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PG&E rates to increase to pay for pipeline costs

Lisa Leff, Associated Press

SAN FRANCISCO (AP) -- California regulators on Thursday unanimously approved a Pacific Gas and Electric Co. rate increase of $299 million to help pay for pipeline inspection and upgrade costs in the wake of the fatal 2010 gas pipeline explosion in a San Francisco Bay area suburb.

The amount approved by the state Public Utilities Commission was less than what PG&E had sought. It was not immediately clear how much the average monthly residential customer bill would be affected.

Commissioners said they were trying to strike a balance between punishing PG&E for past mismanagement and encouraging the company to invest in safety.

"We want to make sure PG&E's new management team has the resources to provide the safe system we all want," Commissioner Michel Peter Florio said.

The money is aimed at improving record-keeping and safety testing of PG&E's gas transmission lines after the Sept. 9, 2010, blast that killed eight people and destroyed 38 homes in the bedroom community of San Bruno. The total cost of those improvements has been estimated at around $2 billion.

The explosion prompted a series of investigations and new requirements for state utilities. Among them, the commission required state utilities last year to forecast how they would pressure-test or replace the untested segments of their gas transmission lines.

Critics of the decision blasted the PUC for scrapping a plan to lower how much PG&E could profit from investments connected to the safety improvements.

California State Sen. Jerry Hill described the decision as a "Christmas gift" for PG&E.

"This will allow PG&E to profit from their gross negligence...," he said.

A call to PG&E was not immediately returned.

PG&E could also face hundreds of millions of dollars in possible fines in other proceedings before the commission.

Attorneys for the San Bruno blast victims have argued that PG&E did not do enough to determine if the pipeline had defective welds.

PG&E has claimed in court filings that the explosion was an accident and not due to mismanagement.