PG&E to appeal proposed $1.4-billion penalty for fatal pipeline blast

PG&E to appeal proposed $1.4-billion penalty for fatal pipeline blast
A Sept. 9, 2010, blast and firestorm killed eight people, injured 66 and destroyed 38 houses in the bedroom city of San Bruno, near San Francisco International Airport. (Don Bartletti, Los Angeles Times)
Pacific Gas & Electric Co.

said it would appeal a proposed $1.4-billon penalty for the


fatal gas pipeline explosion and firestorm that killed eight people and destroyed a Bay Area residential neighborhood.

Now the proposed fine appears headed to the five members of the California Public Utilities Commission, which has been criticized for being too cozy with the company it regulates. A final decision is likely by the end of the year.

PG&E, the state's largest utility, announced its intention to appeal in a filing with the Security and Exchange Commission on Wednesday.

The filing came shortly after the California Public Utilities Commission released proposed decisions by two administrative law judges seeking the largest safety-related fine in its history from PG&E shareholders.

The Sept. 9, 2010, blast and firestorm, caused by faulty welds in a 54-year-old, underground gas-transmission line, killed eight people, injured 66 and destroyed 38 houses in San Bruno, near San Francisco International Airport.

PG&E told the SEC that it “plans to appeal the decisions to the CPUC within 30 days.”

In a statement, the utility said it wanted the PUC to consider “the company's investments and actions to promote safety.”

San Bruno city officials said they were disappointed by PG&E's planned appeal. “It's not entirely a surprise,” City Manager Connie Jackson said. “The city would confirm our call for PG&E to accept the penalty as ordered as an understanding that it's accountable for what happened.”

The fine, she said, “is a clear and strong statement both in the amount and the way it was crafted.”

The stiff penalty, contends San Bruno Mayor Jim Ruane, contrasts with what he charges has been an overly cozy relationship between PUC top brass, particularly commission President Michael Peevey, and PG&E executives. The city contends that Peevey and others broke commission rules about disclosing communications with utilities that have active legal cases at the PUC.

The PUC said it takes all such complaints seriously and would review them. PG&E countered that it's in routine daily contact with the PUC on dozens of matters related to providing electric and gas service to

15 million customers.

The administrative law judges' decision, if upheld by the PUC commissioners, would represent a significant hit to shareholders' equity in PG&E Corp., the parent company told the SEC.

“If the ... decisions become the final CPUC decisions, the utility estimates that its total pre-tax unrecovered costs and fines related to natural gas transmission operations would be about $4.75 billion...,” the filing said. The total includes the proposed fine, the cost of past and projected safety improvements and PG&E's loss of tax deductions for payments of fines.


Twitter: @MarcLifsher