Pacific Gas and Electric Co. asked state regulators three years ago for permission to spend $4.87 million to replace a portion of the same natural gas pipeline that ruptured last week and set a San Bruno neighborhood on fire.

The 1.42-mile portion to be replaced ran beneath South San Francisco, a few miles north of the blast site. PG&E considered the segment a risk.

Then last year, PG&E proposed upgrading another stretch of the same pipeline, this time starting about 8 miles south of the blast site and running all the way to Milpitas, about 32 miles away. The work would cost about $13 million.

Neither project has come to fruition. The South San Francisco project was moved down the priority list and the money spent elsewhere, and the southern project is still pending approval from state regulators. And now some observers wonder if the utility missed a chance to spot flaws in the pipeline that could have contributed to the Sept. 9 explosion, which killed four people, left three missing and destroyed 37 homes.

"If they'd fixed the section they said they were going to fix, maybe they would have found something a few miles south - we don't know," said Mike Florio, senior staff attorney for The Utility Reform Network.

On Wednesday, Florio's group released documents showing that PG&E planned to replace the South San Francisco portion of the aging pipeline as far back as 2007. The new pipe was to be installed by October 2009.

The work was included in a list of projects that PG&E submitted to the California Public Utilities Commission to justify a rate-hike request related to natural gas transmission and storage. The commission approved the request, and the project's price became part of the rates that PG&E customers pay.

But then, the same project reappeared last year in the utility's latest natural gas rate request, which has not yet been approved by the utilities commission.

This time, the company wanted $5 million for the work. A PG&E document submitted to the commission described the pipeline as one of the company's 100 riskiest, with a "potential impact radius of 415 feet," if it failed.

"Coupled with the consequences of failure of this section of pipeline, the likelihood of a failure makes the risk of a failure at this location unacceptably high," the document said.

In the 2009 rate-hike request, PG&E also proposed upgrades to a larger stretch of the same pipeline farther south. The improvements - including the replacement of 2,138 feet of line - would let the company use an automated device known as a "pig" to inspect for flaws in the pipeline's interior, records reviewed by The Chronicle show.

PG&E wanted new valves and other modifications that would allow pigs to probe several sections of the line running through highly populated areas, allowing the utility to "focus on specific segments of the pipeline with the greatest amount of risk and mitigate the risks in the most economically feasible manner."

Neither proposed project covered the stretch of pipe that ultimately ruptured.

PG&E officials have said that they externally inspected the San Bruno segment of the line in November and March and found no problems. However, investigators have said that the area of the blast could not be checked by an automated pig because of the size and contours of the line.

"It wasn't piggable," said Peter Knudson, spokesman for the NTSB.

TURN sees the delay in replacing the northern section of pipe as part of a larger problem at PG&E.

The company, Florio said, has a history of deferring repairs and using maintenance money for other purposes. In one infamous case, a 1998 report from the California Public Utilities Commission found that the utility had taken $77.6 million that was supposed to be spent trimming trees near power lines - a vital step in wildfire prevention - and used it to boost corporate profits instead.

"The conclusion is they're putting profits before customer safety," Florio said.

A PG&E spokeswoman, however, says the company spent more money than planned on gas pipeline maintenance in the last two years, although she did not have precise figures. Spokeswoman Nicole Liebelt said PG&E allocates the money to the projects that need it most, and the priority of projects is constantly shifting.

The South San Francisco segment of pipeline underwent an external corrosion assessment in 2009, she said. Based on that study, the utility decided other natural gas projects should take precedence.

"Based on that - the most recent and up-to-date assessment and the reassurance that provided - we rescheduled this project," Liebelt said. "We are committed to performing the work necessary to ensure the safety of our gas transmission system."

The utilities commission gives PG&E that leeway. Although the company submits lists of projects to justify its revenue requests, PG&E is free to use the money on other projects.

"They're going to be on the front lines of assessing the risks," said Cheryl Cox, a policy adviser with the commission's Division of Ratepayer Advocates. "They can move those funds to something they think has a higher priority."

PG&E's spending priorities have become a touchy subject. The company currently has a rate request pending before the utilities commission that would raise its revenue by $4.2 billion over the next three years. The commission is expected late this year to vote on that request, which is separate from the natural gas rate request.

Critics, including many government officials, also questioned the company's spending priorities this spring when PG&E poured $46 million into an unsuccessful attempt to pass a ballot measure that would have limited the ability of cities and counties to form public power projects. Utility representatives say that money came out of shareholder profits, not customers' monthly bills.

With the investigation into the San Bruno blast continuing, Gov. Arnold Schwarzenegger got his first look at the neighborhood devastated by the ensuing fire.

The governor, returning from a trade mission to Asia, flew into San Francisco International Airport on Wednesday afternoon and was taken in a black SUV through the devastated neighborhood, then to the corner of Earl and Glenview avenues - near the crater caused by the explosion - where he was briefed by emergency officials before speaking to reporters.

Schwarzenegger offered prayers for those who lost relatives, friends or homes, and praised Lt. Gov. Abel Maldonado, who served as acting governor in his absence, as well as firefighters and police, for their quick action responding to the explosion and fire. He said he was kept abreast of the disaster and spoke to President Obama from China, asking for a federal emergency declaration.

Schwarzenegger promised he would get answers to many of the questions swirling around the blast and that those answers would be made public - perhaps within days.

"I will make sure I get every single detail of information, and I will share it with you because you have the right to know what went wrong and why it went wrong," he said. "Believe me, within the next few days you will be getting information.

"I'll be back - and you will get the information."

Chronicle staff writer Michael Cabanatuan contributed

to this report.