San Bruno Officials Want Bigger Fine Upheld Against PG&E Over Pipeline Blast

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Chimneys remain during a massive fire in a residential neighborhood in September 2010 in San Bruno. (Max Whittaker/Getty Images)

San Bruno city officials are calling on the California Public Utilities Commission to uphold a proposed $1.6 billion fine against Pacific Gas & Electric for the 2010 pipeline blast that killed eight people.

"A historic penalty of this magnitude sends the right message that gross negligence, corruption and profits over safety will no longer be tolerated," San Bruno Mayor Jim Ruane said at a press conference Tuesday outside the commission's headquarters in San Francisco.

The bigger fine, proposed by commission President Michael Picker, is $200 million more than what administrative law judges ruled the utility pay last year, which PG&E is appealing. The five-member commission is scheduled to decide the penalty, which would be the largest for safety violations in the commission's history, at its April 9 meeting.

While San Bruno city officials support the larger fine, they oppose routing $300 million of it to the state's general fund. Under Picker's proposal, $850 million in shareholder funds would go toward improving safety on PG&E's pipelines, the utility's customers would get a rebate totaling $400 million, and there would be other remedies totaling $50 million. All told, the fines against the state's largest utility would total $2.2 billion, including $600 million already imposed.

"We don't feel that any amount going to the state general fund is going to improve pipeline safety at all," said Ruane. "We really think it's of dire importance to have an independent monitor."

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San Bruno officials have called for a federal, court-appointed monitor and suggested that the state establish a Pipeline Safety Trust that would be focused on "increasing accountability for safety of intrastate pipelines through enhanced public participation, independent oversight of state and federal regulators, and transparency."

Ruane is also concerned about a recommendation that would cut legal reimbursements to San Bruno, the city of San Francisco and the Office of Ratepayer Advocates. From the city's official response, filed with the CPUC Tuesday:

It is reasonable to infer that the alternative decision is designed to penalize San Bruno for suing the commission for violating the Public Records Act and uncovering the cozy -- and sometimes unethical and illegal -- relationship between CPUC agents and PG&E executives. Such an inference is not conducive to restoring the public's trust in the commission.

Federal investigators have faulted both PG&E and lax oversight by the CPUC in the blast, which led to state and federal investigations into allegedly inappropriate 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 wants a penalty that is "reasonable and proportionate" and takes into account the utility's past spending to improve safety, utility spokesman Greg Snapper said in a statement Tuesday.

The Associated Press contributed to this report.

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