PG&E CEO Anthony Earley told investors Thursday that his company expects to be fined at least $200 million by state regulators for its role in the 2010 San Bruno natural gas pipeline that killed eight and leveled a neighborhood.
In a quarterly statement filed with the Securities and Exchange Commission, Pacific Gas & Electric Co. set aside $200 million, or 49 cents a share, for potential regulatory fines in the quarter.
California regulators said last month that PG&E’s violations of state and federal safety laws led to the pipeline explosion that destroyed 38 homes in San Bruno, on Sept. 9, 2010.
State regulators will also decide this year how much PG&E can collect from customers to help pay for a proposed $2.2 billion gas pipeline improvement plan. PG&E has proposed that shareholders will absorb $535 million for the project, with rate increases covering the remainder.
PG&E will have to sell about $300 million in additional shares for a total of $600 million this year to pay for expected fines and increased costs, Chief Financial Officer Kent Harvey said today during conference call with investors.
And state and federal regulators may also fine PG&E $500 million to $1 billion for the disaster, said Hugh Wynne, a New York-based utility analyst for Sanford C. Bernstein & Co., in a telephone interview before the statement was released.
Meanwhile, the San Francisco-based utility said its fourth-quarter profit fell as it increased spending to update its system following the accident.
Net income dropped to $83 million, or 20 cents a share, from $250 million, or 63 cents a share, a year earlier. Revenue increased 5.4 percent to $3.8 billion, according to data compiled by Bloomberg.
Gas pipeline-related expenses for the quarter were $283 million, after accounting for $23 million of insurance payments. PG&E spent $180 million, or 26 cents a share, on expenses related to the blast’s aftermath including tests to determine the pipeline’s strength and legal fees.
— Bloomberg News