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California may fine PG&E $2.25 billion over San Bruno gas fire

SAN FRANCISCO (Reuters) - The California Public Utilities Commission is considering fining utility PG&E Corp $2.25 billion over the deadly 2010 San Bruno gas line rupture and fire, requiring the utility to spend the entire fine on safety.

The Commission's staff recommended the record fine against PG&E's Pacific Gas and Electric. It would be the largest fine ever imposed by state pipeline regulators in the United States, the California Public Utilities Commission said on Monday in a statement.

In response, PG&E CEO Tony Earley said on Monday in a statement that the proposal reflected a desire to punish his company, ignoring what it had done in the fire's aftermath. The fine would make it more costly to finance remaining safety improvements.

A natural gas pipeline explosion in the city just south of San Francisco destroyed a neighborhood and killed eight people on September 9, 2010. The National Transportation Safety Board later blamed the utility's lax approach to pipeline safety and weak oversight by state and federal regulators.

PG&E already has spent more than $1 billion on safety, which would be counted toward paying the fine, the regulator said.

PG&E may now respond to the Commission. A decision is expected in late summer, the regulator said.

(Reporting by Peter Henderson; Editing by Jan Paschal)

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