1. Summary

This Order Instituting Investigation was opened to examine the operations and practices of Pacific Gas and Electric Company (PG&E) regarding the natural gas explosion and fire that occurred on December 24, 2008 at 10708 Paiute Way in Rancho Cordova, which resulted in one fatality, other injuries, and property damage.

Following the prehearing conference, and as a result of discussions between PG&E and the Consumer Protection and Safety Division (CPSD) of this Commission, a joint motion was filed on June 20, 2011 by PG&E and CPSD "for approval of stipulation to order resolving investigation." The stipulation was separately filed on June 20, 2011 and is entitled "Stipulation to Order Resolving Investigation" (PG&E and CPSD stipulation), a copy of which is attached as Appendix 2. As part of the PG&E and CPSD stipulation, PG&E proposes to pay a penalty of $26 million to the State's General Fund.

PG&E and The Utility Reform Network (TURN) entered into a separate stipulation, a copy of which is attached as Appendix 3. PG&E and TURN request that in addition to approving the PG&E and CPSD stipulation, that the Commission approve the PG&E and TURN stipulation which provides in part:

For purposes of its test year forecasts in PG&E's next general rate case, PG&E shall exclude from Account 925 any amounts paid for claims or settlements related to the December 24, 2008 natural gas explosion in Rancho Cordova, California.

Based on the circumstances which led up to the Rancho Cordova explosion and fire, and the CPSD allegations in this investigation, today's decision denies the joint motion for adoption of the PG&E and CPSD stipulation, and the PG&E and TURN stipulation. Pursuant to Rule 12.4 of the Commission's Rules of Practice and Procedure, this decision proposes a $38 million penalty, plus payment of CPSD's investigation and proceeding costs, as being acceptable to this Commission. PG&E, CPSD, and TURN may agree to accept the proposed penalty amount of $38 million by filing a motion accepting this proposed penalty amount. If no motion is filed, a ruling scheduling evidentiary hearings on the underlying issues in this investigation will then be issued.