After confidential negotiations broke down this week, spilling into the public arena Wednesday, the City of San Bruno, CA, has asked state regulators to help them reach a “global settlement” with Pacific Gas and Electric Co. (PG&E) over a deadly pipeline explosion in September 2010.

The stalemate centers on reimbursements the city thinks the utility should pay in addition to commitments of up to $170 million, which include a $100 million “Rebuild San Bruno” fund aimed at residents and city facilities affected by the incident, plus a $70 million independently managed and utility supported trust fund to cover municipal costs directly related to fire and recovery efforts.

At the same time the California Public Utilities Commission (CPUC) has several ongoing proceedings that could extract more funds from PG&E, and one of them relates to the level of penalties and fines that may be assessed related to past violations in its natural gas system operations. San Bruno has requested that the CPUC allow the city to become a party to that analysis and assessment, said PG&E’s Greg Pruett, senior vice president for public affairs.

“I don’t want to speak for the city, but as a party, one of the things they may seek, as parties in rate cases often do, is to be a participant in determining any kind of penalty against PG&E,” Pruett said. “And if a penalty is awarded, theoretically the CPUC could provide the city with payment of part of that penalty.”

The penalty proceeding is in the “very formative stages,” with no hypothetical numbers so far, Pruett said.

In going public about the confidential talks, San Bruno Mayor Jim Ruane accused PG&E of trying to shirk its responsibilities in the wake of what the mayor characterized as the nation’s biggest ever natural gas disaster.

“They simply want to walk away after doing the minimum required by law,” Ruane said. “We will not let that happen.” He said city officials have become frustrated, alleging that PG&E doesn’t seem to understand the full seriousness of its negligence.

However, Pruett said the tragedy in San Bruno is “relived every day” at PG&E. “We are committed to doing everything we can, every day, to making sure that we give value and meaning to the people that lost their lives and the ones whose lives forever have been irreparably changed by the tragedy,” he said.

While acknowledging that PG&E established a trust to pay for direct damages to city property and has funded $12 million to date, Ruane said that the utility is not willing to address “the momentous damage” done to the “fabric of the community that will last for generations.”

PG&E agreed that the amounts of money paid out have been far below the total it committed to provide within weeks of the pipeline rupture, but Pruett emphasized that was because the city and residents had not asked for more funding.

According to the utility, only $45.1 million of the $100 million rebuilding fund has been used.

Within a week of the incident, PG&E and the mayor announced the creation of the “Rebuild San Bruno Fund,” and then-CEO Peter Darbee pledged the company’s commitment to rebuilding San Bruno (see Daily GPI, Sept. 15, 2010).

Late last year PG&E said it was liable for the pipeline explosion and was going to compensate all of the victims of the incident (see Daily GPI, Dec. 15, 2011). PG&E said it made the statement in response to a San Mateo County judge’s request for PG&E’s official position.

PG&E has said the cost to its shareholders related to the San Bruno rupture and explosion is approaching $1.5 billion (see related story).

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