SAN FRANCISCO – Pacific Gas & Electric Corp must pay a record $1.6 billion in penalties stemming from a natural gas pipeline explosion in 2010 that killed eight people near San Francisco, California’s chief utility regulator ordered on Thursday.
The penalty levied for the deadly rupture in San Bruno, California, marks the largest ever imposed by the five-member state Public Utilities Commission, dwarfing a $38 million fine against PG&E for a 2008 natural gas explosion near Sacramento, according to the agency.
Commission President Michael Picker said the order also ranks as one of the biggest utility sanctions in U.S. history.
PG&E Chairman and Chief Executive Officer Tony Earley said his company did not expect to appeal.
The latest penalties cover nearly 3,800 violations of state and federal laws and regulations cited by two commission administrative law judges regarding PG&E’s pipeline network, including the 2010 explosion.
The company still faces a trial next year on criminal charges arising from a federal probe of the San Bruno disaster.
The penalties include $850 million to pay for improved pipeline infrastructure, a $300 million fine, a $400 million billing credit to PG&E gas customers and $50 million in other remedies to enhance pipeline safety.
When added to pipeline improvements previously ordered, total state penalties and remedies will exceed $2.2 billion, the commission said.
All penalties must be borne entirely by PG&E shareholders and not passed on to its customers.
The explosion on Sept. 9, 2010, in San Bruno, a city just south of San Francisco, leveled an entire neighborhood, killing eight people and injuring 58 others. It renewed concerns about the number of aging gas transmission lines running beneath densely populated areas.
The National Transportation Safety Board later blamed PG&E for lax pipeline safety and faulted state regulators for weak oversight.
A San Francisco federal grand jury indicted the company in July 2014 on 27 counts of violating the Pipeline Safety Act and one count of obstructing the federal investigation.
If convicted of all charges, PG&E could theoretically face maximum fines exceeding $31 billion – or twice the victims’ estimated losses of $565 million for each count, prosecutors said.
PG&E has pleaded not guilty. It said none of its employees intentionally violated the law. A trial is scheduled to begin next March.
The company already has paid at least $70 million to settle civil claims stemming from the explosion.
Since San Bruno, the company said it has replaced 800 miles (1,300 km) of old cast-iron transmission line with stronger pipe, installed 200 emergency shut-off valves and new leak-detection technology 1,000 times more sensitive than earlier equipment.
(Reporting by Ann Saphir; Writing and additional reporting by Steve Gorman in Los Angeles; Editing by Eric Beech and Lisa Shumaker)
This article was from Reuters and was legally licensed through the NewsCred publisher network.