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PG&E to pay $70 million to San Bruno for pipeline disaster

By Dan Weikel, Los Angeles Times –

LOS ANGELES — Pacific Gas & Electric Co. announced Monday that it will pay $70 million in restitution to the San Francisco Bay Area city of San Bruno for a pipeline explosion that killed eight people and destroyed a neighborhood two years ago.

“This money will be used for the benefit of all the citizens of our city and to help us, as a community, get beyond the tragedy and devastation caused by PG&E’s explosion and fire,” Mayor Jim Ruane said.

The utility plans to provide the money to San Bruno within 30 days. City officials said they would set up a nonprofit entity to manage the funds and determine how they should be spent.

City Manager Connie Jackson said there are no restrictions on use of the funds, except that they must help pay for programs and public works that benefit the entire community, not just the neighborhood damaged by the explosion. She added that the city will solicit ideas from the public.

The $70 million payment is in addition to a separate $100 million recovery fund established by PG&E to help restore the neighborhood, compensate victims for their losses, and replace or repair the city’s damaged infrastructure. Utility officials said that about $51 million from the fund has been spent so far.

“San Bruno has suffered through a terrible tragedy and we understand that this accident will affect this community forever,” said Chris Johns, PG&E’s president. “We will continue to work with the victims and the community as a whole to address their needs.”

The explosion occurred Sept. 9, 2010, when a natural gas pipeline constructed in 1956 ruptured, sending a plume of fire into the neighborhood for almost 95 minutes before the gas was shut off. Eight people died, dozens were hurt and 38 homes were destroyed.

The disaster also raised fears nationally about the safety of 150,000 miles of natural gas pipelines that were built before 1970 and exempted from pressure testing, which made it difficult to assess their integrity.

Last year, the National Transportation Safety Board issued a scathing critique that blamed the conflagration on PG&E’s poor management of the pipeline and a lack of oversight by state and federal regulators. A special panel created by the California Public Utilities Commission reached similar conclusions.

In January, the commission launched a legal investigation to determine whether PG&E violated any laws. The process could result in substantial fines for the company.

As part of its ongoing investigations, the commission issued two reports Monday, which concluded that PG&E failed to keep and properly maintain information and records needed to promote the safety of its natural gas pipeline system.

State regulators found that the utility’s records were disorganized, scattered at many locations and that it was difficult, if not impossible, to track their existence or contents. The records in question related to re-used pipe in service, the numbers and conditions of leaks, and pressure information, the reports stated.

PG&E officials acknowledged that the company needs to improve its record-keeping related to pipeline operations. They said they have already learned from the commission’s investigation and the utility has taken “huge steps forward” by adopting some of the industry’s best data management systems.

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