InfrastructurePG&E to pay $1.6 billion in gas explosion settlement
The California Public Utilities Commission (CPUC) has levied the largest penalty in the agency’s history on Pacific Gas and Electric Company (PG&E), ordering the company to pay $1.6 billion for failures which led to a 2010 natural gas pipeline explosion in San Bruno. The explosion killed eight people and destroyed or damaged thirty-eight homes.Afaulty weld on the pipeline caused the explosion and the resulting fire. The company may also owe an additional $1.13 billion in federal criminal fines connected to the blast, and has committed to spend $2.8 billion in reassessing pipeline safety.
The California Public Utilities Commission (CPUC) has levied the largest penalty in the agency’s history on Pacific Gas and Electric Company (PG&E), ordering the company to pay $1.6 billion for failures which led to a 2010 natural gas pipeline explosion in San Bruno. The explosion killed eight people and destroyed or damaged thirty-eight homes.
As Insurance Journal reports, a faulty weld on the pipeline caused the explosion and the resulting fire.
The company may also owe an additional $1.13 billion in federal criminal fines connected to the blast, and has committed to spend $2.8 billion in reassessing pipeline safety.
The CPUC voted 4-0 for the penalty in a meeting in San Francisco last Thursday. Previously, the commission was criticized by local officials after two members were found to have exchanged improper e-mails with PG&E executives. They recused themselves from participating in the vote. The city of San Bruno sued the agency to release the correspondence.
“It’s a milestone considering this has been one of the most contentious regulatory proceedings we’ve seen in a long time,” said Paul Patterson, an analyst for Glenrock Associates LLC. “It would be nice to get this chapter behind us.”
PG&E had warned that the previously touted $2.25 billion fine would lead to bankruptcy. The company has since replaced its CEO, frozen its dividends, and isolated different branches of its power operations to improve oversight.
“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,” said new CEO Tony Earley. “While we obviously need to review the orders in their entirety before making a final decision, we do not expect to appeal today’s rulings.”
“Our decision to use a mix of penalties and remedies is based on our intention to penalize PG&E for its violations and to deter similar behavior and violations in the future,” said Michael Picker, the president of the commission. “A larger fine would result in higher costs for PG&E customers.”
San Bruno Mayor Jim Ruane and others also blamed the CPUC for the disaster.
“The explosion was the result of “gross misconduct by PG&E and lax oversight by this commission,” he said, shortly before the vote.
“I have no confidence in the infrastructure underground, those who operate it and, I have to say, the CPUC which has acted with indifference over the past five years,” added Sue Bullis, a San Bruno resident who lost much of her family in the blast.
Under the order, PG&E will pay $300 million to the state, refund $400 million to its gas customers, and spend $850 million of infrastructure improvements. Additionally, there was a $950 million state fine.
