SAN CARLOS -- The state Public Utilities Commission -- the primary regulator of PG&E's natural gas and electricity operations -- has failed to adequately emphasize safety, according to a harshly critical state legislative report released Monday in San Carlos.

The report, issued by a state senate subcommittee chaired by Sen. Jerry Hill, D-San Mateo, was presented during a hearing that focused on renewed concerns over gas pipeline safety following fresh disclosures of poor record keeping on a section of pipeline running through San Carlos. Poor record keeping by the utility was cited by the National Transportation Safety Board as a factor in the 2010 pipeline explosion in San Bruno that killed eight people and destroyed 38 homes.

"PUC leadership has not figured out how to make safety a priority," Hill said in the report. "The PUC is simply not organized for success. For whatever reason, the PUC appears to be a year behind where it should be in its safety transformation."

After the hearing, Hill reiterated that the PUC has still failed to improve its commitment to public safety three years after the San Bruno explosion.

"As much as the PUC says its priority is safety, the facts are that the safety culture at the PUC has not changed," Hill said in an interview with this newspaper. "A culture shift has to take place at the PUC."

Changes at the PUC must come at the top, said Hill, who called on Gov. Jerry Brown to replace the president of the regulatory agency, Michael Peevey.

Hill said PG&E is "trying to do the right thing" by upgrading operational safety and improving communications with cities and local safety officials, but is being hampered by the PUC. He compared the utility to a struggling student who has poor supervision.

Others among the approximately 150 people who attended the hearing complained that PG&E continues to be hobbled by incomplete knowledge about the nature and safety of its vast network of natural gas pipes.

"PG&E doesn't entirely know what is in the ground," said San Carlos City Manager Jeff Maltbie, referring to the utility's incomplete record keeping for its natural gas pipelines.

Brian Turner, the PUC's deputy executive director, said the commission is conducting a "thorough investigation" into a 4-mile section of pipeline running under San Carlos following the disclosures of poor record keeping by PG&E.

The San Bruno explosion, the controversy over the San Carlos pipeline and other stumbles have scarred PG&E's credibility, the utility conceded on Monday.

"We understand that this is a journey, and as part of that journey, we know we have a long way to go to regain trust," Sumeet Singh, senior director of gas operations for PG&E, told the hearing.

Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.