Proposed PG&E fine swells to $1.6 billion

California Public Utilities Commission President Michael Picker Friday proposed increasing to $1.6 billion a penalty imposed on PG&E for safety violations related to a fatal 2010 gas pipeline explosion in San Bruno.

The proposed penalty is $200 million higher than a $1.4 billion penalty proposed in September last year, and would shift the bulk of the penalty from a payment into state coffers to funds set aside for safety improvements, according to CPUC officials.

Where the previous penalty included $950 million to be paid to California’s general fund, the current settlement calls for PG&E shareholders to pay $850 million toward gas transmission pipeline safety infrastructure, $300 million to the state’s general fund and a one-time $400 million bill credit to gas customers.

The $850 million is in addition to $635 million that the CPUC previously ruled PG&E shareholders must pay for the first phase of its pipeline modernization program, and the costs cannot be passed along to customers.

PG&E had appealed the penalty proposed last year, which at the time was by far the largest penalty for safety violations ever levied by the commission. San Bruno officials had objected to the proposal in part because it put too much money toward state coffers and not enough toward pipeline safety improvements.

The Sept. 9, 2010 pipeline explosion in San Bruno killed eight people, injured 66 others and destroyed dozens of homes. It was caused by 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.

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