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PG&E to pay San Bruno $70m for pipeline blast

13 March 2012

Pacific Gas & Electric has agreed to pay the Californian city of San Bruno $70 million as compensation for the 2010 gas pipeline explosion that killed eight people and destroyed dozens of homes, the city and utility announced on March 13. This is thought to be the first time a municipality had been recompensed directly after an incident of this sort.

The September 2010 explosion and fire destroyed dozens of homes and killed eight
The September 2010 explosion and fire destroyed dozens of homes and killed eight

"The money will be used for the benefit of all the citizens of our city and to help us get beyond the tragedy and devastation caused by PG&E's explosion and fire here in September 2010," said San Bruno Mayor Jim Ruane.

As part of the deal, San Bruno, agreed to cap at $50 million a separate trust fund that PG&E created, previously set at $70 million, to replace infrastructure destroyed in the blast, pay for social services for residents, and recompense the city for staff time.

In addition, the city, a suburb of San Francisco, will seek portions of whatever fines regulators impose on PG&E. The utility also faces dozens of lawsuits from victims of the blast.

The explosion occurred after a power failure at a PG&E terminal in Milpitas caused pressure to increase along the gas transmission line. The explosion in San Bruno blew open a crater 72 feet long and 26 feet wide, launching a 28-foot section of 30-inch pipeline 100 feet into the air. In the ensuing inferno, more than 35 homes were destroyed and eight people killed.

Subsequent state and federal investigations characterised PG&E as a company that valued profits above safety, and exposed many problems, issues that new management at the company is now trying to reverse.

Among the shortcomings identified were inaccurate and missing records on the gas pipeline system. Records showed, for example, that the pipeline that exploded on Sept. 9, 2010, was a solid piece of seamless pipe, when in fact it was welded. The California Public Utilities Commission has issued a report on the company's poor record-keeping but made no recommendations on a possible fine.

"We've been in contact with the city on a regular basis since the accident," said PG&E spokesman David Eisenhauer. "We've been committed to helping them rebuild and recover."

The payment to San Bruno is due in 30 days.

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