The California Public Utilities Commission’s Consumer Protection and Safety Division recommended today that PG&E pay $2.25 billion for negligence leading up to the San Bruno pipeline explosion and fire in September 2010. The blaze killed eight people and destroyed 38 homes. The proposed penalty includes a $300 million fine to be paid into the state’s general fund. The rest will go to pipeline safety and repairs and precludes tax benefits and credit for improvements already made that the utility would have received under a controversial old proposal by the CPSD.
Today’s filing cites “unprecedented and serious violations of PG&E’s safety obligations under the law that continued unabated for many years, and which demonstrate PG&E’s disinterest in compliance with the law.”
The proposal still has to be reviewed by an administrative law judge, who will send a recommendation to the full commission, which must approve it.
State Sen. Jerry Hill, whose district includes San Bruno and who is one of PG&E’s most vocal critics, told KQED’s Peter Jon Shuler that the proposal is “very encouraging.”
“It’s something that is a substantive penalty if the full commission adopts it and if the administrative law judge accepts it. As well, it’s something that is within reason as a penalty that certainly could act as a responsible sanction and punishment for PG&E from a civil standpoint.”
The Utility Reform Network (TURN), another longtime critic of PG&E, issued a press release that said the revised proposal was a “great improvement.” Both Tom Long, TURN’s legal director, and Hill said that the proposal, if approved, would result in the utility’s shareholders paying for $1.5 billion in required safety improvements rather than its customers.
The Wall Street Journal is putting it this way:
The call for harsher punishment shows that hard-liners at the regulatory agency prevailed in an internal dispute among investigators and lawyers concerning the appropriate punishment.
As for PG&E … not on board. From a statement from the company:
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….
It is difficult to understand how the CPUC expects PG&E to attract the capital necessary to maintain the extraordinary investment in safety currently underway, or raise billions of dollars more for safety improvements mandated by the CPUC. We hope that the Commission, in its final decision, will serve the interests of the public and all PG&E customers by remembering the harsh lessons learned a decade ago during the electricity crisis — in order to keep investing in safety, PG&E must be able to attract capital.
The original proposal by the PUC’s safety division was so controversial that PUC lawyers who worked on the case asked to be reassigned. One said that “he could not personally continue working on the San Bruno penalty briefs because I concluded that the [safety division's] recommendations that were to be made in the briefs were unlawful and contrary to what our team had worked to accomplish in the last 2½ years.” After an outcry from, among others, the mayor of San Bruno, the PUC’s general counsel, a former attorney for PG&E, recused himself from the case and the original lawyers returned to working on it.