Commission Recommends Two Billion Dollar Fine Against PG&E for 2010 Pipeline Explosion

The California Public Utilities Commission recently announced a recommended fine against Pacific Gas & Electric Co. in connection with a 2010 gas pipeline explosion: $2.25 billion. According to officials, that would be the largest fine ever assessed by a state regulatory agency. The commission said the fine should be shouldered by the company’s shareholders, not its customers.

On September 9, 2010, a gas pipeline exploded in San Bruno, a suburb of San Francisco. The blast killed eight, injured dozens, and destroyed some 38 homes.

In 2011, the National Transportation Safety Board ruled unanimously that the explosion was caused by a “litany of failures” by the company as well as insufficient oversight by safety officials.

The City of San Bruno issued a separate recommendation that PG&E be fined not less than $1.25 billion, plus pay at least $1 billion toward inspecting and upgrading its pipelines. PG&E is expected to file its own proposal soon, and a utilities commission judge will issue a final ruling on how much the company will pay later this year.

The utilities commission’s recommendation calls for the entire $2.25 billion to be spent on inspecting, upgrading, and replacing hundred of miles of gas pipelines rather than being added to the state’s general revenue fund.

An attorney for consumer advocate group Utility Reform network pointed out that the required infrastructure investments will lessen the impact of the fine on PG&E.

“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,” Marcel Hawiger said.

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