SAN FRANCISCO >> State regulators on Thursday imposed a record-setting penalty of $1.6 billion on PG&E for causing a fatal explosion of natural gas in San Bruno more than four years ago.
The Public Utilities Commission agreed to the penalty on a 4-0 vote.
Investigators believe that a combination of PG&E’s flawed record keeping and shoddy maintenance, coupled with the PUC’s lax oversight of the utility, were the key factors that caused the explosion that killed with and wrecked a quiet residential district in San Bruno.
Before voting, the state Public Utilities Commission took the unprecedented step to allow San Bruno residents who survived the disaster, as well as the city’s mayor, to address the five-member panel.
“The gross negligence of Pacific Gas & Electric and lax oversight of this commission caused a gas pipeline to explode and the resulting fire to rip through the heart of our city,” San Bruno Mayor Jim Ruane told the PUC prior to its decision.
PUC President Michael Picker, who crafted the decision for the $1.6 billion penalty, read out the names of all eight victims who were killed in the explosion.
“This decision imposes the largest penalty ever on a California public utility,” Commissioner Picker said. “It has been a long and contentious road” that led to the Thursday decision, he added.
The penalty is the latest fallout from the September 2010 explosion that killed eight and wrecked a quiet San Bruno neighborhood. It also comes after the release of emails that demonstrated a cozy relationship between the PUC and the utility. Those disclosures unleashed widespread criticism of Michael Peevey, who stepped down at the end of 2014 as president of the PUC.
The PUC decision appears to reflect a changed environment for both the PUC and PG&E.
“Let this decision and our vote today herald a new era of safety,” PUC Commissioner Catherine Sandoval said.
The initial ruling on the fine, issued by administrative law judges last year, recommended a total penalty of $1.4 billion and that a $950 million fine be paid to the state general fund. It did not impose any financial obligation on the utility’s shareholders to pay for safety improvements in the PG&E gas transmission system.
The final decision slashed the payment to the state general fund to $300 million and ordered shareholders to cough up $850 million for the safety upgrades.
“Since the 2010 explosion of our natural gas transmission pipeline in San Bruno, we have worked hard to do the right thing for the victims, their families and the community of San Bruno,” PG&E spokesman Keith Stephens said. “We are deeply sorry for this tragic event and we have dedicated ourselves to re-earning the trust of our customers and the communities we serve.”
Mayor Ruane also urged PG&E CEO Anthony Earley to not appeal the PUC’s decision on the fine.
“Do not drag this decision through endless appeals,” Ruane said. “Take responsibility and do what is right, just and fair so that what happened in San Bruno never happens again, anywhere.”
