An administrative law judge on Sept. 29 rejected as too lenient a $26 million fine against Pacific Gas and Electric Co. that the utility agreed to with state regulators for a 2008 natural gas pipeline explosion near Sacramento that killed a homeowner.
Instead, the judge recommended that PG&E be fined $38 million for breaking state and federal safety laws. If upheld, it would be the largest regulatory penalty ever against a California utility.
Judge John Wong, an administrative law judge for the California Public Utilities Commission, said a $38 million fine “is appropriate given the allegations in this investigation, PG&E’s acknowledgement and admissions, and the gravity and severity” of the blast in Rancho Cordova (Sacramento County) on Christmas Eve 2008.
The explosion happened after gas leaking from a distribution line that PG&E had earlier repaired using substandard pipe filled the home of 72-year-old Wilbert “Bill” Paana. His granddaughter lit a cigarette and the house exploded, killing Paana and badly injuring the granddaughter and her mother.
3-hour wait for help
Wong noted that it had taken PG&E almost three hours to dispatch properly equipped and trained workers to respond to a report of a gas leak in the neighborhood. The workers finally arrived just before the explosion.
The $26 million fine that PG&E agreed to in June with the Public Utilities Commission’s staff, Wong said, is “unreasonable and not in the public interest.”
Boosting the fine to $38 million will “send a clear message to PG&E that safety and reliability of its natural gas system must be its No. 1 priority,” Wong said. The company needs to be taught a lesson, he said, that its “lack of action and lack of initiative” on safety measures are unacceptable.
PG&E and the state commission have 30 days to decide whether to accept the higher fine.
David Eisenhauer, spokesman for PG&E, said the company was reviewing the decision and giving it “the full attention it deserves.”
If PG&E doesn’t agree to the fine, an administrative law judge will hold a hearing on the matter. Wong said that the company, if found guilty of every alleged violation, could be fined as much as $97 million.
The Rancho Cordova blast was found to be the result of a PG&E crew installing substandard plastic pipe during a repair and not properly testing the replacement. PG&E later said it had fired the repair crew and two supervisors for lying and filing false reports.
As part of the agreement with the commission’s staff, PG&E admitted to five violations of law stemming from the blast.
The Rancho Cordova blast was similar in several respects to the explosion of a PG&E gas-transmission line in San Bruno last September that killed eight people and destroyed 38 homes.
In both cases, investigations found that flawed PG&E record-keeping and use of substandard pipe played a role. The company’s emergency response was faulted in San Bruno and Rancho Cordova.
The state did not begin a formal investigation into the Rancho Cordova blast until after the San Bruno pipeline exploded.
“My heart goes out to the family and the Rancho Cordova community,” said Timothy Alan Simon, the state utilities commissioner who was assigned to oversee the case and who said he supports the proposed $38 million penalty.
“The admissions that PG&E made and the degree of what I consider to be a failure to follow their own procedures” justify the higher fine, Simon said. But he added, “this process is still under way.”