InfrastructureState agency imposes heavy fine on PG&E for San Bruno blast

The California Public Utilities Commission (CPUC) two weeks ago  wrapped up its investigation of a 2010 gas pipeline explosion in San Bruno, California, and recommended  that Pacific Gas and Electric (PG&E) pay $2.25 billion for its negligence, which led to the blast.

The San Francisco Examiner reports that the explosion occurred on 9 September 2010, killing eight and injuring another fifty-eight. The blast was so strong that after the initial explosion, the Crestmoor neighborhood of San Bruno continued to burn for several hours under an eight alarm fire. It took almost an hour and a half for officials to turn off the gas from the pipeline that exploded. The fire burned thirty-five houses and another three had to be torn down due to significant damage.

Officials say the fine imposed on PG&E is the largest ever by a state regulator.

TheExaminer notes that the CPUC investigators believe the fine is appropriate due to dozens of violations by the company over the course of decades, and that shareholders should take the fine, not customers.

“They have just plain failed to follow safety standards in so many areas,” Brigadier General Jack Hagan, director of the commission’s Safety and Enforcement Division, told the Examiner. “This is going to send a very strong deterrent message to PG&E that this kind of conduct and culture will not be tolerated.”

PG&E will file its proposal later this month, and a judge from the utilities commission will make a decision later this year on how much PG&E will be fined.

“The penalties proposed by the commission staff and others far exceed anything that I have seen in my 30 years in the industry,” PG&E CEO Tony Earley said in a statement. He added that the penalty “could dramatically set back our efforts to do the right thing by making it harder and more costly to finance the remaining improvements that are needed in our gas system.”

The proposal calls for the entire fine to be allocated to safety testing, and replacing and upgrading hundreds of miles of gas transmission lines, instead of going to the state’s general fund. If that happens, PG&E will be able to claim the fine as a tax deduction.

“It’s absolutely the amount PG&E should pay for their all their past violations,” Marcel Hawiger, an attorney with the nonprofit Utility Reform Network told the Examiner. “This is a very big penalty, but it’s not quite as big as it seems when you account for the tax benefits PG&E would accrue.”