The mayor of San Bruno commended the California Public Utilities Commission today for its unprecedented fine of $1.4 billion against PG&E for a deadly gas pipeline explosion in 2010 but questioned why $1 billion in fines will go to the state’s general fund rather than for safety improvements.
The new fines and penalties bring the total amount PG&E has been ordered to pay in the wake of the explosion — which killed eight people and injured 66 others on Sept. 9, 2010 — to more than $2 billion.
Two CPUC administrative law judges ruled that PG&E had committed nearly 3,800 violations of state and federal laws and regulations over several years leading up to the explosion.
The penalties announced today include $950 million to be paid to California’s general fund, $400 million in pipeline improvements — the cost of which cannot be passed on to customers — and another $50 million to enhance pipeline safety, including to hire CPUC independent auditors to monitor PG&E’s progress.
The CPUC had previously ruled that PG&E shareholders must pay $635 million for the first phase of its pipeline modernization program, costs that also cannot be passed on to customers, bringing the total penalties levied against PG&E for the San Bruno explosion to more than $2 billion, according to the CPUC.
It is the largest penalty for safety violations ever levied by the commission, dwarfing a $38 million penalty handed down to PG&E for a 2008 natural gas explosion in Rancho Cordova.
The judges’ decision will be final in 30 days unless PG&E or San Bruno files an appeal or one of the commissioners requests a review. If there is an appeal, the decision would be put to a vote by the commissioner.
The city of San Bruno had asked the CPUC to levy $2.45 billion in fines and penalties against PG&E.
San Bruno Mayor Jim Ruane said today that “despite the historic level of this fine and penalty we remain disappointed” because such a large portion of the ruling will go directly to the state’s general fund.
He called the fines a “payday for Gov. Jerry Brown,” and called on Brown to make sure that the funds are used for safety improvements rather than other state expenditures.
While Ruane said that the city was still reviewing the decision and was uncertain whether it would appeal, he said, “We call on PG&E to do the right thing and accept this penalty without appeal.”
“Entire neighborhoods were blown apart in this horrific PG&E-made tragedy,” Ruane said. “Our goal has and will continue to be a safer gas pipeline system in California” so that a similar explosion doesn’t happen again.
In a video statement today, PG&E said that it expected a fine but gave no indication whether it would appeal.
“We can never undo the pain from the San Bruno explosion. We’re accountable, and we know a substantial penalty is appropriate,” PG&E spokesman Greg Snapper said.
“We have respectfully asked the commission to ensure the final penalty is reasonable, is proportionate, and it takes into consideration all the significant safety actions we’ve made on behalf of the communities that we’re so fortunate to serve,” Snapper said.
Meanwhile, PG&E is facing criminal charges in federal court for violations related to the explosion. The agency pleaded not guilty last month to one count of obstructing justice and 27 counts of violating federal pipeline safety law.
PG&E could face a maximum penalty of $1.13 billion if convicted of the criminal charges.
There were $565 million in settlements between victims of the explosion and PG&E in San Mateo County Superior Court, including family members of those killed, people who were injured and those whose property was damaged.
The cause of the explosion was 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.
Scott Morris, Bay City News