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PG&E says it plans to appeal $1.4B penalty for deadly 2010 California pipeline explosion

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SAN FRANCISCO - Pacific Gas & Electric Co. plans to appeal a $1.4 billion penalty recommended by California regulatory judges for a gas pipeline explosion in a San Francisco suburb that killed eight people, the utility said in a filing Wednesday with the U.S. Securities and Exchange Commission.

The utility said it plans to appeal to the California Public Utilities Commission within 30 days. The filing did not list a reason for the appeal, but PG&E spokesman Greg Snapper said the utility wants the commission to take into consideration the $2.7 billion PG&E has or will spend on gas pipeline safety improvements.

"We're planning to ask the commission to review yesterday's recommendation to make sure that a final penalty counts all of the company's safety investments and actions to make the gas system the best in the country," Snapper said.

He said any penalty should also directly go toward public safety. By far the largest share of the $1.4 billion penalty recommended by two administrative law judges Tuesday would go directly to the state with no strings attached.

The $950 million portion marked for the state's general fund also drew objections from a private advocacy group for ratepayers and the city of San Bruno, the San Francisco suburb where the fiery 2010 explosion destroyed more than three dozen homes and became the state's deadliest utility disaster in decades.

Those funds can be spent any way the governor and Legislature see fit, said H.D. Palmer, a spokesman for the state Department of Finance.

The penalty — the largest safety-related levy ever against a public utility in the state — also includes $400 million for pipeline improvements and about $50 million to enhance pipeline safety. PG&E cannot recover any of the money from customers.

Any appeal would first go to the administrative law judges who recommended the penalty before going to the state utilities commission for consideration.

The blast occurred when a 30-inch natural-gas transmission line installed in 1956 ruptured.

A 2011 investigation by the National Transportation Safety Board concluded the break occurred in a weak weld in a pipeline that PG&E records had shown as being smooth and unwelded. Among other safety failings, PG&E let an hour and 35 minutes go by before shutting off the natural gas fueling the fire, the federal investigators said.

The utilities commission previously ordered PG&E to pay $635 million for pipeline modernization — money that also cannot come from PG&E customers.

This year, federal prosecutors separately indicted PG&E on 27 counts alleging the utility violated pipeline safety requirements.

PG&E faces additional fines of more than $1 billion if convicted of the federal charges, which are separate from the state financial penalties. PG&E has pleaded not guilty to the counts.

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Associated Press writers Ellen Knickmeyer, Garance Burke and Donald Thompson contributed to this report.

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