SoCalGas Pegs Cost of 2015 Leak at $841M and Counting

LOS ANGELES (CN) – The 2015 blowout at an LA-area natural gas storage facility that displaced thousands of residents will cost Southern California Gas Company an estimated $841 million, according to a quarterly earnings report from the company – which said the leak generated more than 300 lawsuits involving over 43,800 plaintiffs.

The suits claim negligence, strict liability, property damage, fraud, public and private nuisance (continuing and permanent), trespass, inverse condemnation, fraudulent concealment, unfair business practices, and loss of consortium, among other things against the utility and the state of California. Most of those suits were filed with the Los Angeles Superior Court.

Porter Ranch resident Matt Pakucko, who has been a vocal critic of how the state and SoCalGas handled the situation at its Aliso Canyon facility, said the 2015 leak was like a façade being lifted from the community.

“We could tell there were all these strange problems with people’s health before the blowout, but there were no infections, no bacteria that could be discovered by tests,” Pakucko said in an interview.

“The symptoms were in line with exposure to chemicals. Then we knew the truth.”

Pakucko, founder of the group Save Porter Ranch, personally knows hundreds of people who have sued SoCalGas and the state, including himself. He has lived in the San Fernando Valley community for 10 years and does not expect the quarterly earnings report to have any impact on the Aliso Canyon storage facility’s operations.

In July, SoCalGas Company restarted operations at the facility with the approval from the California Public Utilities Commission and state’s Department of Conservation Division of Oil, Gas & Geothermal Resources.

A majority of the $840 million estimated cost was used to relocate residents and to pay for cleaning and labor costs. More was spent on efforts to control and stop the leak, reduce emissions, and investigate the cause of the blowout at the well.

The remaining sum includes “legal costs incurred to defend litigation, the value of lost gas, the costs to mitigate the actual natural gas released, and other costs,” according to the report.

One lawsuit filed by Alberto Del Castillo, his family and several other Porter Ranch residents the leak made them “sick almost all the time” due to the strong gas odor they could smell from their home.

In 2016, a Los Angeles judge ordered SoCalGas to pay for the costs to clean residents’ homes. And the utility pleaded no contest as part of a settlement agreement after the Los Angeles County District Attorney’s Office filed a misdemeanor criminal complaint seeking penalties and other remedies over the failure to provide timely notice of the leak.

SoCalGas agreed to pay a $75,000 fine, penalty assessments of approximately $233,500 and operational commitments estimated at $5 million.

Liza Tucker with Consumer Watchdog wants to know how much of the $841 million estimate will be passed on to ratepayers, and told Courthouse News the utility shouldn’t be allowed to ask customers to pay for anything.

“They’re supposed to be maintaining these wells, but they were not,” Tucker said. “They collected ratepayers’ fees to service the facilities. Clearly the wells were not being maintained. It was SoCalGas’ fault that the well exploded. It was not an act of God.”

In 2015, the California Public Utilities Commission ordered SoCalGas to exclude costs related to the Aliso Canyon leak from requests to raise rates. And in March 2016, the commission ordered SoCalGas to track day-to-day costs not associated with the leak so regulators can determine if ratepayers should receive a refund.

Several state agencies have ongoing investigations related to the estimated 109,000 metric tons of natural gas that were released during the leak. The $841 million estimate does not include pending lawsuits, costs of cooperating with the investigations, damages and restitution, civil, administrative and criminal fines, or other penalties.

The residents’ lawsuits will likely go to trial by late next year.

 

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