PG&E Corp. Faces Fine worth $10.85M over Carmel Explosion
San Francisco, CA-based PG&E Corporation’s (PCG) main subsidiary, Pacific Gas and Electric Company has been charged a fine of $10.85 million for the Carmel natural gas explosion that occurred in Mar 2014.
A citation was issued by the California Public Utilities Commission’s (“CPUC”) Safety and Enforcement Division (“SED”) on Nov 20, 2014. According to the SED, the utility was found to be guilty ofnatural gas safety rules on two accounts.
Firstly, it had failed to follow the requisite procedures by not providing accurate information to its crew, which was trying to replace a natural gas distribution line. The workers were not properly equipped and proper records were not maintained. Secondly, it did not take the precautions and steps required to operate safely.
Per the SED, these violations were responsible for the explosion, which severely damaged an empty cottage. The utility has been granted 10 calendar days to appeal the citation.
The natural gas explosion that had occurred in Carmel, CA is presently under investigation by the U.S. Attorney. The blast occurred when the utility’s employees were upgrading a natural gas distribution pipeline in the area. No injuries or fatalities were reported.
The CPUC has also asked for a formal investigation into the utility’s records of the gas distribution system. The order also requires the utility to provide sufficient evidences in its defense.
The CPUC order mandates the provision of a report within 30 days explaining the company’s failure to maintain proper records, as revealed by SED in its investigations and requires the utility to cite remedial procedures undertaken, if any.
The CPUC will then decide if the utility has indeed violated the safety rules and will impose penalties thereafter. The Commission has the authority to decide whether the costs of the investigation process will be borne by the shareholders or the ratepayers.
Of late, the utility has been subject to a series of fines. In Sep 2014, it was charged with $1.4 billion in fines and penalties associated with the fatal 2010 San Bruno natural gas pipeline explosion. (Read more: PG&E Faces $1.4B Fine Over San Bruno Pipeline Explosion)
Despite these issues, PG&E Corporation posted upbeat performance in the third quarter of 2014, comfortably surpassing both the revenue and earnings estimates.
Currently, PG&E carries a Zacks Rank #1 (Strong Buy). Other equally well-placed stocks in the same industry include Black Hills Corporation (BKH), IdaCorp, Inc. (IDA) and Korea Electric Power Corp. (KEP).
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