CPUC Fines PG&E $1.6B After Deadly 2010 San Bruno Explosion – Largest Fine in California History

The California Public Utilities Commission on Thursday voted unanimously to fine PG&E Co. $1.6 billion following a deadly 2010 blast in San Bruno - the largest penalty ever against a California utility -  to be paid for by the shareholders.

Sue Bullis, who lost her her husband, son and mother-in-law during the blast, spoke emotionally at the San Francisco hearing, where she recounted tearfully how this was the most "horrific day of my and my daughter's life." If Bullis had not been at a meeting on Sept. 9, 2010, and if her daughter hadn't been out celebrating her birthday, "My entire family would have perished," she said.

Allowing residents and the San Bruno mayor to address the commission was unprecedented, the Bay Area News Group noted.

PG&E CEO and Chairman Tony Earley assured the public that his utility would not appeal the ruling, and he sent out a lengthy statement saying that his "focus is on moving forward to complete the important safety work" necessary. "Tremendous progress" has been made, Earley said, but "we have more to do and we are committed to doing it right."

The four commissioners could have decided to fine the utility company $1.4 billion proposed by two PUC administrative judges, but chose the higher amount of $1.6 billion, recommended in March by the commission's new president, Michael Picker, who took office in that post in December.

Eight people - whose names were read aloud during the CPUC hearing - 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 almost five years ago. The pipeline segment, installed in approximately 1956, had a defective seam weld and was incorrectly listed in PG&E records as being seamless.

The commission's fifth member, Mike Florio, did 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 also pointed out what was not included in the punishment: The creation of an independent monitor and a Pipeline Safety Trust – that he said are "essential to addressing the failures of this commission." He reminded the commission of PG&E's "gross misconduct" that stole the "lives of eight innocent citizens" which destroyed his comunity.

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

Picker's recommendation devotes 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 have provided a $950 million fine for the general fund.

Both proposals included 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.

The $1.6 billion penalty is on top of the $635 million for pipeline modernization that the commission previously ruled must be paid by shareholders. The total of Thursday's penalty and previous penalties now total more than $2 billion, the largest in PUC's history in a safety-related case, according to the commission.

NBC Bay Area's Stephanie Chuang, Lisa Fernandez and Bay City News' Julia Cheever contributed to this report.

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