CPUC Consumer Protection Director Jack Hagan told a two-judge panel considering penalties for PG&E that the company should have to spend $2.25 billion on pipeline safety.
"I am recommending the highest penalty possible against PG&E without compromising safety and I want every penny of it to go toward making PG&E's system safer," Hagan was quoted by the San Francisco Chronicle as saying.
A natural gas pipeline operated by PG&E exploded in 2010 in San Bruno, Calif., killing eight people and damaging 38 homes.
The National Transportation Safety Board said PG&E didn't know what kind of pipe was beneath San Bruno. A defective weld seam on the pipeline was blamed for the explosion.
Hagan said the company's gas transit system is "broken" because of a long history of mismanagement. PG&E Chief Executive Officer Tony Earley said penalties suggested "far exceed" anything he's seen in his 30 years in the business.
The panel hearing the case will issue its own penalty recommendations though no time frame was announced.