Even though state officials awarded PG&E nearly $5 million in ratepayer money in 2007 to replace a South San Francisco natural gas line identified as a high safety risk, the utility never did the work and is now seeking another $5 million to make the repairs, a consumer group charged Wednesday.

The accusations came as the San Bruno catastrophe generated a wave of legislative proposals to reduce the chances of such a disaster happening again, including a move from the Obama administration to stiffen oversight of the nation’s pipelines and boost fines for safety violations.

The allegations from the consumer group, The Utility Reform Network, center on a section of pipe north of the gas line that exploded in San Bruno. That South San Francisco section is on a list of 100 portions of pipe that PG&E has declared a high risk. TURN added that the California Public Utilities Commission granted the company almost $5 million from ratepayers three years ago, assuming PG&E would replace the pipe in 2009.

But TURN said that work wasn’t done and that PG&E has recently submitted a list of construction projects for which it wants the state agency to pay, which includes a request for another $5 million to replace the same section of South San Francisco pipe.

In response to TURN’s charges, PG&E issued a statement saying it “is committed to performing the work necessary to assure the safety of its gas transmission system” and “is constantly prioritizing its projects using the most recent up-to-date information available.”

“In this particular case,” the company’s statement said, “PG&E did identify this line section as being a high priority project in its 2008 gas transmission rate case filing. Subsequent to that filing PG&E performed an External Corrosion Direct Assessment (ECDA) in 2009 and based on the updated assessment, and the assurance it provided us, we rescheduled the project accordingly.”

In PG&E’s request for more funding, which is pending the commission’s approval, the utility is now seeking to begin the work on the pipe in 2012. The company’s documents, which TURN made public, indicate the utility still thinks the section is in dangerous shape. Calling the risk of failure on the pipe “unacceptably high,” one PG&E document noted in an apparent reference to a possible explosion that it “has a potential impact radius of 415 feet and is located in a heavily urbanized area.”

“Not only are they bilking the ratepayers but they are endangering public safety,” TURN senior attorney Mike Florio said. “I think it’s fair to ask, if they had done the work, maybe they could have found something” that might have alerted them to the potential of a catastrophic failure of the San Bruno pipe, he added.

TURN, which accused PG&E of deferring maintenance on a wide variety of its equipment in recent years, said failing to fix the South San Francisco pipe with the $5 million was particularly troubling because last year the utility spent nearly $5 million on bonuses for six of its top executives.

In the wake of the San Bruno explosion, as well as recent pipeline oil leaks in Michigan and Illinois, U.S. Transportation Secretary Ray LaHood proposed legislation to increase pipeline supervision.

“As the recent pipeline failures (in the Midwest) have shown, as well as the tragic gas pipeline explosion in Northern California, the department needs stronger authority to ensure the continued safety and reliability of our nation’s pipeline network,” LaHood said.

Dubbed the “Strengthening Pipeline Safety and Enforcement Act of 2010,” the proposed legislation would increase the maximum fine for major safety violations involving death, injury or major environmental harm from $1 million to $2.5 million. Other provisions would authorize funding to hire 40 more pipeline inspection and enforcement workers over four years and set up a process to examine whether safety rules for “high-consequence” areas, such as urban areas or waterways, should be applied to entire pipelines.

California’s U.S. senators, Dianne Feinstein and Barbara Boxer, said they plan to introduce a bill containing those ideas.

During an interview with KCBS Radio, Feinstein said the San Bruno disaster “is so horrendous that it has galvanized people” to improve gas line safety. Feinstein said she also favored requiring that pipelines be fitted with valves that automatically shut off the flow of gas during an emergency. PG&E officials said it took them 1 hour and 46 minutes to manually turn off two valves controlling gas to the devastated San Bruno neighborhood.

Sharing Feinstein’s concern, U.S. Rep. Jackie Speier, D-San Mateo, whose 12th Congressional District includes San Bruno, said she is drafting legislation calling for automatic or remote shut-off valves on gas transmission lines that run through densely populated areas.

State Sen. Mark Leno, D-San Francisco, said he’ll introduce legislation that would protect ratepayers from being held financially responsible for fires or other events that destroy homes, personal property or a public utility’s infrastructure when the utility’s own negligence causes the catastrophe. Under its provisions, a utility couldn’t seek a rate increase to cover uninsured damages caused by its maintenance lapses.

In addition, U.S. Rep. John Garamendi, D-Walnut Creek, sent a letter to the House Transportation and Infrastructure Committee chairman, Rep. Jim Oberstar, D-Minn., requesting a hearing in the Bay Area on the causes of the San Bruno pipeline explosion and strategies to prevent future disasters.

One possible source of information investigators with the National Transportation Safety Board are taking a hard look at is a PG&E facility in Milpitas, where gas lines that feed the Peninsula originate. The agency is looking into the backgrounds of employees and the possibility of worker fatigue.

The workers at the Milpitas facility “would have known if there was a big pressure drop and that something was wrong,” NTSB Vice Chairman Christopher Hart said.

Bay Area News Group reporter Joshua Melvin contributed to this report. Contact Steve Johnson at sjohnson@mercurynews.com or 408-920-5043