The scathing report by a business consulting group found PUC staff members think the agency has an "overly cozy" relationship with utilities and that leaders have an "anti-safety attitude."
Lawmakers are reviewing the report as part of an update on changes in wake of the 2010 San Bruno pipeline explosion.
Democratic Assemblymember Bob Blumenfield denounced the head of the PUC.
"How can you look at this report and say that there has been progress?" asked Blumenfield. "I look at it and I don't see one iota of evidence of any progress on safety, I look at this and I see abject failure."
But Executive Director Paul Clanon defended the agency's actions.
"The safety culture at the PUC is turning," said Clanon. "It is not where we need it to be, I'm not going to blow smoke here, I've never blown smoke in this committee and I never will. It is changing, it's changed a lot."
Just last month, the PUC had to defend its accounting and budgeting practices before lawmakers as a result of an audit.