San Bruno nods approval to $1.6B PG&E fine

San Bruno officials announced Tuesday they support a proposed increased $1.6 billion penalty and fine for PG&E Co. for a fatal 2010 pipeline explosion in San Bruno and record-keeping violations.

The proposed larger punishment was announced March 13 by the California Public Utilities Commission’s new president, Michael Picker.

A previous proposal issued by two PUC administrative law judges in September recommended a $1.4 billion penalty and fine. Picker’s proposal would allocate the penalty money differently, devoting more to safety improvements rather than the state’s general fund. The commission is currently due to consider the proposals at its April 9 meeting in San Francisco, although the case could be postponed.

Eight people died in San Bruno and 66 others were injured on Sept. 9, 2010, in an explosion and fire that followed the rupture of a high-pressure PG&E natural gas pipeline that had a defective seam weld and was incorrectly listed in the utility’s records as seamless.

San Bruno Mayor Jim Ruane applauded the strengthened penalty proposal at a news conference outside the PUC’s headquarters in San Francisco:

“While PG&E can never undo this terrible tragedy, or bring back the innocent lives lost, we believe this historic penalty sends the right message that gross negligence, corruption and profits-over-safety will no longer be tolerated.”

The mayor said Picker’s proposal to devote more of the funds to pipeline safety “is a key distinction we strongly support.” City officials also submitted written comments to the commission this morning supporting Picker’s penalty plan.

City Manager Connie Jackson said the comment document was submitted to the PUC electronically, but said that because the agency was closed for Cesar Chavez Day, San Bruno’s lawyers will check on Wednesday to make sure the filing was recorded. Wednesday is the deadline for interested parties to submit comments on the proposal by Picker, who was appointed by Gov. Jerry Brown in December to replace retiring commission President Michael Peevey.

The two alternate PUC proposals were issued in a coordinated case that combines three investigations into the San Bruno explosion, PG&E record-keeping practices and its pipeline operations in locations with high population density. Picker’s plan would have the utility’s shareholders pay for $850 million in pipeline safety improvements, a $300 million fine allocated to the state’s general fund, a $400 million bill credit for PG&E customers and $50 million for other improvements.

The proposal by administrative law judges Mark Wetzell and Amy Yip-Kikugawa would include the $400 million bill credit, the $50 million for previously identified improvements and a $950 million fine payable to the state’s general fund.

While supporting the proposed larger penalty, San Bruno officials said in their filing today that they also want the appointment of an independent monitor, the establishment of a pipeline safety trust and reimbursement for the city’s legal fees.

The proposals will be considered by four of the commission’s five members at the April 9 meeting. Commissioner Michel Florio recused himself from the case in October after emails came to light that allegedly showed him engage in back-channel communications with PG&E officials.

Peevey, who announced his retirement in October, and his then-chief of staff were also alleged to have participated in improper private communications with PG&E officials on regulatory matters. In September, PG&E fired three executives who participated in the email exchanges.