The CPUC has an opportunity to send a PG&E a strong message about public safety

State regulators propose that PG&E be punished with a record $2.25 billion penalty for San Bruno blast

State regulators recommended on Monday that PG&E pay a $2.25 billion penalty—the largest of its kind in the nation’s historyto punish the embattled utility for its mistakes that helped trigger lethal natural gas disaster in San Bruno in 2010.

PG&E’s top executive, Tony Earley, said such a penalty would be unprecedented in natural gas accidents.

“Anything above $100 million, that would probably be the largest penalty in the history of pipeline accidents” said Tony Earley, PG&E’s chief executive officer. Earley made the comments during a meeting with reporters following the embattled utility’s annual meeting at its headquarters in San Francisco.

San Bruno city officials on Monday recommended that the state Public Utilities Commission impose a $2.25 billion fine on PG&E, while The Utility Reform Network suggested a $1.7 billion penalty.

“PG&E played with the lives of the people of San Bruno by installing defective pipe under their homes, then compounded the danger by failing to properly test and inspect the pipe,” TURN legal director Tom Long said. “The CPUC has an opportunity to send PG&E a strong message about safety.”

A PUC hearing officer will issue a final recommendation about the penalties. After that, the full commission would issue a final decision.

Faulty welding of a pipe, inadequate record keeping by PG&E and lax regulatory oversight by the PUC were deemed to be the primary factors that led to the explosion that killed eight people.

“I am recommending the highest penalty possible against PG&E, without compromising safety,” Brigadier General Jack Hagan, director of the PUC’s Safety and Enforcement Division, said in a prepared release. “I want every penny of it to go toward making PG&E’s system safer.”

PG&E has already spent about $1.5 billion attempting to improve the safety of its natural gas system. It also is building an around-the-clock nerve center in San Ramon for natural gas operations.

During 2013, PG&E also intends to increase the number of miles of natural gas pipelines it will test, the miles of pipes it will replace and the number of valves it will automate, said Christopher Johns, president of Pacific Gas & Electric, the utility operation of PG&E.

PG&E intends to conduct hydrostatic testing of nearly 200 miles of pipes, slightly more than the number last year, to replace 60 miles of pipes, which would be double the number, and install nearly 70 new automated valves, about double last year’s total, Johns and company media representatives said.

“All of these are unprecedented numbers in the industry,” Johns said.