A man and a woman suffered severe burns in the explosion, which was heard more than a mile away and was powerful enough to shatter windows in nearby homes.
The Washington Utilities and Transportation Commission filed a complaint against PSE alleging the utility violated gas-safety rules when it responded to the gas leaks in north Seattle that later caused the home explosion.
Under the settlement agreement, PSE admits violating the rules and will pay a $275,000 penalty. The company is not allowed to pass penalty costs to customers through rate increases, according to the Utilities and Transportation Commission .
The man who was injured told investigators he smelled gas the night before the explosion but did not report it and went to bed. The gas was ignited when the couple began turning on lights and appliances after they woke up the next morning.
An investigation found the explosion was the result of a downed power line several blocks away. When the power line came down Sept. 25, it energized a metal fence post, which then energized an abandoned, buried metal water pipe, according to the report.
The electrical current then surged to the natural gas line, punching four finger-sized holes into it, according to the report.
Puget Sound Energy workers found and repaired three of the four leaks but missed the fourth.
According to the report, the leak likely filled the home's crawlspace with gas before exploding.