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PG&E Fined $1.6B for 2010 Blast

Monday, April 13, 2015

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SAN FRANCISCO—Pacific Gas and Electric Company will pay a record $1.6 billion fine for committing 2,425 violations related to the deadly 2010 San Bruno pipeline explosion, California regulators announced.

The California Public Utilities Commission approved the fine in a unanimous vote Thursday (April 9). Already 10 times bigger than any fine ever imposed by the CPUC, the fine is $200 million more than a penalty proposal last year by administrative law judges. The CPUC was originally urged to fine the utility $2.25 billion.

On Sept. 9, 2010, a segment of PG&E's 30-inch gas transmission line exploded in San Bruno, killing eight people, injuring 58, destroying 38 homes, and damaging another 70.

"PG&E failed to uphold the public's trust," said CPUC President Michael Picker. "The CPUC failed to keep vigilant. Lives were lost. Numerous people were injured. Homes were destroyed."

San Bruno pipeline
Photos: National Transportation Safety Board

PG&E said it does not plan to appeal the record $1.6 billion fine it will pay stemming from investigations into the deadly 2010 San Bruno pipeline explosion.

Investigations into the explosion, PG&E's recordkeeping practices and the company's pipeline classification related to higher density populations "have brought to light the characteristics and consequences of PG&E's longstanding failure to heed federal and state regulations governing the safe operation of natural gas transmission pipelines throughout its system," the CPUC said in its 301-page decision.

Fine Breakdown

PG&E Chairman and CEO Tony Early commented on the decision, stating that the company is focused on becoming the safest and most reliable energy provider in America, "motivated by the tragic lessons of the 2010 explosion."

PG&E will be ordered to pay:

  • $850 million in gas transmission pipeline safety infrastructure improvements;
  • $300 million in a fine to the state's General Fund;
  • $400 million in a one-time bill credit spread across PG&E's gas customers; and
  • About $50 million towards other remedies to enhance pipeline safety.

Combined with the disallowances already adopted prior to the CPUC decision, PG&E's penalties and remedies exceed $2.2 billion.

Penalties and remedies assessed against PG&E must be paid by shareholders and are not recoverable from PG&E's customers.

NTSB

According to the CPUC, PG&E committed 2,425 violations over a number of decades for a total of 18,447,803 days in violation. In some cases, the violations lasted for nearly 60 years.

Early said that while the company needs to review the entirety of the orders before issuing a final decision, it does not plan to appeal the ruling.

According to the CPUC, PG&E committed 2,425 violations over a number of decades for a total of 18,447,803 days in violation. In some cases, the violations lasted for nearly 60 years.

"We must do everything we can to ensure that nothing like this happens again. Our decision commits a significant portion of the shareholder-funded penalty—one of the biggest utility sanctions in U.S. history—to making PG&E's gas transmission system as safe as possible for the public, consumers, utility workers, and the environment," Picker stated.

Previous Penalties, Proposals

In the years following the incident, PG&E said it expected fines to exceed $200 million. The utility has already faced numerous penalties and has paid millions in restituion.

PG&E

"PG&E failed to uphold the public's trust," said CPUC President Michael Picker. "The CPUC failed to keep vigilant. Lives were lost. Numerous people were injured. Homes were destroyed."

"Since the 2010 explosion of our natural gas transmission pipeline in San Bruno, we have worked hard to do the right thing for the victims, their families and the community of San Bruno," Early commented.

"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. The lessons of this tragic event will not be forgotten."

PG&E shelled out a $70 million municipal restitution package in March 2012, in addition to an earlier committment to fund replacement and repair of the city's infrastructure and other costs related to the accident and restoration of the neighborhood.

Last July, a San Francisco-based grand jury announced a criminal indictment charging the utility with obstructing the National Transportation Safety Board's investigation of the blast and additional violations of the National Gas Pipeline Safety Act. The indictment carried potential fines of over $1.1 billion.

The indictment superseded an original 12-count indictment returned in April 2014 in the U.S. District Court for the Northern District of California. Those charges only related to the 1968 Pipeline Safety Act and carried a penalty of up to $6 million.

In January, the CPUC dropped a $530,000 fine for three violations of specific federal requirements to manage system integrity and two violations related to a gap in the company's operator qualification procedures.

   

Tagged categories: Accidents; Explosions; Government; Health & Safety; North America; NTSB (National Transportation Safety Board); Oil and Gas; Pipeline; Regulations; Utilities

Comment from Tom Schwerdt, (4/13/2015, 8:32 AM)

$700MM in actual fines, the rest is pipeline safety and upgrades they should have been doing anyway. Less than half the amount shouted in the headlines.


Comment from Tony Rangus, (4/15/2015, 10:12 AM)

You cannot condone what PG&E has done over the last 60 years, but how many of us can install something metallic at below grade in 1955; start operating at a relatively high pressure in 1956 and have it operate until 2010? One cannot relieve PG&E of the sin of profits over safety, but DAMN, I wish my car, my TV, my lawnmower, my water heater, my home HVAC system etc. would last that long.


Comment from James Albertoni, (4/16/2015, 11:23 AM)

Tony...all over California, we have sewers that are brick and steel pipes with riveted joints from early 1900s that are still operating. Just have to maintain and inspect them. Imagine how long PG&E's pipe would have lasted if they did that.


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