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Record $2.25B PG&E Fine Recommended For San Bruno Explosion

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California firefighter Martin Medina mops-up a fire during a massive fire in a residential neighborhood September 9, 2010 in a San Bruno. (Max Whittaker/Getty Images)

California firefighter Martin Medina mops-up a fire during a massive fire in a residential neighborhood September 9, 2010 in a San Bruno. (Max Whittaker/Getty Images)

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SAN FRANCISCO (CBS/AP) – The California agency investigating the deadly 2010 gas pipeline explosion in a San Francisco Bay Area neighborhood says Pacific Gas & Electric Co. should pay a $2.25 billion fine for its negligence leading up to the blast.

Officials say the penalty would be the largest ever assessed by a state regulator.

The California Public Utilities Commission recommended the fine Monday and said the company’s shareholders should shoulder it, not the utility’s customers.

The blast in San Bruno sparked a fireball that killed eight people, injured dozens more and destroyed 38 homes in the quiet bedroom community.

Commission investigators and consumer advocates filed a range of proposals for fines Monday.

The City of San Bruno, which is still struggling to rebuild the neighborhood devastated in the blast, said earlier Monday that the utility’s shareholders should pay no less than $1.25 billion in fines, plus at least $1 billion toward pipeline inspection and upgrade costs.

“They blew up our city. Eight people were killed. A whole neighborhood destroyed,” said San Bruno Mayor Jim Ruane.

“PG&E has admitted not a single, substantive violation of law in the face of thousands of charges violations of state and federal law,” said Ruane.

PG&E will file its proposal later this month, and a judge from the utilities commission is expected to make a final decision about how much to fine PG&E later this year.

Consumer advocates said the fine the commission proposed was appropriate, given the company’s myriad violations before the blast. The proposal calls for all the money to be directly invested in safety testing, replacing and upgrading hundreds of miles of PG&E’s gas transmission lines, rather than being sent to the state’s general fund.

“It’s absolutely the amount PG&E should pay for their all their past violations,” said Marcel Hawiger, an attorney with the nonprofit The Utility Reform Network. “This is a very big penalty, but it’s not quite as big as it seems when you account for the tax benefits PG&E would accrue.”

“The important thing here is that the money that is necessary to fix PG&E’s neglected pipes comes out of profits, not out of rates,” said TURN spokeswoman Mindy Spatt.

The National Transportation Safety Board unanimously agreed in 2011 that the accident was caused by what board chairman Deborah Hersman called a “litany of failures” by PG&E, as well as weak oversight by regulators.

Separate from the NTSB investigation, state investigators at the California Public Utilities Commission have blamed PG&E for the explosion, which occurred when an underground pipeline ruptured at the site of a decades-old faulty weld, sparking a gas-fueled fire.

(Copyright 2013 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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