BUSINESS

PUC seeks higher PG&E penalties for San Bruno explosion

PUC's Michael Picker suggests increasing penalties against PG&E in the San Bruno explosion by $200 million

The new head of the Public Utilities Commission wants to increase financial penalties against Pacific Gas & Electric Co. to a record $1.6 billion for negligence related to the 2010 pipeline explosion that killed eight people and leveled a neighborhood in the Bay Area suburb of San Bruno.

President Michael Picker late Friday suggested penalties that would increase by $200 million the fines proposed earlier by PUC administrative judges.

If approved by the five commission members, the penalty would be the largest safety-related fine in the PUC's history.

The total, when combined with earlier PUC penalties, could exceed $2.2 billion, the commission said.

Picker's proposal — expected to be discussed in April — also would reallocate some of the proposed fines so that the money could be spent on improving the company's aging and extensive natural gas transmission system. A 1950s-era transmission line appeared to have faulty welds that contributed to the disaster that destroyed 38 homes and injured 66 people.

An additional $400 million would be paid back to PG&E customers as one-time credits on monthly bills.

All of the money for proposed penalties would be paid by the utility and its stockholders, not by ratepayers. What's more, the company would not be allowed to make a profit on the $850 million in capital investments for upgrades in its natural gas transmission system.

The proposal drew a favorable response from one of the PUC's most outspoken critics, state Sen. Jerry Hill (D-San Mateo), who represents San Bruno. "It's consistent with what I think is a responsible and reasonable allocation of the penalty."

Another frequent PUC critic agreed. "We think this does a lot to improve the penalties, both in making sure that shareholders are going to pay $850 million in pipeline safety improvements and crediting customers with $400 million in refunds," said Mark Toney, executive director of the Utility Reform Network, a San Francisco-based ratepayers' advocacy group. "This is really a very big victory."

A PG&E spokesman said his company is reviewing the latest PUC proposal but declined to address specific details.

"We have respectfully asked that the commission ensure that the penalty is reasonable and proportionate and takes into consideration the company's investments and actions to promote safety," Keith Stephens, the senior director for field communication, said in a statement. "Moreover, we continue to believe any penalty should directly benefit public safety."

The state's largest utility also would pay a fine of $300 million to the state's general fund, while the remaining $50 million would be earmarked for other pipeline safety compliance measures.

marc.lifsher@latimes.com

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