Enron Mail

From:drew.fossum@enron.com
To:dave.schafer@enron.com, louis.soldano@enron.com
Subject:Trade Press on PG&E Issue
Cc:michael.moran@enron.com, eric.benson@enron.com
Bcc:michael.moran@enron.com, eric.benson@enron.com
Date:Tue, 28 Mar 2000 02:48:00 -0800 (PST)

Dave - louie said you would want to see this....
---------------------- Forwarded by Drew Fossum/ET&S/Enron on 03/28/2000
10:47 AM ---------------------------
ET & S Business Intelligence
From: Lorna Brennan on 03/28/2000 10:52 AM
To: Bill Cordes/ET&S/Enron@ENRON, Julie McCoy/ET&S/Enron@ENRON, Lou
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cc:
Subject: Trade Press on PG&E Issue

PG&E Fights Toxin in Gas Stream, Movie Fallout

Sunday's Oscar winners have nothing on San Francisco's venerable Gran
Dame of
combination energy utilities, Pacific Gas and Electric Co., whose film
career and notoriety
seem destined to win increasing Hollywood scrutiny if not gold
statuettes.

Look no further than your local first-run movie theaters and the
real-life drama, "Erin
Brockovich," taking the actual name of the latest heroine to put PG&E's
familiar logo in
the klieg lights. Unfortunately for PG&E, toxins like chromium or PCBs
in association
with its gas pipelines can create their own dramas.

Just as the new movie, starring Julia Roberts, hit the theaters earlier
this month, a new
real-life problem confronted the combination utility with contaminates
getting into the
southern part of its California gas transmission system.

The movie is the story of a legal assistant --- a twice-divorced mother
of three young
children --- who single-handedly challenges PG&E, exposing its alleged
operating
mistakes that led to the use of chromium in its pipelines and eventually
in the local water
supply of a small, remote, high-desert town called Hinkley, which is
about 130 miles
northeast of Los Angeles. Lawsuits emerged in the early 1990s based on
the
development of tumors and other health problems among many of the
Hinkley residents.
By PG&E's own admission decades earlier it legally discharged wastewater
containing
chromium into the ground at its compressor station near Hinkley. Some of
the chromium
eventually got into the groundwater, and PG&E acknowledges it "did not
respond to (that)
problem as openly, quickly or thoroughly as it should have." It provided
drinking water to
nearby residents and arranged for medical exams for residents wishing to
have them.
PG&E also worked with local and state officials to clean up the problem.
In 1996,
however, PG&E settled a class action suit (one of several) with 650
Hinkley residents for
a record $333 million.

"The movie is a dramatization and it is pretty entertaining, so I liked
it," said Jon
Tremayne, a PG&E utility spokesperson.

PG&E CEO Robert Glynn told his employees, "It's clear in retrospect that
our company
should have handled some things differently at that time. And I wish
that it had."

Litigation against the big energy firm continues. Involving the same
transmission pipeline
and geographical areas, the current PCBs found in PG&E's interstate
supplies are
coming through Enron's Transwestern Pipeline unit at the
California-Arizona border from
New Mexico but are not at harmful levels at this point in time. Routine
testing early in
February turned up the suspected cancer-causing chemical, which was used
as a
lubricant in high-pressure pipelines and compressor stations until it
was banned.

"What we are talking about here is very low levels (ranging from 2 to 22
parts-per-million,
or ppm), well below (U.S.) Environmental Protection Agency (EPA) levels
(50 ppm),"
according to Tremayne.

Since the installation of a series of filter separators on both sides of
the
California-Arizona border, PG&E has concentrated on testing and
following up along its
southern transmission system that extends some 350 miles to the town of
Kettleman in
the northwestern part of the central San Joaquin Valley. PCB traces have
been found,
and PG&E has been working with the local gas distributor in the area,
Southwest Gas
Corp., to test for signs of PCBs in the nearby Barstow and Victor Valley
distribution
systems. As of March 22, none of the definitive results were in and
there won't be much
before the end of this month, according to Tremayne.

Both state regulators and the federal EPA have been notified of the
situation. The federal
EPA confirmed that PCBs are authorized for use in concentrations below
50 ppm. It is
the EPA laboratory tests that showed PCBs were known to cause cancer in
laboratory
rats.

PG&E spokespeople were assuring the public last week that the utility
will "take any
additional actions necessary" as a result of data from the ongoing
testing it is doing of its
transmission system and interconnecting distribution pipeline systems.
And the utility is
planning to install additional filter separators at various locations
along its pipeline.

PCB-containing lubricating oils once were used routinely by a number of
U.S. pipeline
companies in their gas pipeline compressors, which help push the fuel
through the pipes.
While they are no longer used, some of the oils have remained inside
some pipelines since
the 1960s and 70s. If present, they are carried in liquid droplets in
the natural gas stream.

Between the newly released motion picture and PG&E's local wrestling
match with the
PCBs, another class action lawsuit against PG&E stemming from the
original chromium
issue heads toward trial, pushed by residents in Topock, AZ and former
residents of
Hinkley not involved in the first suit. A trial date has been set for
Nov. 27, and CNN's
"CourtTV" program is proposing to provide live coverage.