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California city seeks penalty settlement with PG&E for fatal gas pipeline blast

10.16.2013  | 

Officials from the city of San Bruno, California, have sought to resume talks with PG&E, as regulators move closer to a decision on penalties for a 2010 gas pipeline explosion that killed eight people.

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By PETER WARD

SAN FRANCISO (Bloomberg) -- Officials from the city of San Bruno, California, have sought to resume talks with PG&E Corporation, as state regulators move closer to a decision on penalties for a 2010 natural gas pipeline explosion that killed eight people.

“We have never met with” Anthony Earley, the chairman and CEO of San Francisco-based PG&E, City Manager Connie Jackson said in an interview at Bloomberg headquarters. PG&E ended settlement talks last year and has rejected the city’s overtures to resume negotiations.

Earley, who took over in 2011, canceled a planned April 30 meeting as his office expressed “a level of dissatisfaction” with press statements the city made, she said.

Earley said in an August interview that a recommended $2.25 billion penalty for the pipeline explosion in the San Francisco suburb may force the company into bankruptcy. San Bruno said the company’s own expert witness has refuted that notion. The recent discovery of corrosion on a pipeline under the nearby city of San Carlos is an indicator PG&E hasn’t learned from the incident, Jackson said.

The San Carlos line was operating safely as determined by industry standards that PG&E implemented following the San Bruno accident, Brittany Chord, spokeswoman for PG&E, said in a telephone interview.

“We want to discover these kinds of issues on our system so that we can find, fix, and analyze problems and prevent them from occurring in the future,” Chord said.

PG&E “have to pay and it has to hurt,” San Bruno Mayor Jim Ruane said in the interview. “Not to the point where they’re out of business, nobody wants that.”

Settlement Talks

Several parties including the California Public Utilities Commission’s office of ratepayer advocates are involved with the penalty investigation and would need to be included in settlement talks, Chord said.

“The California Public Utilities Commission is our regulator and makes the final decision regarding penalties,” Chord said. “That said, we are committed to working with the city and help them rebuild.”

PG&E has given San Bruno $120 million including a $50 million trust and $70 million as restitution for the pipeline blast, Chord said. PG&E holds regular meetings with San Bruno and executives including Chris Johns, president of the company’s utility unit, have met the city on several occasions, she said.

Time is running out for settlement talks between the city and PG&E as the agency process nears its conclusion, Jackson said. The commission’s administrative law judges have been working on penalty rulings for some time, Steven Meyers, an attorney with Oakland, California-based Meyers Nave, said in the interview.

“We expect that within the next two months we’ll be seeing some conclusion from the ALJs,” he said.



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