PG&E has said publicly it will hold itself accountable if it is found to be at fault for the Sept. 9 gas pipeline explosion and fire.

But, according to a local personal injury lawyer, Pacific Gas & Electric Co. is not telling people what it had warned its shareholders about -- that the company knew  an explosion could happen and that a disaster such as the Crestmoor fire likely would jeopardize the utility's financial condition.

Mike Danko, a San Mateo attorney who has represented people affected by gas explosions, said PG&E's 2009 annual report (see attached) warned shareholders of problems with operating practices used in detecting gas leaks and said those problems could result in a major accident.

According to the annual report, the utility reviewed how it conducts its gas leak surveys and determined that "improvements needed to be made to operating practices and procedures, including increasing the accuracy of gas maintenance records and compliance with operating procedures."

The report also said the state Public Utilities Commission's Consumer Protection and Safety Division was investigating the utility's gas-pipeline maintenance practices.

"The company basically says, 'We know that PG&E's leak survey situation sucks and that we're under investigation," said Danko, who is representing two families affected by the Crestmoor fire and a man who lost his business as a result of the disaster.

Danko won a case against PG&E after the deadly gas line explosion in 1992 in Santa Rosa and settled a case involving the 2005 underground utility fire in downtown San Francisco that badly burned a woman.

He said PG&E further acknowledges in its annual report that the utility may not be insured for damages if a court decides to punish the company for an explosion.

In an e-mail, PG&E spokesman Joe Molica said the utility has $992 million set aside in general-liability insurance to pay for injuries and property-damage claims from the San Bruno disaster.

The company also has set up a $100 million recovery fund for affected residents. And it gave the city a $3 million no-strings-attached check after the fire to help cover the costs of responding to the disaster.

According to PG&E's latest 8-K, a report required by the U.S. Securities and Exchange Commission whenever a publicly traded company reports a significant event, the utility said that if its insurance is found to be insufficient to cover the costs of the disaster once the investigation  is completed, PG&E's financial condition could be adversely affected.

However, "the utility believes that most of the costs relating to the San Bruno event will be covered by this insurance," the 8-K report said, "although there can be no assurance as to the ultimate amount that will be recovered."

Danko said this explanation doesn't address the real issue.

"They're basically saying it's cheaper to pay people off than to do proper leak checks."