Court OKs $90 million PG&E San Bruno explosion settlement

Firefighters battle a fire possibly resulting from a high-pressure gas line explosion in San Bruno, Calif., Thursday, Sept. 9, 2010. (AP Photo/Bay Area News Group, Karl Mondon)

SAN BRUNO — A San Mateo County court has given preliminary approval to a $90 million settlement with PG&E shareholders to settle lawsuits that blamed a fatal explosion in San Bruno on the company’s mismanagement, attorneys said Friday.

The deal not only provides cash to shareholders affected by the investment aftermath of the blast, it also requires PG&E to undertake changes to its culture and gas operations aimed at preventing a repeat of the lethal San Bruno disaster that killed eight people in September 2010, the attorneys said.

“It is an unprecedented settlement in this type of corporate case,” said Frank Pitre, a lead attorney in the litigation. “It is unprecedented because of the $90 million amount and because it also calls for corporate reforms both in the gas operations of the company and in the manner of PG&E’s corporate governance.”

PG&E won’t discuss the settlement, company spokesman Brian Hertzog said.

The deal requires PG&E to hire a chief safety officer and a chief ethics and compliance officer to review safety compliance issues and corporate governance.

San Francisco-based PG&E, under the settlement, also must create a safety and oversight committee composed of outside independent directors who will report regularly to the board of directors to ensure PG&E understands the risks that it faces and is undertaking remedies to address those risks, Pitre said.

In August, PG&E was convicted of six felony counts for crimes the company committed before and after the 2010 San Bruno explosion, which killed eight people and destroyed a residential area. In January, PG&E was sentenced on the charges, a judge’s ruling that branded PG&E as a convicted felon.

Prosecutors suggested during that trial that PG&E placed profits ahead of safety, a choice that PG&E’s critics contend contributed to the lethal explosion.

In April 2015, the state Public Utilities Commission imposed a $1.6 billion penalty on PG&E for causing the San Bruno explosion. That was the largest financial punishment ever meted out to an American utility.

The explosion was caused by a combination of PG&E’s shoddy maintenance, flawed record-keeping and the PUC’s lazy oversight, according to an official investigation by the National Transportation Safety Board.

“These are real reforms,” Pitre said. “Our whole purpose here is to effect a change in the safety culture that both the PUC and the NTSB said was lacking and led to the San Bruno disaster.”

A San Mateo County Superior Court hearing is scheduled for July 18 at which the judge in the case is scheduled to finalize the settlement.

A consumer group, The Utility Reform Network, said it wants to be certain that the settlement doesn’t extract any money from PG&E ratepayers. Many PG&E customers in recent months have suffered spikes in their gas bills from the utility.

“It would obviously be unacceptable for customers to pay these costs,” said Mark Toney, TURN’s executive director. “It would be unacceptable for them to pay any of the costs of corporate mismanagement.”