Regulators slap $1.6 billion fine on PG&E for pipeline blast

California Public Utilities Commission voted Thursday to penalize Pacific Gas & Electric Co. $1.6 billion for a 2010 gas pipeline explosion that killed eight people and destroyed more than three dozen homes in suburban San Francisco.

The penalty comes as the state's top regulator, Commission President Michael Picker, called for a larger review that suggests the energy behemoth could be broken up.

"I'm asking the question. We'll have to answer it," Picker told The Associated Press on Thursday.

He has said state safety citations against PG&E were rising, but that the utility was so big, with $1.6 billion in earnings in 2014, that it was able to shrug off financial penalties.

"If, indeed, PG&E is failing to establish a safety culture, and we continue to see more accidents and violations of safety rules, what are our tools?" Picker asked.

The commission will study "the culture of safety" and organizational structure of Pacific Gas & Electric Co., which has its gas and electricity operations under a single corporate board and chief executive.

The board on Thursday, meanwhile, voted 4 to 0 in favor of the penalty Picker proposed last month. One of the five commissioners recused himself from the vote.

The $1.6 billion is the largest against a utility in California history, Picker said. It's $200 million higher than one recommended by administrative law judges last year for the state's largest power utility.

The fine requires PG&E shareholders to pay $850 million toward gas transmission safety improvements. It also orders PG&E to pay a $300 million fine that goes into the state's general fund.

It mandates the utility pay $400 million in bill credits, and it directs approximately $50 million toward other remedies.

Federal investigators faulted both PG&E and lax oversight by the utilities commission in the 2010 explosion in San Bruno.

The explosion has led to state and federal investigations into back channel dealings between PG&E executives and the utility commission's former head, Michael Peevey, whose term expired earlier this year. No results of the investigations have been announced.

PG&E has said it wanted a penalty that is "reasonable and proportionate" and that takes into account the utility's past spending to improve safety.

The Associated Press.