According to The Wall Street Journal:
A California regulator fined PG&E Corp. $1.6 billion for a deadly natural-gas explosion in a San Francisco suburb in 2010, marking the largest penalty ever levied against a utility in the state.
Despite the hefty judgment, California’s Public Utilities Commission isn’t finished with PG&E. The commission’s members now want to open a new investigation into the safety culture at the San Francisco utility after finding that it neglected its vast network of gas pipelines for decades.
The blast, which killed eight people and leveled houses in San Bruno, Calif., was caused by a poorly maintained pipeline with faulty welding work that dated back to the 1950s.
Members of the Public Utilities Commission voted unanimously Thursday to fine PG&E for 2,425 violations of federal and state safety rules. The commission is also forcing the company to return $635 million it collected from its customers for pipeline improvements that were never made or were mismanaged. The combined fines and required credits to consumers come to more than $2.2 billion.
The commission cited PG&E’s shoddy pipeline construction, substandard safety testing and poor management of its operations in densely populated cities as reasons for the fatal incident.
“We are deeply sorry for this tragic event,” said PG&E Chairman and Chief Executive Tony Earley, adding that the company is working to complete important safety work. “We do not expect to appeal today’s rulings.”
The state commission levied the biggest fine it could without jeopardizing the utility’s credit rating, said Michael Picker, chief of the California PUC.
But Mr. Picker said he isn’t convinced PG&E has learned its lesson or made necessary changes to protect the public. Despite years of detailed analysis of the utility’s operations, he said, “I’m left being unclear whether PG&E has the safety culture we’re calling for.”
San Bruno Mayor Jim Ruane said city officials support the fine, but are disappointed the commission didn’t create a new pipeline-safety watchdog group. “This explosion was a preventable disaster,” he said.
The final penalty was $200 million more than a $1.4 billion penalty proposed last year by PUC hearing judges. The commission also redirected where PG&E’s fines will be spent. Instead of $950 million going into California’s general fund, the state will get $300 million. PG&E will refund $400 million to its customers in the form of a credit on their monthly gas bill, with the rest of the money going toward pipeline safety upgrades at the company.
In separate legal actions, PG&E has already paid out millions of dollars to San Bruno and accident victims. It also faces potentially huge penalties in connection with federal criminal charges for allegedly violating the U.S. Pipeline Safety Act and obstructing the government’s investigation into the fatal blast.
Experts said the landmark case should serve as a warning to other gas utilities.
The fine should “send a message to all the other pipeline companies across the nation” and encourage them to spend whatever is necessary to fix them, said Carl Weimer,executive director of Pipeline Safety Trust, a citizen watchdog group in Bellingham, Wash.