SAN FRANCISCO (KCBS) – Pacific Gas and Electric has asked state regulators for permission to pass along to consumers the cost of upgrading its natural gas transmission system to safety standards adopted after the deadly San Bruno pipeline explosion.

The company is seeking a rate increase that will generate $5 billion to comply with new regulations adopted after the Sept. 2010 disaster claimed eight lives and destroyed dozens of homes.

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KCBS’ Susan Kennedy Reports:

“Anytime a new standard is put in place, it’s appropriate for customers to fund the work to meet those standards,” said PG&E spokesman David Eisenhower.

Consumer advocates denounced the proposed rate hike at a California Public Utilities Commission hearing on Monday, where state regulators began what’s expected to be lengthy review of PG&E’s application.

Mark Toney with The Utility Reform Network (TURN) said ratepayers should not pay extra because PG&E’s neglected to perform maintenance or keep accurate records.

“TURN is asking the CPUC to make sure that not one penny of ratepayer money goes to fund work that PG&E should have done for years and years,” Toney said.

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Toney put the actual cost of upgrading the system at $2.2 billion, and said it was unfair to ask consumers to come up with another nearly $3 billion to cover obligations such as taxes, interest payments and shareholder profits.

Eisenhower pointed out that shareholders would foot at least part of the cost of the upgrades, adding that revenue from the rate increase would go towards meeting or exceeding the new safety standards.

Assemblyman Jerry Hill, who represents the Crestmoor neighborhood where the blast occurred, urged state regulators to consider whether PG&E diverted money budgeted for safety upgrades to shareholders or executives.

Hill said the CPUC needs to hold P&GE accountable for failing to maintain the pipeline system and keep accurate records.

The commission has scheduled several more hearings on the rate increase, and is expected to issue its final decision later this year.

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