Utility, others appeal $1.4 billion penalty

SAN FRANCISCO -- Pacific Gas & Electric Co. and others on Thursday appealed a proposed $1.4 billion penalty against PG&E in a deadly 2010 gas-pipeline explosion, in a case that has raised repeated accusations of cozy relations between the utility and state regulators.

Thursday was the deadline for appeals of a California administrative law judge's recommendation last month for the proposed penalty, which the California Public Utilities Commission says would be the biggest safety-related penalty in its history. The fiery explosion of a PG&E pipeline killed eight people and leveled a residential neighborhood in the suburban San Francisco city of San Bruno. A probe into the blast by the National Transportation Safety Board faulted both the utility and what investigators said was lax oversight by the state utilities commission.

Utilities commission members still have to approve or modify the $1.4 billion penalty, which includes a $950 million fine PG&E would pay into the state's general fund.

PG&E called the penalty excessive. That sum would bring the eventual total cost borne by PG&E shareholders in the blast to more than $4.5 billion, including $2.7 billion that the utility has spent or plans to spent to improve safety of the utility's natural-gas operations, PG&E said in a statement Thursday.

E-mail exchanges released since the explosion have shown utility executives and senior state regulators negotiating and conferring on the state's regulation of PG&E, including on the proper size for the financial penalty in the pipeline explosion.

San Bruno city officials filed their own appeal Thursday, asking the state to grant San Bruno's request for appointment of an independent monitor to oversee both PG&E and the utilities commission, on the grounds that the commission had lost public confidence.

In a separate appeal filed Thursday, a public-utilities commissioner, Catherine Sandoval, two rate-payers' groups, and the city and county of San Francisco all objected to the fact so much of the proposed penalty would go into the state general fund rather than pay for pipeline safety.

Two other commissioners - commission chief Michael Peevey, and commission member Michael Florio - have removed themselves from some cases involving PG&E after release of e-mails showing their behind-the-scenes dealings with PG&E officials.