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Judges call for $1.4B penalty

SF pipeline blast killed 8

SAN FRANCISCO — California regulatory judges recommended a $1.4 billion penalty on Tuesday — the largest safety-related levy ever against a public utility in the state — for a fiery 2010 gas pipeline explosion that killed eight people in a suburban San Francisco neighborhood.

The California Public Utility Commission said the figure reached by two administrative law judges over the San Bruno pipeline explosion reflected nearly 3,800 violations of state and federal law, regulations and standards by Pacific Gas & Electric in the operation of its gas pipelines.

The penalty is meant to “send a strong message to PG&E, and all other pipeline operators, that they must comply with mandated federal and state pipeline safety requirements, or face severe consequences,” Timothy Sullivan, one of the two judges, wrote in the order.

The largest share — $950 million — of the penalty is a fine to be paid directly to the state. That amount drew objections from city officials in San Bruno, the utility and a private ratepayers-advocacy group that the overall penalty should be focused on spending for the safe operation of the aging pipeline network.

“We are accountable and fully accept that a penalty is appropriate,” the utility said in a statement.

Asked whether PG&E would appeal, utility spokesman Greg Snapper said, “We’re reviewing the decision and believe that any penalty should go toward pipeline safety.”

The recommended penalty requires approval by members of the state utility board. PG&E and other parties in the case have 30 days to lodge an appeal.

The commission previously ordered PG&E to pay $635 million for pipeline modernization in the wake of the Sept. 9, 2010, blast. The explosion destroyed more than three dozen homes and was California’s deadliest utility disaster in decades. The blast occurred when a 30-inch natural-gas transmission line installed in 1956 ruptured.

The $1.4 billion penalty also includes $400 million for pipeline improvements, and about $50 million to enhance pipeline safety. PG&E cannot recover any of the money from customers, including the earlier $635 million penalty, although a ratepayers’ group called The Utility Reform Network maintained PG&E could raise rates in other rate cases to indirectly offset the penalty.

Sending $950 million to the state’s general fund, with no strings attached, means it could be spent in any way the governor and Legislature see fit, said a spokesman for the state Department of Finance.

The public utility commission recommended in July that the utility pay at least $300 million in fines.

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