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(Reuters) - The California Public Utilities Commission (CPUC) on Monday proposed a $45 million shareholder-funded penalty against Pacific Gas and Electric Company (PG&E (NYSE:PCG)) for its connections to the destructive 2021 Dixie wildfire.

California's second-largest wildfire, ignited after a tree fell on the state's main utility's electrical distribution wires in July 2021, burned more than 963,000 acres in multiple counties.

The proposed penalty, pending CPUC Commissioner's approval, consists of a $2.5 million fine to the California General Fund, $2.5 million payment to tribes impacted by the fire for remediation, and $40 million for capital expenditures to transition records to electronic format.

"We do not contest three of ... allegations involving record keeping or process violations which are unrelated to the cause of the fire, and as part of the agreement, we will fund an initiative to transition to electronic records for our electric distribution patrols and inspections," PG&E said in a statement.

The company said it would dispute allegations of "violations based on findings and conclusions" in the Dixie Fire report by the California Department of Forestry and Fire Protection (Cal FIRE).

PG&E said it would not to seek cost recovery for the initiative, but noted the agreement does not preclude the company from receiving recovery for costs related to the fire, including from the state's Wildfire Fund.

CPUC enforcement staff is recommending this penalty under an Administrative Consent Order (ACO) and Agreement, as per a release on the state regulator's website.

The proposed settlement will be on the CPUC's voting meeting agenda on Nov. 16.

(This story has been refiled to fix typographical errors to read 'dispute' and 'in the Dixie Fire report' in paragraph 5)

California regulator proposes $45 million penalty for PG&E over 2021 Dixie fire