CPUC to Decide Thursday on PG&E Penalty of up to $1.6B for San Bruno Explosion

Four and one-half years after a fatal pipeline explosion in San Bruno, the California Public Utilities Commission is set to decide in San Francisco Thursday on a penalty for PG&E Co. that could be as much as $1.6 billion.

Eight people died, 66 others were injured and 38 houses were destroyed in an explosion and fire that followed the rupture of a high-pressure PG&E natural gas pipeline on Sept. 9, 2010.

The pipeline segment, installed in approximately 1956, had a defective seam weld and was incorrectly listed in PG&E records as being seamless.

At Thursday’s meeting at the PUC’s headquarters in San Francisco, four commissioners are scheduled to consider two alternate packages of penalties and fines, one amounting to $1.4 billion and the second totaling $1.6 billion.

The $1.4 billion penalty was proposed by two PUC administrative law judges in September. The $1.6 billion amount was recommended in March by the commission’s new president, Michael Picker, who took office in that post in December.

The commissioners could accept either proposal or could decide on a modified version with an increased or decreased penalty.

The commission’s fifth member, Mike Florio, will not participate because he voluntarily recused himself after email messages came to light that showed private communications between Florio and PG&E executives.

San Bruno officials have supported the larger penalty. Mayor Jim Ruane said last month, “We believe this historic penalty sends the right message that gross negligence, corruption and profits-over-safety will no longer be tolerated.”

Ruane is scheduled to be the first speaker in a public comment period slated for the start of the PUC meeting at 9:30 a.m. before the commissioners decide on the penalty.

Under both proposals, the costs of the penalties and fines would be absorbed by shareholders and not by customers, but the two plans would allocate the funds differently.

Picker’s recommendation would devote an $850 million penalty to pipeline safety improvements and levy a $300 million fine to be paid to the state’s general fund.

The proposal by administrative law judges Mark Wetzell and Amy Yip-Kikugawa would provide a $950 million fine for the general fund.

Both proposals would also include a $400 million bill credit for customers and $50 million for previously identified improvements.

The proposals were issued in a coordinated case that combines three PUC proceedings that investigated the San Bruno explosion, PG&E record-keeping practices and its pipeline operations in locations with high population density.

Any penalty set in Thursday’s meeting would be added to $635 million for pipeline modernization that the commission previously ruled must be paid by shareholders. If either proposal is approved tomorrow, the total of the new and previous penalties would be more than $2 billion, the largest in PUC’s history in a safety-related case, according to the commission.

Julia Cheever, Bay City News

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