California set to fine utility $2.25 billion for deadly pipeline failure

A firefighter works on a gas pipeline blaze September 9, 2010, in San Bruno, California.

Story highlights

  • Regulators could approve the recommended fine in late summer
  • The San Bruno, California, explosion killed 8 people
  • The blast destroyed dozens of homes in the San Francisco suburb
  • Proposed $2.25 billion fine would be largest state penalty, regulator says
California regulators recommended a record $2.25 billion fine for the state's largest utility Monday in the gas pipeline explosion that killed eight people in a San Francisco suburb.
If approved by the California Public Utilities Commission, the proposed fine for Pacific Gas and Electric would be the largest ever imposed by a state regulator. Jack Hagan, the head of the agency's safety and enforcement decision, said "every penny" should go toward safety improvements.
"There is no amount of money that will bring back the eight people who tragically lost their lives in the pipeline blast or heal the lasting wounds to the people of San Bruno," Hagan said in a statement announcing the decision. "All we can do is make sure such a tragedy does not happen again."
The September 2010 explosion destroyed 38 homes and left a 72-foot by 26-foot crater in the middle of a neighborhood in San Bruno, near San Francisco International Airport. Federal investigators found the pipeline at the heart of the blast was inadequate even when installed in 1956.
There was no immediate reaction to the announcement from PG&E, which accepted responsibility for the explosion in December 2011. The company has until May 24 to file a response to the recommendation, and the commission says it expects to decide on the penalty in late summer.
PG&E has said it invested more than $1 billion in safety upgrades on the pipeline since the disaster, and that money would be applied to the proposed fine, the commission said. The company would be required to spend shareholder funds on the improvements without seeking additional money from customers, the commission said.
In addition, PG&E would be subjected to audits to make sure it's not shifting money from other operations "that affect safety."
The National Transportation Safety Board, which investigated the disaster, found that a faulty pipe, flawed operations and inadequate government oversight led to the explosion. NTSB Chairman Deborah Hersman said the probe yielded "troubling revelations about a company that exploited weaknesses in a lax system of oversight, and government agencies that placed a blind trust in operators to the detriment of public safety."
"It was not a question of if this pipeline would burst," she said. "It was a question of when."