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PG&E hit with $1.4 billion penalty

A devastated zone in San Bruno following the 2010 gas pipeline explosion. (Photo: Brocken Inaglory)

Pacific Gas and Electric Co., California’s largest utility, should pay an unprecedented $1.4 billion in fines and penalties stemming from the 2010 gas pipeline blast in San Bruno that killed eight people and destroyed three dozen homes, state regulators ruled.

The state Public Utilities Commission, which issued the ruling by a two-member panel of administrative law judges, said the penalty will take effect in 30 days, absent an appeal.

Until Tuesday’s decision, the largest safety-related penalty was $38 million against PG&E as a result of a natural gas explosion on Dec. 24, 2008, in Rancho Cordova near Sacramento.

“The Administrative Law Judges found that in total, PG&E committed 3,798 violations of state and federal laws, rules, standards, or regulations in connection with the operations and practices of its gas transmission system pipeline,” the PUC said in announcing the decision.

The PUC, which has jurisdiction over investor-owned utilities, said penalties against PG&E stemming from the San Bruno explosion exceed $2 billion – the $1.4 billion announced Tuesday and $635 million from an earlier decision involving aging pipelines.

Some $950 million of the penalty is to be paid directly to the state’s General Fund, the main budget account for income, sales, corporate and insurance taxes. Another $450 million will be spent on pipeline improvements, money that cannot be recovered from the utility’s customers.

The state fines are separate from the actions of federal transportation authorities, who have accused PG&E of some 28 safety and other violations that could result in $1 billion in fines.

Until Tuesday’s decision, the largest safety-related penalty was $38 million against PG&E as a result of a natural gas explosion on Dec. 24, 2008, in Rancho Cordova near Sacramento.

The utility issued a statement saying that since the San Bruno explosion, “we’ve been dedicated to re-earning the trust of our customers and the communities we serve,” the utility said in the statement.

“We are deeply sorry. We have respectfully asked that the commission ensure that the penalty is reasonable and proportionate and takes into consideration the company’s investments and actions to promote safety,” PG&E said.

The San Bruno blast on Sept. 9, 2010 occurred after a 54-year-old pipeline broke, forcing series of explosions and fires. The disaster prompted a national inquiry into aging pipelines.


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