SAN BRUNO -- A key state regulator that oversees PG&E on Wednesday announced a reorganization of its safety division, the latest twist in the controversy over how PG&E should be punished for its role in the fatal natural gas explosion in San Bruno.

The reshuffling was made in direct response to the recent reassignment of several key staff attorneys with the state Public Utilities Commission in connection with a PUC safety division proposal to impose a $2.25 billion penalty on PG&E as its punishment for the 2010 gas disaster.

The attorneys said penalizing PG&E by requiring it to undertake certain repairs and upgrades of its gas system didn't go far enough and insisted that the utility also be fined. Their reassignments were widely seen as an undermining of work done by staff lawyers who had recommended harsh fines against PG&E for the explosion.

The uproar over the earlier staff reshuffling led to a flurry of accusations and claims, and a public airing of PUC staff grievances. These included claims that Jack Hagan, director of the PUC's safety and enforcement division, ignored staff attorney recommendations on how to punish PG&E.

In the latest staff reshuffling, announced by PUC President Michael Peevey, PUC General Counsel Frank Lindh, a former PG&E attorney who had reassigned the attorneys working on the PG&E San Bruno case, recused himself as chief advisory attorney in the case.

Retired PUC Assistant General Counsel Arocles Aguilar has agreed to assume that role. Assistant General Counsel Harvey Morris, one of the attorneys who had been reassigned, will return to lead the lawyer team.


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"While we have had some internal misunderstandings, the lawyer team is committed to working with General (Jack) Hagan and the Safety and Enforcement Division in the prosecution of PG&E in these important enforcement cases to bring justice to San Bruno and improve pipeline safety in California," Morris said.

Hagan told this newspaper that he hopes the latest reorganization "puts the problems behind us."

The public airing of grievances, which included leaked emails to this newspaper and other news organizations, appears unprecedented for the PUC, normally a staid regulatory agency.

"This is extraordinary," said Thomas Long, legal director with The Utility Reform Network, or TURN. "In 25 years, I have never seen this kind of erratic behavior from a division of the PUC."

Hagan blamed the problems on emotional reactions by some of the staff. "Some people have invested years of their time and effort into this and let their emotions get the better of them," he said.

Some PG&E critics were skeptical about the latest changes.

"The PUC spends more time cleaning up its own messes than it spends regulating utilities," said state Sen. Jerry Hill, D-San Bruno. "The PUC is losing more public confidence by the day."

The PUC's five commissioners are expected to rule on the PG&E penalty before the end of the year.

In a related development, a federal employees group on Wednesday accused federal regulators of failing to adequately ensure that necessary repairs and improvements are made to the PG&E natural gas system. PG&E says it has completed seven of 12 items on the National Transportation Safety Board list of recommendations related to the San Bruno explosion.

"We could have another San Bruno. It could happen again," said Jeff Ruch, executive director of the Public Employees for Environmental Responsibility. "The lessons that were learned haven't been implemented."

Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at twitter.com/george_avalos.