Bloomberg News

PG&E Reaches $70 Million Accord With San Bruno Over Blast

March 12, 2012

PG&E Corp. (PCG) reached a $70 million settlement with the city of San Bruno, California, over a 2010 pipeline explosion that killed eight people, the largest natural-gas disaster in U.S. history.

The settlement will support efforts to recover from the blast, which destroyed 38 homes and damaged another 70, city spokesman Sam Singer said today in an e-mail.

The California Public Utility Commission said in January that San Francisco-based PG&E’s violations of state and federal safety laws led to the explosion.

PG&E, owner of California’s largest utility, confirmed the settlement in a regulatory filing, saying it will contribute $70 million to a not-for-profit entity set up to benefit the city. The company’s Pacific Gas & Electric Co. unit won’t seek to recover the money through insurance or customer rates, PG&E said.

Recordkeeping Practices

Separately, state investigators found that PG&E’s pipeline record-keeping practices leading up to the gas explosion didn’t meet the utility’s legal and regulatory requirements for safety standards, according to a report posted on the California Public Utilities Commission’s website.

“PG&E’s recordkeeping was a mess and had been for years,” according to the report issued by the commission’s consumer protection and safety division. The utility’s request to collect $222.8 million from customers to improve its record keeping system is “excessive”, the report said.

“PG&E has acknowledged the need to improve how we collect, store, access, and share information about our natural gas system,” said Nick Stavropoulos, executive vice president of gas operations at Pacific Gas and Electric, in an e-mailed statement. The utility is converting its paper records to electronic files and is asking for additional money for technology improvements to its system, Stavropoulos said in the statement.

The commission staff analysis is part of an investigation by state regulators into PG&E’s role in the Sept. 9, 2010 blast, which could result in fines. Federal and state fines could be as much as $1 billion, Hugh Wynne, a New York-based utility analyst with Sanford C. Bernstein & Co., wrote in a Feb. 17 research note.

To contact the reporters on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net; Mark Chediak in San Francisco at mchediak@bloomberg.net

To contact the editor responsible for this story: Stephen Farr at sfarr@bloomberg.net


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