The plan replaces an earlier proposal that ordered the utility to pay the same total amount but included no fine, which analysts said lowered the company's costs on an after-tax basis. The new proposal also limits the amount of money already spent on pipeline upgrades that PG&E can count toward paying the penalties. The company has already put aside $200 million to cover a fine. The commission still is months away from reaching a final decision.
The penalty case stems from the September 2010 explosion of a high-pressure natural-gas pipeline owned by Pacific Gas & Electric that cut through a residential neighborhood in San Bruno. The rupture caused a massive fireball that killed eight people, injured 58 others and damaged or destroyed more than 100 homes. It was one of the largest pipeline disasters in U.S. history, and reconstruction of the neighborhood is continuing.
Federal and state investigators determined that PG&E was to blame for the pipeline rupture, following separate investigations that revealed a pattern of neglect, including lost or incomplete pipeline records, shoddy welding of the pipeline that ruptured and inadequate safety testing.
City officials also have asked the federal Pipeline and Hazardous Materials Safety Administration to strip California regulators of responsibility for enforcing federal pipeline-safety laws. PHMSA, which in most states delegates those duties to utility regulators, told the city on Monday that it would audit California's inspection and enforcement program. (WSJ, 7/16/2013, Photo: Associated Press)