State Regulators Flip on San Bruno Blast, Seek $300 Million Fine for PG&E

Wednesday, July 17, 2013

State regulators have decided that maybe it wasn’t enough to assess Pacific Gas & Electric Co. (PG&E) a $2.25 billion “penalty” for the deadly 2010 San Bruno blast, which was essentially paid for by crediting money being spent on already-required infrastructure upgrades.

After widespread criticism that included public protests from its own legal team, the staff of California’s Public Utilities Commission (PUC) revised its proposal, shifting the financial burden from ratepayers to shareholders and fining the company $300 million.

A long-expected staff report in May expressed concern that PG&E would suffer financial hardship if it were forced to pay a fine directly to the state’s General Fund or ding its shareholders for years of shoddy practices, which led to eight people dying in a fiery gas pipeline explosion that leveled a neighborhood. Attorneys in the PUC’s safety unit were reassigned when they objected to the recommendation.

One of the PUC’s most vocal critics, The Utility Reform Network (TURN), said the new proposal mirrors its own recommendations on consumer benefits. “The differences between the two proposals are night and day,” TURN's legal director Thomas Long told the Oakland Tribune. “The first proposal was smoke and mirrors. This is a real proposal that holds PG&E accountable for serious and unprecedented violations of the law that led to the explosion.”

The total amount of the penalty suggested by the PUC's Safety and Enforcement Division remains the same, but the distribution is different. TURN estimated that about $1.5 billion would be used to reduce ratepayer obligations for the pipeline upgrades. In the old deal, tax deductions, credits and other benefits would have reduced PG&E’s actual expense to zero.

Supporters of the original deal, including a key PG&E union, the International Brotherhood of Electrical Workers Local 1245, said if the PUC signs off on the new deal jobs will be lost, infrastructure work will be slowed and ultimately, ratepayers will pay more.

“In its zeal to punish PG&E, the staff of the California Public Utilities Commission has lost sight of our important shared goal of making PG&E's natural gas operation the safest in the country as quickly as we possibly can,” PUC Senior Vice President Tom Bottorff said in a release.

–Ken Broder


To Learn More:

PUC Staff Recommends $300 Million Fine for PG&E over San Bruno Blast—Largest Fine in PUC History (by George Avalos, Oakland Tribune)

CPUC’s San Bruno Penalty Revisions Mirror TURN Proposal (The Utility Reform Network)

Regulators Propose $2.25-billion Fine for PG&E in San Bruno Explosion (by Marc Lifsher, Los Angeles Times)

Proposed $2.25 Billion PG&E Penalty for San Bruno Blast Decried as Too Big and Too Small (by Ken Broder, AllGov California)

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