Tag:Gas Transportation

Collision of Cost of Safety and the Cost of Energy

Collision of Cost of Safety and the Cost of Energy

Last December, Pacific Gas & Electric Company (PG&E) filed its cost of service and rate application for gas transportation and storage. This application was filed in the context of the California Public Utilities Commission (CPUC) being under enormous pressure to increase its safety oversight of utilities, a $14.4 million fine imposed on PG&E for failing to notify regulators about incorrect records on a natural gas pipeline and a looming $2.2 billion fine for the 2010 San Bruno explosion. In this context, it is understandable that PG&E would be very sensitive to safety concerns and would seek to make capital expenditures to improve the safety of its gas transportation system. The catch, of course, is that when a utility spends money, rates go up. For PG&E, this is complicated even further by the risk that a $2.2 billion fine could increase PG&E’s cost of raising money to pay for the capital upgrades it wants to make. When rates go up, large consumers pay attention; and when rates go up a lot, everyone pays attention.

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