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Regulators impose US$ 1.4 billion fine on PG&E

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World Pipelines,

California regulators have announced a US$ 1.4 billion fine for Pacific Gas & Electric for a 2010 gas pipeline explosion in a San Francisco suburb that killed eight people.

In an announcement this Tuesday, the California Public Utilities Commission called the fine against PG&E "the largest safety-related penalty ever levied by the CPUC."

PG&E can appeal the fine.

PG&E representatives issued a statement Tuesday saying it believes a penalty is appropriate.

Details of the fine

The commission previously ordered PG&E to pay US$ 635 million for pipeline modernisation after the 9 September, 2010, blast in San Bruno.

A 30 in. natural gas transmission line installed in 1956 ruptured, destroying more than three dozen homes.

A 2011 investigation by the National Transportation Safety Board concluded that the rupture occurred in a weak weld in a pipeline that PG&E records had shown as being smooth and unwelded.

PG&E neglected to shut off natural gas feeding the fire until 95 minutes after the blast, the federal investigators said.

The investigation found PG&E's safety management of its pipelines overall deficient and ineffective. The federal board also faulted what it called the ineffectiveness of California's Public Utilities Commission in regulating the power utility, whose service area covers all but the southern one-third of California.

This year, federal prosecutors separately indicted PG&E on 27 counts alleging the utility violated pipeline-safety requirements. Another federal count alleges that PG&E lied to the National Transportation Safety Board in that agency's investigation.

The company could face additional fines of more than US$ 1 billion if convicted of the federal charges, which are separate from the financial penalties that the state administrative judges weighed.

Criticism of the fine

The regulators are being criticised for the proposed fine, as it would put more money into state coffers and less into natural gas pipeline safety.

The proposed US$ 1.4 billion penalty includes US$ 950 million that would be paid to the state and US$ 450 million in charges and remedies that shareholders would have to disburse, according to a preliminary decision from two state regulatory judges yesterday.

Critics from the mayor of San Bruno to a consumer advocacy group are urging a higher amount go toward repairing PG&E’s gas pipelines.

Edited from various sources by Elizabeth Corner

Sources: USA TodayBloomberg

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