Posted on 13 Sep 2010
On Friday federal regulators heard from PG&E Corp. advising that its utility has nearly $1 billion in fire insurance to cover liabilities from the deadly natural gas pipeline blast last Thursday in San Bruno, California. It also said that its financial condition "could be materially adversely affected" if the insurance coverage falls short or isn't available.
Pacific Gas & Electric Co., PG&E's main subsidiary, has said it would "take accountability" if found to be responsible for Thursday's pipeline explosion.
"We are committed to do what's right and what's appropriate to help all of the families and others that have been impacted by this tragedy," utility President Chris Johns said during a news conference Friday.
The unusual nature of the incident, which occurred in a residential area, could ratchet up costs well beyond pipeline incidents of the recent past, analysts said, but several expressed confidence that PG&E had sufficient insurance and financial resources to handle damages, potential fines and lawsuits as well as repairs.
Other pipeline accidents ultimately have resulted in damages of about $100 million to $200 million, analysts said. But they stressed that most of those incidents occurred in relatively isolated areas, far away from neighborhoods.
"It's especially rare for this to happen in a residential area. They usually occur in construction sites and involve digging in places without authorization," said Shelby Tucker, managing director of electric utilities for Oppenheimer & Co. "It's really hard to say whether their insurance will cover this, and now we are talking about lost lives, which takes it to an entirely different level."