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CEO Says San Bruno Explosion Could Cost PG&E $1 Billion

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San Bruno Explosion

Flames are seen in San Bruno’s Crestmoor neighborhood following a gas pipeline explosion, September 9, 2010 in San Bruno. (Getty Images)

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SAN BRUNO (CBS SF) — PG&E president and CEO Tony Earley said Thursday that civil settlements and potential fines stemming from a fatal gas pipeline explosion in San Bruno two years ago could cost the company more than $1 billion.

Earley—who became CEO of PG&E in 2011 — said at a news conference that the Sept. 9, 2010 pipeline explosion in San Bruno’s Crestmoor Canyon neighborhood was a catalyst for the utility to reevaluate its operations “from top to bottom.”

The explosion and subsequent fire killed eight people, injured dozens and destroyed a neighborhood.

Earley said that PG&E has successfully settled with seven of the eight victims’ families, and that additional settlements with victims who were injured in the disaster could be expected by the end of the year.

“I feel good that we are starting to give those families a sense of closure,” Earley said.

PG&E has set aside between $400 and $500 million to pay to victims of the San Bruno explosion, and around $200 million to settle possible fines and related penalties that could be levied by the California Public Utilities Commission, Early said.

PG&E has already agreed to pay the city of San Bruno $70 million to help rebuild and heal the community, and invested millions to replace the streets and infrastructure that were destroyed.

The total amount paid by PG&E to the victims, their families and the city could exceed $1 billion, Earley said.

“We know it’s going to take years and years in terms of the recovery process,” he said.

Although Earley did not comment on the details of any individual cases, he did say that a leak earlier this week of a confidential court document outlining the terms of a $1.8 million settlement with a teenager who was burned in the explosion was likely the fault of the San Mateo County court.

“That was a mistake somewhere there,” he said. “It was actually one of the smaller cases.”

The leaked information would not likely impact the outcome of cases that have yet to be settled, he said.

Since the San Bruno explosion, PG&E has conducted high-pressure tests on more than 200 miles of gas transmission lines throughout its service area, and is on track to test more than 700 miles by the end of 2014, Earley said.

The utility hopes to improve its infrastructure, safety record, corporate culture and customer service in the coming years, he said.

“I think we’ve made a lot of progress in the last year,” he said.

“We know that we still have a huge amount of work ahead of us.”

(Copyright 2012 by CBS San Francisco and Bay City News Service. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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