Pacific Gas and Electric Co. (PG&E) was hit with a $16.8 million fine Friday under a program on citations established at the end of last year by the California Public Utilities Commission (CPUC). The penalty was assessed for the utility’s admitted failure to conduct natural gas pipeline leak surveys.

PG&E was given 10 days to pay the fine with shareholder dollars or file a notice of appeal. A spokesman for the San Francisco-based utility told NGI Sunday that PG&E is reviewing the citation and fine to determine if it would appeal. PG&E expressed surprise at the CPUC action and size of the penalty.

“To receive a penalty this extreme for being open, transparent and accountable is disappointing,” said PG&E Executive Vice President for Gas Operations Nick Stavropoulos, who added that PG&E had taken “immediate and comprehensive action” following its reporting of the violations. “We were surprised by the action taken by the CPSD as we have demonstrated repeatedly our commitment to safety, and that commitment is unwavering.”

This is the second precedent-setting fine levied against PG&E in the past two months. California regulators in December handed out the biggest penalty ever for a gas utility, increasing an earlier penalty to $38 million for a fatal distribution pipeline failure and explosion in Rancho Cordova, CA, on Christmas Eve 2008.

Last month the CPUC bolstered its natural gas safety efforts by creating a citation program under which gas pipeline operators could be fined by the regulatory commission’s Consumer Protection and Safety Division (CPSD) for violating state and federal safety rules (see Daily GPI, Dec. 2, 2011). Friday’s fine was the first citation issued under the program. The CPUC staff now has the authority to issue written citations whenever a violation of state or federal regulations is found, and each day of an ongoing violation may be counted as an additional offense. Each citation assesses the maximum penalty amount set under the state public utilities code.

The latest penalty stems from PG&E self-reporting to state regulators that it had failed to perform pipeline leak surveys in several locations in violation of CPUC regulations. The utility has since performed the surveys and corrected the leaks that presented safety risks, the CPUC said.

CPSD Interim Director Michelle Cooke said the staff concluded that the citation was warranted “because of the duration and seriousness of the violation and the numerous opportunities PG&E had to find these problems earlier.”

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