PUC to vote on record $1.6-billion fine for PG&E in San Bruno blast

REPORTING FROM SACRAMENTO —  California utility regulators are poised to hit Pacific Gas & Electric Co. with a record-high, $1.6-billion penalty for negligence leading to the deadly natural gas explosion in San Bruno.

The penalty, if approved in a Thursday vote of the Public Utilities Commission, would dwarf all previous enforcement actions. The record penalty previously was $146 million; the total of all fines and restitution from 1999 to 2013 was $653 million.

The utility faces the penalties for violating state and federal natural gas pipeline standards. The decision on punishment comes almost five years after a 1950s-era transmission line exploded in the Bay Area bedroom community, killing eight people, injuring 58 others, destroying 38 homes and damaging 70 more.

An approval Thursday, say some citizens and city officials, could help heal survivors still traumatized by the blast. Still, the long wait for PUC action is “justice delayed,” said John McGlothlin, 70, a retired Internal Revenue Service administrator who lives close to the explosion’s epicenter, in the hills above the San Francisco International Airport.

“Everything took longer than expected,” he said.

On the evening of the blast, Sept. 9, 2010, McGlothlin and wife Joanne, 68, a retired teacher, had just returned from walking their dog near what would soon be the site of the explosion. They were making dinner in the ranch house that had been their home since 1979.

At 6:11 p.m., the floor trembled like an “earthquake,” Joanne McGlothlin recalled.

The couple rushed to the window and saw neighbors running up the street.

“Get out of the house!” a fleeing passerby yelled.

The McGlothlins grabbed their dog and took off. John McGlothlin looked over his shoulder and saw a huge fireball filling the sky, only about 150 feet away.

The McGlothlins were not injured, and their home sustained only moderate damage to the walls, foundation and windows. A shift in the wind spared them. But they say they are haunted by the role that fate played on “that terrible September night.”

The McGlothlins say they’re not ready to forget “negligence and complicity” of the PUC and PG&E, creating conditions that allowed the explosion.

Neither are federal and state law enforcement agencies. In 2014, the U.S. Department of Justice filed criminal charges against PG&E, accusing the company of subpar record keeping, poor management and obstruction of justice. The agency alleges that company officials lied to National Transportation Safety Board investigators about its pipeline testing policy. The NTSB in January 2011 reported that a section of the blown 30-inch pipe had defective welds.

The PUC’s proposed penalty slams PG&E for a “long-standing failure to heed federal and state regulations governing the safe operation of natural gas transmission pipelines throughout its system.”

The company says shareholders — not ratepayers — are bearing the financial pain of the explosion.

Since the San Bruno explosion, the utility has “spent or committed” $2.8 billion of shareholder money on natural gas safety measures. That does not include the proposed penalty of $1.6 billion.

The proposed fine could put a big dent in the profits of the utility’s parent company, PG&E Corp. The penalty is equivalent to the company’s reported earnings from operations during all of 2014, at $1.65 billion.

The utility’s regulator also has come under fire for having a weak pipeline safety program before the San Bruno explosion, and for recent revelations that former PUC President Michael Peevey and other top brass engaged in improper, overly friendly communications with PG&E executives. In emails, regulators agreed to assign a PG&E-friendly judge to a pending gas transmission proceeding.

Those ties are being probed by the California attorney general’s office and the U.S. attorney in San Francisco.

Despite the criminal investigations, some residents of the Crestmoor subdivision, close to the blast site, say they are no longer angry.

“I try to look forward,” said Brigid Daly, who was out walking two dogs last week near the spot in the road where the explosion dug a deep crater, 67 feet long by 26 feet wide.

“I feel sorry for people who lost everything,” she explained, “but we have tragedies all the time.”

In the nearly five years since the explosion, 22 of the 38 leveled houses have been rebuilt.

For its part, PG&E said that it has “worked hard to do the right thing for the victims, their families and the community of San Bruno,” said spokesman Keith Stephens.

Regaining the trust of local residents won’t be easy, said San Bruno City Manager Connie Jackson.

She described the 41,000-population municipality’s relationship with PG&E as “difficult” and criticized the PUC for “demonstrating an appalling incapacity to deal with the issues in a straightforward manner and in a timely way.”

The mayor and city council, she said, have spent the last four and a half years confronting the two bureaucratic Goliaths.

“Eight of our citizens died,” she said. “Let that never be forgotten or lost in the rhetoric.”

[email protected]

Twitter: @MarcLifsher