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June 29, 2013
Another View: Bee misguided in analysis of PG&E penalty in San Bruno blast

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(June 29 -- By Tim Fitzpatrick, Special to The Bee)

Since the tragic San Bruno gas transmission pipeline accident, Pacific Gas and Electric Co. has committed to investing to become the safest and most reliable gas operator in the United States. Nobody else in the country is spending on gas operations on a similar scale. To ensure that PG&E can continue these massive investments, the penalty associated with the accident should be proportionate and carefully constructed so as to not disadvantage the company in attracting investors and the capital needed.

The Bee's editorial "PG&E shareholders need to pay fair share of gas safety upgrades" (June 23) fails to acknowledge that the $2.25 billion penalty recommended by the California Public Utilities Commission's Consumer Protection and Safety Division - and derided by The Bee's editorial board as much too low - is 20 times larger than the largest penalty ever before levied for a pipeline accident in the United States. Knowing this, readers might question your claim that "shareholders will mostly escape liability."

In addition, The Bee conflates our normal request for resources to cover the operation, maintenance and modernization of our gas and electric distribution and electric generation systems with the separate issue - at stake in the San Bruno case - of our gas transmission system. You seem to suggest that shareholders should henceforth pay for all parts of our business, whether or not related to San Bruno. This is misleading at best.

Finally, The Bee suggests that PG&E shareholders haven't been hurt much since PG&E stock "has barely dropped since 2010." You fail to inform readers that, during the very same period, the valuation of peer companies in the industry has soared. The bottom line is that PG&E's market capitalization has lagged about $5.7 billion behind our peers. Why does that matter? Because we often seek to attract the very same investors, who logically compare the returns they will get from comparable investments in similar companies.

Tim Fitzpatrick is vice president of corporate relations for Pacific Gas and Electric Co.

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