California Fines PG&E A Record $1.6B For 2010 San Bruno Gas Explosion

California regulators slapped Pacific Gas & Electric with a $1.6 billion fine for a 2010 natural gas explosion that killed eight people and leveled houses in a San Francisco suburb. The penalty is the largest ever levied against a utility in the United States.

The four members of the California Public Utilities Commission voted unanimously Thursday to fine PG&E for nearly 2,500 violations of federal and state safety rules. The CPUC ordered the utility to make $850 million in pipeline infrastructure improvements and pay $300 million to the state’s general fund. PG&E must also give $400 million in one-time bill credits to all of its gas customers and spend an extra $50 million for other upgrades to enhance pipeline safety.

“PG&E failed to uphold the public’s trust. The CPUC failed to keep vigilant,” Michael Picker, the commission's president, said in a statement. “We must do everything we can to ensure that nothing like this happens again.”

On top of the fines, the commission is also forcing PG&E to return the $635 million it collected from its customers for pipeline upgrades that were mismanaged or never made. The combined penalties and remedies top $2.2 billion.

The Sept. 9, 2010, blast in San Bruno, California, was caused by a nearly 60-year-old natural gas transmission line with faulty welding work. Tony Earley, PG&E’s chairman and CEO, said that since the explosion the utility has “worked hard to do the right thing for victims, their families and the community of San Bruno,” a statement said.

“We are deeply sorry for this tragic event and we have dedicated ourselves to re-earning the trust of our customers and the communities we serve,” he said. “The lessons of this tragic event will not be forgotten.”

Picker, however, said he was skeptical that PG&E had transformed itself in the nearly five years since the fatal incident. After the commission vote, he publicly criticized the utility for continued flaws in the company’s safety record. “PG&E is safer. But I just don’t believe PG&E is safe enough,” Picker told the San Jose Mercury News.

The $2.2 billion in combined penalties come on top of the millions of dollars PG&E has already paid to San Bruno and accident victims. The utility could still face even higher penalties if federal officials find the company violated the Pipeline Safety Act and obstructed the government’s investigation into the natural gas blast.

San Bruno Major Jim Ruane said city officials support the fines but are disappointed the commission didn’t take further steps to avoid future accidents, including forming a pipeline safety watchdog group. “This explosion was a preventable disaster,” he told the Wall Street Journal.