by Christopher Freeburn | August 21, 2013 9:43 am
California utility Pacific Gas & Electric (PCG) is facing a potentially crippling fine resulting from a 2010 explosion at one of its natural gas pipelines.
A decision on whether to impose a penalty of $2.25 billion is expected before the end of the year. But the California Public Utilities Commission, which is considering the hefty fine, is assessing its possible impact. PG&E CEO Tony Earley has warned that the fine could send the struggling utility into its second bankruptcy in 12 years, Bloomberg notes.
The fine would be four times higher than PG&E’s earnings for 2012. It would also equal a decade and a half’s worth of profits for the company’s natural gas business. However, a report commissioned by the state found that the utility could pay the fine without risking a credit downgrade.
On September 10, 2010, a PG&E natural gas pipeline in the San Francisco suburb of San Bruno exploded, killing eight people. Earley notes that fines assessed against other utilities for accidents that killed more people were far less than the amount California regulators are considering. He also indicated that PG&E plans to invest $2.2 billion to improve its natural gas pipelines and is requesting that regulators reduce any total fine by that amount.
The city of San Bruno is demanding an even higher fine: $3.85 billion.
Shares of PG&E fell more than 1% in Wednesday morning trading.
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