SAN BRUNO, Calif.—Pacific Gas & Electric Co. has promised to make sweeping risk management changes after the National Transportation Safety Board's determination that the utility's lax pipeline safety approach was the probable cause of a deadly blast last year.

A natural gas pipeline owned and operated by PG&E ruptured in a residential area of San Bruno, Calif., last September, igniting an inferno that killed eight people, injured dozens, and damaged or destroyed more than 100 homes.

The five-member NTSB panel on Tuesday released results of an investigation that harshly criticized the utility for its risk management failures, which the agency said likely led to the explosion.

“Our investigation revealed that for years, PG&E exploited weaknesses in a lax system of oversight,” NTSB Chairman Deborah A.P. Hersman said in a statement. “We also identified regulators that placed a blind trust in the companies that they were charged with overseeing to the detriment of public trust.”

After the NTSB hearing, PG&E President Chris Johns outlined steps the utility is taking to shore up its pipeline safety processes and implement a safety culture.

“We have spent the past year making fundamental changes to our operations and management that will put the safety of the public, our customers and our employees first,” Mr. Johns said in a statement.

Among the changes, PG&E said it will hire a vp of safety with experience in instituting industry best practices, a position that will report directly to Mr. Johns, according to the statement.

The NTSB said the San Bruno disaster could have been prevented.

Defective welds in the 30-inch diameter pipe that ruptured would have been detectable at the time PG&E installed it in 1956, the agency said. Because of the utility's “inadequate quality control during the construction project and its failure to maintain accurate records, the poorly welded section of pipe went undetected for over 50 years,” the NTSB concluded.

“Failure of one of the improperly welded seams caused the Sept. 9, 2010, rupture during an increase in pressure resulting from repair work being performed at a terminal upstream of the rupture site,” the agency noted of the accident it said was “clearly preventable.”

Ms. Hersman said the installation of a “woefully inadequate pipe” was a mistake “compounded by a litany of failures—including poor record-keeping, inadequate inspection programs and an integrity management program without integrity.”

The NTSB made 29 safety recommendations for PG&E to follow, and Mr. Johns said PG&E will “take to heart the NTSB's findings from its thorough and independent investigation.”

The utility has taken steps that include reducing pressure on more than 1,600 miles of gas transmission pipelines and using in-line camera technology to inspect welds. In addition, PG&E is developing a more comprehensive emergency response plan, Mr. Johns said.

The utility has “retained leading safety experts to help implement public and employee best safety practices,” he said. In addition, it has made safety performance a “significant component of the employee incentive plan and a condition of future employment.”

PG&E has liability insurance with limits of $992 million above a $10 million deductible that will respond to claims from the San Bruno explosion, the utility acknowledged in a filing last year with the Securities and Exchange Commission.

The first $35 million of the utility's coverage is written by Associated Electric & Gas Insurance Services Ltd., a Hamilton, Bermuda-based mutual insurer. The next layer of coverage is written by Tampa, Fla.-based Energy Insurance Mutual Ltd., said David Croom-Johnson, chief underwriter at Aegis London.

Energy Insurance Mutual writes excess liability above $35 million up to limits of $100 million, according to the insurer's website.

Mr. Croom-Johnson said PG&E's coverage above the mutual's layer is written by several Bermuda insurers.