SAN BRUNO -- State regulators on Tuesday demanded that PG&E pay a $2.25 billion penalty -- including a fine of at least $300 million -- the largest fine ever imposed by the Public Utilities Commission -- because of its role in the fatal natural gas explosion in San Bruno.

The fine would be paid to the state government's general fund immediately, under the proposal issued Tuesday by the PUC's Safety and Enforcement Division.

The remaining $1.95 billion would be used to reduce the amount that utility ratepayers should pay to finance PG&E's repairs for its massive pipeline safety, repair and improvement program.

"PG&E's extensive violations of its safety obligations under California law and regulations" were the primary reasons cited by the PUC unit in a regulatory filing.

The fine wouldn't be tax deductible. In addition, the staff proposal curtails PG&E's ability to receive and deduct the costs of repairs it had undertaken following the September 2010 explosion.

A final decision by the full five-member PUC is expected by year's end. Hearings and further recommendations are expected between now and then. The natural gas explosion killed eight and destroyed 38 home.

The fine, the PUC staff stated in its filing, is larger than any other fine recommended by the PUC "in its history," the regulatory filing stated.


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A previous proposal by the PUC staff was deemed by some critics to be too mild in how it punished PG&E for the explosion. The original proposal unleashed a rare public furor among PUC staffers, ushered in a shakeup at the state agency and ultimately led to Tuesday's proposal.

"The tragedy in San Bruno, which was directly caused by PG&E's unreasonable conduct and neglect for decades, was the worst disaster in the history of California electric and gas utilities," the PUC safety division stated.

Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at twitter.com/george_avalos.