CPUC to decide of PG&E penalty for San Bruno explosion

San Bruno Pipeline Explosion

SAN FRANCISCO (BCN) — 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.

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