State regulators ordered Pacific Gas and Electric Corp. (PG&E) ratepayers Thursday to pay more than half the $2.2 billion bill for upgrading natural gas pipelines whose decrepit state became known after shoddy maintenance that contributed to the deadly 2010 San Bruno blast was detailed by state and federal investigations.

The state Public Utilities Commission (PUC) voted 5-0 to let PG&E raise $299 million through rate increases over the next two years, in addition to nearly another $1 billion stretched over decades, to pay for tests, repairs and upgrades, some of which were erroneously reported as already done.

The utility had asked for significantly more.

A PG&E spokesperson told the Contra Costa Times that the average customer will pay $1.36 more per month by the end of 2014. The company will test 783 miles of pipeline, replace 186 miles of it and install 228 automated valves. PG&E was also ordered to modify nearly 200 miles of pipeline to allow testing for defects and other problems.

PG&E and its shareholders will make a tidy profit on the repair work. The PUC factored in the utility’s customary 11.3% return on investment for pipeline-safety work, which had San Bruno Mayor Jim Ruane scratching his head.

“It is difficult for us to understand why PG&E and its shareholders should ever profit from the utility's failure to invest in necessary safety upgrades,” Ruane said after the ruling. “PG&E blew up our town and killed eight people. PG&E is making a profit on those lives. It is disgusting and unfair.”

After the San Bruno explosion, the National Transportation Safety Board issued a report that linked the blast to a deficient weld that escaped detection because PG&E botched the inspection. The NTSB also faulted the utility for its poor response to the explosion in the immediate aftermath.

Subsequent investigations found numerous violations of state and federal safety laws before the blast, three of which are being pursued by the authorities and almost certainly will result in fines and other penalties for the utility.

–Ken Broder

To Learn More:

PG&E Rates to Increase to Pay for Pipeline Costs (by Lisa Leff, Associated Press)

State Regulators Approve PG&E Rate Increase to Cover Pipeline Upgrades (by George Avalos, Contra Costa Times)

PG&E Customers Get Bill for Gas Rebuild (by Jaxon Van Derbeken, San Francisco Chronicle)

PG&E Ratepayers to Foot Much of Safety Bill (by Cassandra Sweet, Wall Street Journal)