco's rebuilding efforts. Many of PG&E's utility competitors ceased operation following the Great Earthquake. However, the company's substantial capital allowed it to survive, rebuild, and expand.
Sacramento Electric, Gas and Railway Company
In 1906, PG&E purchased the Sacramento Electric, Gas and Railway Company and took control of its railway operations in and around Sacramento. The Sacramento City Street Railway began operating under the Pacific Gas & Electric name in 1915, and its track and services subsequently expanded. By 1931 the Sacramento Street Railway Division operated 75 streetcars on 47 miles (76 km) of track. PG&E's streetcars were powered by the company's hydroelectric plant in Folsom. In 1943, PG&E sold the rail service to Pacific City Lines, which was later acquired by National City Lines. Several streetcar lines were soon converted to bus service, and the track was abandoned entirely in 1947.
During this same period, Pacific City Lines and its successor, National City Lines, with funding from General Motors, Firestone Tire, Standard Oil of California (through a subsidiary, Federal Engineering), Phillips Petroleum, and Mack Trucks were buying streetcar lines and rapidly converting most of them to bus service. This consortium was convicted in 1949 of Federal charges involving conspiracy to monopolize interstate commerce in the sale of buses and supplies to National City Lines and its subsidiaries. The actions became known as the Great American Streetcar Scandal or the General Motors Streetcar Conspiracy.
Further Consolidation and Expansion
Within a few years of its incorporation, PG&E made significant inroads into Northern California's hydroelectric industry through purchase of existing water storage and conveyance facilities. These included many reservoirs, dams, ditches and flumes built by mining interests in the Sierras that were no longer commercially viable. By 1914, PG&E was the largest integrated utility system on the Pacific Coast. The company handled 26 percent of the electric and gas business in California. Its operations spanned 37,000 square miles across 30 counties.
The company expanded in the 1920s through strategic consolidation. Important acquisitions during this period included the California Telephone and Light Company, the Western States Gas and Electric Company and the Sierra and San Francisco Power Company, which provided hydropower to San Francisco's streetcars. These three companies added valuable properties and power and water sources. By the end of 1927, PG&E had nearly one million customers and provided electricity to 300 Northern Californian communities.
In 1930, PG&E purchased majority stock holdings in two major Californian utility systems--Great Western Power and San Joaquin Light and Power--from The North American Company, a New York investment firm. In return, North American received shares of PG&E's common stock worth $114 million. PG&E also gained control of two smaller utilities, Midland Counties Public Service and the Fresno Water Company, which was later sold. The acquisition of these utilities did not result in an immediate merger of property and personnel. The Great Western Power Company and the San Joaquin Company remained separate corporate entities for several more years. But through this final major consolidation, PG&E soon served nearly all of Northern and Central California through one integrated system.
Natural Gas
The gas industry market structure was dramatically altered by the discovery of massive natural gas fields throughout the American Southwest beginning in 1918. The fuel was cleaner than manufactured gas and less expensive to produce. While natural gas sources were abundant in Southern California, no economical sources were available in Northern California. In 1929, PG&E constructed a 300-mile pipeline from the Kettleman oil field to bring natural gas to San Francisco. The city became the first major urban area to switch from manufactured gas to natural gas. The transition required the adjustment of burners and airflow valves on 1.75 million appliances. In 1936, PG&E expanded distribution with an additional 45-mile pipeline from Milpitas. PG&E gradually retired its gas manufacturing facilities, although some plants were kept on standby.
Defense activities boosted natural gas sales in California during World War II, but cut deeply into the state's natural reserves. In 1947, PG&E entered into a contract with the Southern California Gas Company and the Southern Counties Gas Company to purchase natural gas through a new 1,000-mile pipeline running from Texas and New Mexico to Los Angeles. Another agreement was reached with the El Paso Natural Gas Company of Texas for gas delivery to the California-Arizona border. In 1951, PG&E completed a 502-mile main that connected with the El Paso network at the state line.
During this period of expansion PG&E was involved in legal proceedings with the Securities and Exchange Commission regarding the company's status as a subsidiary of the North American Company. As outlined by the Public Utility Holding Company Act of 1935, a utility subsidiary was defined as a utility company with more than 10% of their stock held by a public utility holding company. Though 17% of PG&E stock was held by the North American Company at this time, PG&E filed with the SEC to be exempted from subsidiary status on the grounds that 17% ownership did not give the North American Company control and because the North American Company occupied only two board member spots. The North American Company backed PG&E's request by stating that they were involved in business operations in a limited capacity. The request remained unresolved until 1945 when the North American Company sold off stocks that brought its ownership to below 10%. The SEC then ruled that PG&E was not a subsidiary of the North American Company. In 1948, the North American Company sold its remaining stock in PG&E.
Nuclear plants and gas pipelines
In 1957, the company brought online Vallecitos Nuclear Center, the first privately owned and operated nuclear reactor in the United States, in Pleasanton, California. The reactor initially produced 5,000 kilowatts of power, enough to power a town of 12,000.
In addition to nuclear power, PG&E continued to develop natural gas supplies as well. In 1959, the company began working to obtain approval for the import of a large quantity of natural gas from Alberta, Canada to California, via a pipeline constructed by Westcoast Transmission Co. and the Alberta and Southern Gas Company on the Canadian side, and by Pacific Gas Transmission Company, a subsidiary of PG&E, on the U.S. side. Construction of the pipeline lasted 14 months. Testing began in 1961, and the completed 1,400-mile pipeline was dedicated in early 1962.
PG&E began construction on another nuclear facility, the Diablo Canyon Power Plant, in 1968. Originally slated to come online in 1979, the plant's opening was delayed for several years due to environmental protests and concerns over the safety of the plant's construction.
Testing of the plant began in 1984, and energy production was brought up to full power in 1985.
During the construction of the Diablo Canyon plant, PG&E continued its efforts to bring natural gas supplies from the North to their service area in California. In 1972, the company began exploring possibilities for a 3,000-mile pipeline from Alaska, which would travel through the Mackenzie River Valley and on to join with the previously constructed pipeline originating in Alberta.
In 1977 the Mackenzie Valley Pipeline project received approval from the U.S. Federal Power Commission and support from the Carter Administration. The pipeline still required approval from Canada, however. Plans for the pipeline were placed on hold in 1977 by a Canadian judge. Justice Thomas R. Berger of British Columbia shelved the project for at least 10 years, citing concerns from First Nations groups, whose land the pipeline would have traversed, as well as potential environmental impacts.
In 1984 the great-grandson of PG&E's founder George H. Roe--David Roe published his book entitled Dynamos and Virgins during the time when there was a growing antinuclear-power movement. David Roe, who was an environmentalist and the Environmental Defense Fund's West Coast general counsel, "mounted an assault on the longstanding assumption that steady growth in coal- and nuclear-generating capacity was the only solution to the nation's energy needs." He based his arguments on an economic analysis "aimed at showing that a shift to energy conservation and alternative energy sources alone could slake the thirst for electricity."
Postwar era
As of December 1992, PG&E operated 173 electric generating units and 85 generating stations, 18,450 miles (29,690 km) of transmission lines and 101,400 miles (163,200 km) of distribution system.
In 1997, PG&E reorganized as a holding company, PG&E Corporation. It consisted of two subsidiaries--PG&E, the regulated utility, and a non-regulated energy business.
In the later 1990s, under electricity market deregulation this utility sold off most of its natural gas power plants. The utility retained all of its hydroelectric plants, the Diablo Canyon Power Plant and a few natural gas plants, but the large natural gas plants it sold made up a large portion of its generating capacity. This had the effect of requiring the utility to buy power from the energy generators at fluctuating prices, while being forced to sell the power to consumers at a fixed cost. However, the market for electricity was dominated by the Enron Corporation, which, with help from other corporations, artificially pushed prices for electricity ever higher. This led to the California electricity crisis that began in 2000 on Path 15, a transmission corridor PG&E built.
With a critical power shortage, rolling blackouts began on January 17, 2001.
Bankruptcy
In 1998, a change in the regulation of California's public utilities, including PG&E, began. The California Public Utility Commission (CPUC) set the rates that PG&E could charge customers and required them to provide as much power as the customers wanted at rates set by the CPUC.
In the summer of 2001 a drought in the northwest states and in California reduced the amount of hydroelectric power available. Usually PG&E could buy "cheap" hydroelectric power under long term contracts with the Bonneville Dam, etc. Drought and delays in approval of new power plants and market manipulation decreased available electric power generation capacity that could be generated in state or bought under long term contracts out of state. Hot weather brought on higher usage, rolling blackouts. etc.
With little excess generating capacity of its own PG&E was forced to buy electricity out of state from suppliers without long term contracts. Because PG&E had to buy additional electricity to meet demand some suppliers took advantage of this requirement and manipulated the market by creating artificial shortages and charged very high electrical rates. The CPUC refused to adjust the allowable electric rates. Unable to change rates and sell electricity to consumers for what it cost them on the open market PG&E started hemorrhaging cash.
PG&E Company (the utility, not the holding company) entered bankruptcy under Chapter 11 on April 6, 2001. The state of California tried to bail out the utility and provide power to PG&E's 5.1 million customers under the same rules that required the state to buy electricity at market rate high cost to meet demand and sell it at lower fixed price, and as a result, the state also lost significant amounts of money.
The crisis cost PG&E and the state somewhere between $40 and $45 billion. There is some evidence that this crisis played an important part in the eventual recall of California Governor Gray Davis.
PG&E Company, the utility, emerged from bankruptcy in April 2004, after paying $10.2 billion to its hundreds of creditors. As part of the reorganization, PG&E's 5.1 million electricity customers will have to pay above-market prices for several years to cancel the debt.
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Generation portfolio
PG&E's utility-owned generation portfolio consists of an extensive hydroelectric system, one operating nuclear power plant, one operating natural gas-fired power plant, and another gas-fired plant under construction. Two other plants owned by the company have been permanently removed from commercial operation: Humboldt Bay Unit 3 (nuclear) and Hunters Point (fossil).
Hydroelectric
PG&E is the largest private owner of hydroelectric facilities in the United States including 174 dams. According to the company's Form 10-K filing for 2011, "The Utility's hydroelectric system consists of 110 generating units at 68 powerhouses, including the Helms pumped storage facility, with a total generating capacity of 3,896 MW ... The system includes 99 reservoirs, 56 diversions, 174 dams, 172 miles of canals, 43 miles of flumes, 130 miles of tunnels, 54 miles of pipe (penstocks, siphons and low head pipes), and 5 miles of natural waterways."
The single largest component is the Helms Pumped Storage Plant, located at 37°02?13.78?N 118°57?53.63?W near Sawmill Flat in Fresno County, California. Helms consists of three units, each rated at 404 MW, for a total output of 1,212 MW. The facility operates between Courtright and Wishon reservoirs, alternately draining water from Courtright to produce electricity when demand is high, and pumping it back into Courtright from Wishon when demand is low. The Haas Powerhouse is situated more than 1,000 feet (300 m) inside a solid granite mountain.
Nuclear
The Diablo Canyon Power Plant, located in Avila Beach, California, is the only operating nuclear asset owned by PG&E. The maximum output of this power plant is 2,240 MWe, provided by two equally sized units. As designed and licensed, it could be expanded to four units, at least doubling its generating capacity. Over a two-week period in 1981, 1,900 activists were arrested at Diablo Canyon Power Plant. It was the largest arrest in the history of the U.S. anti-nuclear movement.
In June 2016, PG&E announced that it plans to close Diablo Canyon in 2025. This will make California free of operating commercial nuclear power plants, but will mean the loss of 2256 MW of generation that produced over 18,000 GWh of electricity per year.
The company operated the Humboldt Bay Power Plant, Unit 3 in Eureka, California. It is the oldest commercial nuclear plant in California and its maximum output was 65 MWe. The plant operated for 13 years, until 1976 when it was shut down for seismic retrofitting. New regulations enacted after the Three Mile Island accident, however, rendered the plant unprofitable and it was never restarted. Unit 3 is currently in decommissioning phase and scheduled to be fully dismantled in 2015. The spent nuclear fuel is currently stored at the Independent Spent Fuel Storage Installation (ISFSI) on the plant site because of the United States Department of Energy's failure to find a suitable alternative to storing or disposing of the spent fuel.
Pacific Gas & Electric planned to build the first commercially viable nuclear power plant in the United States at Bodega Bay, a fishing village fifty miles north of San Francisco. The proposal was controversial and conflict with local citizens began in 1958. In 1963, there was a large demonstration at the site of the proposed Bodega Bay Nuclear Power Plant. The conflict ended in 1964, with the forced abandonment of plans for the power plant.
Fossil fuels
Built in 1956, there are two conventional fossil fuel (natural gas/fuel oil) units at Humboldt Bay Power Plant that produce 105 MWe of combined output. These units, along with two 15 MWe Mobile Emergency Power Plants (MEPPs), will be retired in the summer of 2010. The Humboldt Bay Generating Station, built on the same site, is set to take the older power plant's place in the summer of 2010. It will be producing 163 MWe using natural gas for fuel and fuel oil for backup on Wärtsilä Diesel engines. It will employ technology to produce 80 percent fewer ozone precursors and 30 percent less CO2 than the previous facility. The new design will also reduce water use by eliminating the need for "once-through" cooling.
As part of a settlement with Mirant Services LLC for alleged market manipulations during the 2001 California energy crisis, PG&E took ownership of a partially constructed natural gas unit in Antioch, California. The 530 MW unit, known as the Gateway Generating Station, was completed by PG&E and placed into operation in 2009.
On May 15, 2006, after a long and bitter political battle, PG&E shut down its 48-year-old Hunters Point Power Plant in San Francisco. At the time of closure, the maximum output of the plant was 170 MW. Residents of the impoverished neighborhood had been pushing for more than a decade to close the plant, claiming it contributed to above average rates of asthma and other ailments.
PG&E broke ground in 2008 on a 660 MW natural gas power plant located in Colusa County. It began operation in December 2010, and serves nearly half a million residences using the latest technology and environmental design. The plant will use dry cooling technology to dramatically reduce water usage, and cleaner-burning turbines to reduce CO2 emissions by 35 percent relative to older plants.
Solar
On April 1, 2008, PG&E announced contracts to buy three new solar power plants in the Mojave Desert. With an output of 500 MW and options for another 400 MW, the three installations will initially generate enough electricity to power more than 375,000 residences.
In April 2009, PG&E's Next100 blog reported that PG&E was asking the California Public Utilities Commission to approve a project by the company Solaren to deliver 200 megawatts of power to California from space. This method of obtaining electricity from the sun eliminates (mostly) the darkness of night experienced from solar sites on the surface of the earth. According to PG&E spokesman Jonathan Marshall, energy purchase costs are expected to be similar to other renewable energy contracts.
PG&E and the environment
Beginning in the mid-1970s, regulatory and political developments began to push utilities in California away from a traditional business model. In 1976, the California State Legislature amended the Warren-Alquist Act, which created and gives legal authority to the California Energy Commission, to effectively prohibit the construction of new nuclear power plants. The Environmental Defense Fund (EDF) filed as an intervenor in PG&E's 1978 General Rate Case (GRC), claiming that the company's requests for rate increases were based on unrealistically high projections of load growth. Furthermore, EDF claimed that PG&E could more cost-effectively encourage industrial co-generation and energy efficiency than build more power plants. As a result of EDF's involvement in PG&E's rate cases, the company was eventually fined $50 million by the California Public Utilities Commission for failing to adequately implement energy efficiency programs.
Since Darbee took control of the PG&E Company in 2004, PG&E has aggressively promoted its environmental image through a variety of programs and campaigns.
In the early first decade of the 21st century, the CEO of PG&E Corporation, Peter Darbee, and then-CEO of Pacific Gas & Electric Company, Tom King, publicly announced their support for California Assembly Bill 32, a measure to cap statewide greenhouse gas emissions and a 25% reduction of emissions by 2020. The bill was signed into law by Governor Arnold Schwarzenegger on September 27, 2006.
In 2014 PG&E had a renewables mix of 28%. By 2016, 32.9% of PG&E's power sources were renewable.
PG&E's Community Pipeline Safety Initiative (CPSI) essentially cut down hundreds of thousands of trees in California from Eureka to Bakersfield along their nearly 7,000 miles of gas transmission pipeline. PG&E did not conduct a CEQA review in any of these cities, and the total number of trees removed is known only to PG&E.
During 2017, around 33% PG&E's energy came from GHG (greenhouse gas) free sources. In February 2018, the company announced that 80% of the company's delivered electricity comes from GHG free sources. Both meet the 33% that California will require of all electric by 2020, nearly three years in advance.
Disasters
Groundwater contamination in Hinkley, California
From 1952 to 1966, PG&E dumped "roughly 370 million gallons" of chromium 6-tainted wastewater" into unlined wastewater spreading ponds around the town of Hinkley, California. PG&E used chromium 6--"one of the cheapest and most efficient commercially available"--at their compressor station plants in their cooling towers along the natural gas transmission pipelines.
PG&E did not inform the local water board of the contamination until December 7, 1987, stalling action on a response to the contamination. The residents of Hinkley filed a successful lawsuit against PG&E in which the company paid $333 million-- the largest settlement ever paid in a direct-action lawsuit in U.S. history. The legal case, which was dramatized in the 2000 film Erin Brockovich, became an international cause célèbre. In response, in 2001, at the request of the CalEPA, the Chromate Toxicity Review Committee was formed to investigate the toxicity of chromium-6 when ingested. In 2003 a Senate hearing revealed that the committee's supposedly blue-ribbon members included PG&E defense expert witnesses who had influenced the final August 2001 report which found in PG&E's favor concluding that other reports were alarmist with "spuriously high" statistics and that further evaluation should be handled by academics in laboratory settings not by regulators. Through time the report was recanted but it set back regulation of chromium 6 for many years. In July 2014 California became the first state to acknowledge that ingested chromium-6 is linked to cancer and as a result has established a maximum chromium-6 contaminant level (MCL) of 10 parts per billion (ppb). In setting the regulations it was acknowledged that in "recent scientific studies in laboratory animals, Hexavalent Chromium has also been linked to cancer when ingested." Previously, when older chromium MCLs were set, "at the time Total Chromium MCLs were established, ingested Hexavalent Chromium associated with consumption of drinking water was not considered to pose a cancer risk, as is now the case."
By 2013 PG&E had cleaned up 54 acres, but it is estimated the remediation process will take another 40 years. PG&E built a concrete wall barrier that is about a half-mile-long to contain the plume, pump ethanol into the ground to convert chromium-6 into chromium-3, and have planted acres of alfalfa. They created a chicken farm to use the alfalfa. PG&E uses irrigation to maintain these large circles of green in the otherwise desert area, and was asked to stop because of the ongoing danger of residents inhaling chromium 6.
In 2015 the California Regional Water Quality Control Board, Lahontan Region served PG&E with a new order "to cleanup [sic] and abate the effects of the discharge of chromium waste or threatened pollution or nuisance." By the time of the report the plume had expanded to "8 miles in length and approximately 2 miles in width, throughout the Hinkley Valley and into Harper Dry Lake Valley", polluting new areas. In early 2016, the New York Times described Hinkley as having been slowly turned into a ghost town due to the contamination of the area with owners unable to see their properties.
Epidemiologist John Morgan produced a 2010 report for the California Cancer Registry in which he argued that there was no cancer cluster in Hinkley related to chromium 6. In one study Morgan had claimed that cancer rates in Hinkley "remained unremarkable from 1988 to 2008" saying that "the 196 cases of cancer reported during the most recent survey of 1996 through 2008 were less than what he would expect based on demographics and the regional rate of cancer." In 2013 the Center for Public Integrity found glaring weaknesses in Morgan's 2010 analysis that challenged the validity of his findings. "In his first study, he dismisses what others see as a genuine cancer cluster in Hinkley. In his latest analysis, he excludes people who were exposed to the worst contamination."
Sierra Blaze
On June 19, 1997 a Nevada County jury in Nevada City found PG&E guilty of "a pattern of tree-trimming violations that sparked a devastating 1994 wildfire in the Sierra." "PG&E was convicted of 739 counts of criminal negligence for failing to trim trees near its power lines--the biggest criminal conviction ever against the state's largest utility."
San Bruno, California explosion
On the evening of September 9, 2010, a suburb of San Francisco, San Bruno, California, was damaged when one of PG&E's natural-gas pipelines that was "at least 54 years old, 30 inches (76.2 centimeters) in diameter and located under a street intersection in a residential area..." exploded sending a "28-foot section of pipe weighing 3,000 pounds flying through the air, fueled by blowing natural gas." The blast created a crater at the epicenter and "killed eight people and injured nearly five dozen more while destroying about 100 homes." The USGS reported that the shock wave was similar to a 1.1 magnitude earthquake. Following the event, the company was heavily criticized for ignoring the warnings of a state inspector in 2009 and for failing to provide adequate safety procedures. The incident then came under investigation by the National Transportation Safety Board (NTSB). On August 30, 2011, the NTSB released its findings, which placed fault for the blast on PG&E. The report stated that the pipeline installed in 1956 that later burst did not even meet standards of that time. PG&E was charged with "twelve criminal felony counts alleging violations of the Natural Gas Pipeline Safety Act. PG&E pleaded not guilty to the "criminal counts in both the initial and superseding indictments, opting to put the prosecutors to their proof." On April 1, 2014 a United States grand jury in San Francisco charged PG&E with "knowingly and willfully" violating the Natural Gas Pipeline Safety Act.
In August 2015 the California Public Utilities Commission levied a $300 million fine against PG&E which they paid. PG&E also "refunded $400 million to gas customers and agreed to pay $850 million for gas-system safety improvements. It also settled more than $500 million in claims involving victims of the disaster and their relatives."
Controversies
Community Pipeline Safety Initiative (CPSI)
In 2014, PG&E rolled out the "Pipeline Pathways" project which was later rebranded to the "Community Pipeline Safety Initiative". These projects were PG&E's $500 Million four-year effort to clear many of the trees that lie along the almost 7,000 miles of the high pressure gas distribution pipeline in California. PG&E's claims that removing trees were necessary to 1) provide emergency access should an incident occur under a tree and 2) protect pipelines from rupturing due to tree roots. Many communities have protested the removal of private and public trees. According to local opposition groups, PG&E's safety claims for tree removal are incorrect and that tree removal makes aerial monitoring of pipeline faster and cheaper. In 2017, several lawsuits have been filed in Contra Costa County Court by the non-profit organization Save Lafayette Trees stating that PG&E did not conduct the proper CEQA reviews or provide ample public notice before signing agreements for tree removal.
Metcalf sniper attack
On the morning of April 16, 2013 a team of gunmen opened fire with rifles on the Metcalf Transmission Substation in San Jose, California, severely damaging 17 transformers.
Smart meters
In the middle of 2010, PG&E rolled out new electronic meters that replaced traditional mechanical electric meters. Customers whose meters were replaced with smart meters reported seeing their energy bills increase and accused the company of deliberately inflating their bills and questioned the accuracy of the meters. ubsequently, the California Public Utilities Commission conducted an investigation and found that of the 613 Smart Meter field tests, 611 meters were successfully tested and 100% passed Average Registration Accuracy. One meter was found to have serious errors and was malfunctioning on arrival, while another was found to have serious event errors upon installation. These meters were, therefore, excluded from testing.
There were also complaints that the company did not honor customers' request not to have their mechanical meters replaced. Although the contractor that installed the meters would honor these requests, PG&E would eventually replace them anyway.
Proposition 16
In 2010, PG&E was accused of attempting to stifle competition with Proposition 16, which mandated approval from two-thirds of voters to start or expand a local utility. Critics argued that this would make it harder for local governments to create their own power utilities, thus effectively giving PG&E a monopoly. The company was also rebuked for supplying $46 million to support the ballot measure when opponents raised $100,000 in the campaign. The proposition was voted down with 52.5% in opposition and 47.5% in favor.
Tax dodging and lobbying
In December 2011, the non-partisan organization Public Campaign criticized PG&E for spending $79 million on lobbying and not paying any taxes during 2008-2010, instead getting $1 billion in tax rebates, despite making a profit of $4.8 billion and increasing executive pay by 94% to $8.5 million in 2010 for its top 5 executives.
Restatements
On February 28, 2002, after the collapse of Enron, which used dubious accounting and partnerships to hide its debt, PG&E announced to restate results dating back to 1999, to show leases related to power plant construction that had been previously kept off its balance sheet.
On June 27, 2003, PG&E National Energy Group, a unit of PG&E Corporation revised its 2002 Form 10-K/A to reclassify certain offsetting revenues and expenses, which net to zero. PG&E revised its 2002 Form 10-K/A accordingly to reflect the change.
Rates
The PG&E and other investor owned utilities that are essentially granted monopoly status in California are guaranteed a negotiated fair rate of return on equity (ROE). PG&E's ROE rate was set at 10.4% and a return on rate base (ROR) was set at 8.06% by the CPUC in December 2012. PG&E electricity rates are among the highest in the United States. In his 2013 paper Jonathan Cook of the UC Davis Energy Efficiency Center, described the 'unique factors' that explain why PG&E's rates are higher than other utilities in California. According to Cook, PG&E procures 60% of its electricity supply from 3rd party generators and 40% from nuclear, fossil fuel and hydroelectric power plants. Many of the dams that produce PG&E's hydroelectric power were built in the early 1900s and require high maintenance. The cost of hydroelectric power maintenance is estimated to rise from $28 million in 2012 to $48 million. PG&E "current and near-term capital expenditures are dominated by Diablo Canyon and its hydroelectric system." Operations and Maintenance (O&M) expenses are expected to rise especially with new regulations in place after the Fukushima accident. PG&E uses less natural gas than its competitors and is expected "to experience slower price growth rates" particularly if there are high emission allowance prices.
Future projects
PG&E are also engaged a Clean Air Transportation Program, a A Dialogue on the Next Century of Energy, a We Can Do This.
South San Joaquin Irrigation District (SSJID)
In 2009 the California Public Utilities Commission (CPUC) unanimously approved a resolution that would allow the South San Joaquin Irrigation District to purchase PG&E's electric facilities in Manteca, Ripon and Escalon. In March 2016 a "San Joaquin County Superior Court Judge Carter Holly has rejected PG&E claims that South San Joaquin Irrigation District lacks sufficient revenues to provide electrical retail service to the cities of Manteca, Ripon, and Escalon and surrounding farms." The Municipal Service Review (MSR) found that SSJID's customer rates would be 15 percent lower than PG&E rates.
See also
- Raker Act
- Grid-tied electrical system
- Southern California Edison
- Diablo Canyon Power Plant
- San Diego Gas & Electric
- Erin Brockovich (film)
- List of articles associated with nuclear issues in California
References
External links
- Official website
- PG&E Corporation
Source of article : Wikipedia
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