State Agency Says PG&E Must Pay Additional $1.4 Billion in Penalties for San Bruno Explosion

By Bay City News Service:

PG&E was hit with $1.4 billion in penalties by the California Public Utilities Commission Tuesday for safety violations related to a deadly gas pipeline explosion in San Bruno in 2010.

The new fines and penalties bring the total amount PG&E has been ordered to pay in the wake of the explosion -- which killed eight people and injured 66 others on Sept. 9, 2010 -- to more than $2 billion.

Two CPUC administrative law judges ruled that PG&E had committed nearly 3,800 violations of state and federal laws and regulations over several years leading up to the explosion.

The penalties include $950 million to be paid to California’s general fund, $400 million in pipeline improvements -- the cost of which cannot be passed on to customers -- and another $50 million to enhance pipeline safety, including to hire CPUC independent auditors to monitor PG&E’s progress.

The CPUC had previously ruled that PG&E shareholders must pay $635 million for its pipeline modernization program, costs that also cannot be passed on to customers, bringing the total penalties levied against PG&E for the San Bruno explosion to more than $2 billion, according to the CPUC.

The city of San Bruno had asked the CPUC to levy $2.45 billion in fines and penalties against PG&E.

“We can never undo the pain from the San Bruno explosion. We’re accountable, and we know a substantial penalty is appropriate,” PG&E spokesman Greg Snapper said in a video statement.

“We have respectfully asked the commission to ensure the final penalty is reasonable, is proportionate, and it takes into consideration all the significant safety actions we’ve made on behalf of the communities that we’re so fortunate to serve,” Snapper said.

PG&E has 30 days to file an appeal of the decision. If no appeal is filed, the penalty would be put up to a final vote by the commission.

It is the largest penalty for safety violations ever levied by the commission, dwarfing a $38 million penalty handed down to PG&E for a 2008 natural gas explosion in Rancho Cordova.

Meanwhile, PG&E is facing criminal charges in federal court for violations related to the explosion. The agency pleaded not guilty last month to one count of obstructing justice and 27 counts of violating federal pipeline safety law.

PG&E could face a maximum penalty of $1.13 billion if convicted of the criminal charges.

There were $565 million in settlements between victims of the explosion and PG&E in San Mateo County Superior Court, including family members of those killed, people who were injured and those whose property was damaged.

The cause of the explosion was a rupture in a defective seam weld in a pipeline segment that was incorrectly listed in PG&E records as seamless, according to the National Transportation Safety Board.