CPUC Imposes $1.6 billion fine on Pacific Gas and Electric for San Bruno Gas Pipeline Explosion

The California Public Utilities Commission (CPUC) has decided to impose $1.6 billion in fines on Pacific Gas and Electric, related to a natural gas pipeline explosion that occurred about five years ago. Pacific Gas and Electric is the state's largest investor-owned utility.

A 30-inch natural gas transmission pipeline ruptured underneath a residential neighborhood in San Bruno nearly 12 miles south of San Francisco.

The rupture led to an explosion that registered 1.1 on the Richter scale and led to an ignition of 'a wall of fire over 1,000 feet high'. The blast and subsequent blaze left eight people dead, severely injuring dozens of people and burned 38 homes to the ground.

In the penalties, there will be $850 million for gas transmission pipeline safety infrastructure improvements, $300 million to the state's General Fund, $400 million in a one-time bill credit spread across PG&E's gas customers and $50 million for other remedies for enhancing the safety of pipeline.

PG&E has decided not to appeal the penalty, which is the largest imposed on a utility in the history of California.

Despite of the multi-billion dollar fines and penalties involved, PG&E has been talked about many times for safety violations on multiple occasions.

The chronic safety problems at PG&E are still in the notice of California's utility regulators. The utility regulators, particularly, have recognized that shareholders haven't held the utility's management accountable.

The CPUC has tried its best to discourage the safety violations at PG&E by imposing fines and giving monetary penalties, but such measures have started reaching the limits of their efficacy.

President Picker said, "We are now reaching the upper end of the range of fines and cash penalties that the CPUC's economic studies, cited in these just-adopted decisions, argue that we can make the utility pay without raising the cost to borrow capital, and thus raise costs to ratepayers".