SAN BRUNO -- The state Public Utilities Commission has abruptly halted an investigation into faulty records for PG&E's natural gas system -- a move that caused city officials in San Bruno, site of a fatal gas explosion, to suggest on Saturday that the probe's end resulted from a "possible backroom deal" between the utility and its regulators.

"We are extremely disappointed that the PUC did not follow through with the action they had started to pursue," said Connie Jackson, San Bruno's city manager. "This is yet another example of the too-cozy relationship between the utility and its regulator."

The end of the investigation came amid protracted PUC proceedings over the extent and nature of fines and punishments to be levied against PG&E for its negligence that caused the September 2010 explosion, killing eight, injuring 66 and destroying 38 homes.

San Francisco-based PG&E faces fines of up to $2 billion. Separately, federal prosecutors have filed criminal charges that are due to be amended in July.

"Nothing is more important than the safety of the public and our employees," said Greg Snapper, a PG&E spokesman. "We'll continue openly reporting on our gas operations and any suggestions. It's information that is all public and available. Any suggestions that we aren't being completely open with information are simply wrong."

PUC officials could not immediately be reached for comment, but the agency says in a new filing obtained by this newspaper: "The Safety and Enforcement Division is not backtracking on its positions in its briefs that PG&E's record-keeping practices were so poor as to make the operations of its system unsafe."

Until a few days ago, the PUC's Safety and Enforcement Division had been attempting to force PG&E to produce accurate strength test records for nearly 24,000 segments of gas pipes covering more than 435 miles. The records include documents related to Line 132, the pipe beneath San Bruno that ruptured in the fatal blast.

"There had to be pressure from PG&E to get the PUC to halt the investigation," Sen. Jerry Hill, a Democrat who represents portions of San Mateo County, including San Bruno, told this newspaper. "The records would have exposed the inadequacy and illegal maintenance of Line 132."

Initially, the PUC unit filed a motion to reopen the penalty proceedings against PG&E for the purpose of obtaining the records. Later, the Safety and Enforcement Division decided not to seek a new hearing because that would cause delays in the proceeding to punish PG&E. Yet that proceeding has already been going on for several months and might not be resolved until more than four years after the explosion.

Flawed record-keeping and negligent maintenance have been determined to be the primary causes that contributed to the San Bruno explosion.

"PG&E's overwhelming failure to have in its possession records of manufacture, construction, testing, and maintenance cannot be viewed as an isolated instance, or as negligent oversight," Harvey Morris, an attorney for the PUC's Safety and Enforcement Division, wrote in the recent filing.

The PUC unit also said in its filing that it decided not to seek to reopen the punishment proceeding because it felt it had sufficiently addressed in prior filings what it deemed to be PG&E's failures and poor record keeping.

In a separate filing, a PG&E employee, David Harrison, who testified in the punishment proceeding, said that the utility has not given up looking for the missing records and still hopes to find them.

The Safety and Enforcement Division, however, issued a harsh retort to PG&E's efforts and noted that about 1,500 PG&E employees attempted in 2011 to locate missing records related to high pressure water testing of the utility's natural gas pipes.

"PG&E confuses 'hope' with evidence," the PUC unit said in its filing. "Years after that exercise, thousands of test records of pipe segments installed between 1956 and 2010 remain missing."

San Bruno officials contend that the recent events suggest that neither the PUC or PG&E are sufficiently serious about the safety of the utility's natural gas system, nearly four years after the fatal explosion.

"PG&E continues to play a lethal game with the lives of the public. We are deeply concerned by their persistent failure and unwillingness to produce accurate pipeline records," San Bruno Mayor Jim Ruane said in a prepared release. "Yet even more troubling is the PUC's decision to not pursue an investigation of these missing records."

Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.