PG&E hit with record fine for blast

PUC ap­proves the $1.6-bil­lion penalty as its chief ques­tions the util­ity’s safety cul­ture.

Los Angeles Times - - BUSINESS - By Marc Lif­sher

Cal­i­for­nia reg­u­la­tors ap­proved a record $1.6-bil­lion fine against the state’s largest util­ity, Pa­cific Gas & Elec­tric Co., even as the new pres­i­dent of the Public Util­i­ties Com­mis­sion pub­licly ques­tioned the com­pany’s com­mit­ment to safety.

The fine for vi­o­lat­ing state and fed­eral pipe­line safety stan­dards was prompted by the 2010 ex­plo­sion of a PG&E nat­u­ral gas trans­mis­sion line that killed eight peo­ple and lev­eled parts of a neigh­bor­hood in the San Fran­cisco sub­urb of San Bruno.

The com­mis­sion ap­proved the mea­sure by a 4-0 vote Thurs­day with Com­mis­sioner Mike Flo­rio not par­tic­i­pat­ing.

In Oc­to­ber, Flo­rio re­moved him­self from de­lib­er­at­ing on the San Bruno case at the re­quest of San Bruno city of­fi­cials. They ac­cused Flo­rio of hav­ing im­proper, one-sided com­mu­ni­ca­tions with PG&E ex­ec­u­tives. He said at the time he was un­clear about the rules and would step aside.

The fine was the largest in PUC his­tory and one of the largest paid by a U.S. util­ity, said PUC Pres­i­dent Michael Picker. To­tal San Bruno-re­lated penal­ties levied against PG&E now ex­ceed $2.2 bil­lon, he said.

Af­ter the vote, Picker said the util­ity spent heav­ily to im­prove its nat­u­ral gas trans­mis­sion sys­tem since the ex­plo­sion. But he pub­licly ques­tioned the depth of PG&E’s safety cul­ture.

“I see a lot of un­even­ness, and that’s trou­bling me,” he said.

Picker told his col­leagues that he plans to open an in­ves­ti­ga­tion “into the safety cul­ture and prac­tices at PG&E.”

Com­mis­sioner Catherine San­doval said she sup­ported Picker’s call for an in­ves­ti­ga­tion. PG&E, she said, has demon­strated “a whole host of fail­ures … that start from the top.”

The Thurs­day vote and fu­ture ac­tions, she said, “sig­nal that we ex­pect ac­count­abil­ity and per­for­mance from util­i­ties we reg­u­late and from our­selves at the CPUC.”

The com­pany said it would co­op­er­ate with reg­u­la­tors.

What’s more, PG&E does not ex­pect to ap­peal the

PUC’s de­ci­sion, Chief Ex­ec­u­tive Tony Ear­ley said.

“I want to be very clear — our fo­cus is on mov­ing for­ward to com­plete the im­por­tant safety work we set out to do,” he said in a state­ment. “We’ve made tremen­dous progress but we have more to do and we are com­mit­ted to do­ing it right.”

The en­tire $1.6-bil­lion penalty will come from the com­pany and its share­hold­ers — not from ratepay­ers. The pro­ceeds will be al­lo­cated to pipe­line safety, tax­pay­ers and cus­tomers.

In all, $850 mil­lion will be spent on im­prov­ing PG&E’s en­tire nat­u­ral gas trans­mis­sion sys­tem; $300 mil­lion will go to the state’s gen­eral trea­sury; $400 mil­lion will be re­bated to PG&E nat­u­ral gas cus­tomers; and $50 mil­lion will pay for a va­ri­ety of PUC safety ac­tiv­i­ties.

In tes­ti­mony be­fore the vote, San Bruno Mayor Jim Ruane praised the com­mis­sion’s large penalty. But he com­plained that the PUC did not heed the city’s call to cre­ate an in­de­pen­dent panel to mon­i­tor PG&E’s safety pro­gram.

The mayor also crit­i­cized the com­mis­sion for not agree­ing to re­im­burse the city for its more than $2 mil­lion in legal costs for par­tic­i­pat­ing in PUC pro­ceed­ings re­lated to the dis­as­ter. Ruane vowed to pur­sue the mon­i­tor­ing is­sue with the Cal­i­for­nia Leg­is­la­ture and state and fed­eral law en­force­ment agen­cies in­ves­ti­gat­ing the blast, the PUC and the util­ity.

Vic­tims and sur­vivors of the San Bruno tragedy, who ad­dressed the com­mis­sion be­fore the vote, said they were skep­ti­cal about prom­ises from both PG&E and the PUC to im­prove safety.

Levy­ing the fine, said Su­san Bullis, who lost three fam­ily mem­bers in the San Bruno firestorm, is too lit­tle too late.

“I blame PG&E for the death of my fam­ily,” she said. “And I blame the PUC, the watch­dog agency re­spon­si­ble for mon­i­tor­ing PG&E.”

Thurs­day’s penalty was more than 10 times greater than the pre­vi­ous high­est fine of $146 mil­lion against South­ern Cal­i­for­nia Edi­son.

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