$38 Million State Fine in 2008 PG&E Pipeline Explosion

The Rancho Cordova, Calif., explosion on Dec. 24, 2008, involved natural gas leaking from a distribution pipeline. An administrative judge rejected a smaller, $26 million fine proposed by the CPUC and the utility.

The California Public Utilities Commission on Dec. 1 approved a $38 million fine against Pacific Gas and Electric Company (PG&E) as a result of a natural gas explosion Dec. 24, 2008, in Rancho Cordova, Calif., which resulted in one death, along with injuries and property damage.

The destruction was much less severe, however, than the blast two years later in San Bruno, Calif., when a PG&E gas pipeline exploded and sparked fires, killing eight people, injuring 58, and destroying 38 homes.

CPUC said it determined that PG&E violated safety laws in several respects in connection with the Rancho Cordova explosion. The violations included:

  • The September 2006 installation of pipe at Paiute Way was pipe that was not authorized for gas service
  • The pipe used in the repair at Paiute Way was not pressure tested in the manner required by law prior to reinstating gas service
  • The wall thickness of the gas pipe installed in Elk Grove, Calif., in October 2006 was thinner than allowed by gas piping specifications
  • PG&E failed to follow its internal procedures with respect to its October 2006 discovery of the installation of gas pipe with wall thickness below specifications in Elk Grove
  • PG&E did not administer drug and alcohol tests after the Rancho Cordova explosion to all employees "whose performance on Dec. 24, 2008, under the circumstances presented, could not be completely discounted as a contributing factor to the accident"
  • PG&E's response to the neighborhood resident's Dec. 24, 2008, telephone call reporting an outdoor gas leak odor on Paiute Way was unreasonably delayed and not effective

The agency said both parties proposed a $26 million fine, but an administrative law judge rejected it and levied the higher amount. "I commend Administrative Law Judge Wong's decision that levies this penalty on PG&E for safety violations resulting in a tragic fatality and property damage," said Commissioner Timothy Alan Simon, the assigned commissioner for this proceeding. "This decision sends a signal that California is taking a firm stand on integrity and safety in its gas distribution infrastructure. Today's decision is part of the CPUC's ongoing effort to set a high bar on California's distribution pipeline safety standards that will incentivize utilities to maintain effective pipeline safety, risk assessment, and response procedures."

"I support the $38 million penalty and related stipulations," said Commissioner Catherine J.K. Sandoval. "It represents a strong reminder that safety and reliability of the natural gas system are of paramount importance to the CPUC and to the public interest. My deepest condolences to the family and community affected by this tragedy."

CPUC said the utility wont' seek to recover any of the penalty or other costs from its customers in rates; the fine will be paid to the state's General Fund.

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