Liability:
Utility’s future in peril if it must cover billions in damages
California fire investigators’ findings that power lines owned by Pacific Gas and Electric Co. started many of the fires that swept through the Wine Country last October could expose the state’s largest utility to billions of dollars in damages.
But Friday’s report by the California Department of Forestry and Fire Protection, or Cal Fire, did not include October’s deadliest blaze — the Tubbs Fire, which started near Calistoga and burned into Santa Rosa on a fierce wind, destroying more than 4,650 homes and killing 24 people.
PG&E has argued that the Tubbs Fire was started by
wires belonging to a private homeowner. Avoiding responsibility for the Tubbs Fire could significantly affect the amount of money PG&E stands to lose in lawsuits seeking to hold the company accountable for fire damage.
Instead, Cal Fire determined that 12 Northern California fires — including the Atlas, Partrick and Redwood fires — started either with branches and trees hitting power lines, or lines and poles toppling over into vegetation.
Investigators blamed the Pythian Fire in the Glen Ellen area on a downed power line that PG&E tried to restart. PG&E uses devices called reclosers that automatically try to restart power lines that switch off, even if they have been knocked down. Although other California utilities have, for years, reprogrammed their reclosers during fire season so
they don’t accidentally spark flames, most of PG&E’s reclosers in Wine Country were programmed to restart their lines the night the fires broke out.
In addition to the 12 fires discussed Friday, Cal Fire issued reports last month on four of the smaller Northern California fires in October. All were attributed to vegetation hitting PG&E’s power lines.
Although the findings, issued Friday afternoon, had long been expected, their release begins a dangerous period for PG&E, the 112-year-old utility long considered one of the state’s most powerful companies.
More than 100 lawsuits have been filed against PG&E, seeking
to hold the company accountable for a series of winddriven October fires that together killed 45 people, destroyed 8,880 buildings and razed entire neighborhoods of Santa Rosa.
Insurance claims from the fires are nearly $10 billion, far outstripping the $800 million in liability insurance that PG&E carries. PG&E Corp., the utility’s parent company, made a $1.66 billion profit last year, on $17.14 billion in revenue.
PG&E has said that its programs for trimming trees near power lines and inspecting poles meet or exceed all applicable safety rules.
“We look forward to the opportunity to carefully review the Cal Fire reports to understand the agencies’ perspectives,” PG&E said Friday. “Based on the information we have so far, we continue to believe our overall programs met our state’s high standards.”
Still, Cal Fire reported Friday that for eight of the 12 fires, the agency had referred its findings to local district attorneys, “due to evidence of alleged violations of state law.” Cal Fire did the same with three of its four fire reports last month, saying the agency had found evidence that PG&E had not followed state rules for keeping trees and branches away from power lines.
Sacramento lawmakers
could also make things more costly for the utility. Legislators have not forgotten the fatal 2010 explosion of an old PG&E natural gas pipeline beneath San Bruno, a blast that led to a $1.6 billion fine from state regulators and a felony conviction from a federal court jury.
State Sen. Jerry Hill, D-San Bruno, warned last year that if Cal Fire investigators blamed the Wine Country fires on negligence by PG&E, he would try to break up the company, which serves 16 million people across Northern and Central California.
On Friday, Hill said he would wait for Cal Fire to issue the rest
of its reports before deciding how to proceed. He also wants to see the results of a separate investigation by the California Public Utilities Commission.
However, Cal Fire’s decision to send its findings to district attorneys for possible prosecution, Hill said, showed the company was likely negligent. He scoffed at PG&E’s prior comments blaming the fires on climate change and what the company calls “the new normal.”
“Climate change and ‘the new normal’ do not ignite fires,” Hill said. “Fires are started the old-fashioned way: negligence by PG&E.”
The company, which has about 20,000 employees, has
survived an existential threat before. PG&E filed for bankruptcy in 2001 at the height of the California electricity crisis, reorganizing and re-emerging three years later.
Even if the company is not found negligent in any way — and that as yet is unclear — Cal Fire’s announcement Friday could force the company to pay economic damages to people who lost their homes and property in the October fires. Under a legal doctrine known as inverse condemnation, California utilities can be held liable for financial losses from fires sparked by their equipment, even if they followed all safety regulations.
PG&E and the state’s other
utility companies have been pushing the Legislature to address that situation by removing the threat of inverse condemnation or allowing them to pass those costs on to their customers. Although Gov. Jerry Brown in March expressed vague support, saying in a news release that the state needed to “update liability rules and regulations for utility services in light of changing climate,” no such legislation has passed to date.
“They wanted something done in Sacramento before these investigations,” Hill said. “Now a ‘get out of jail free’ card becomes less of an option. This makes it more difficult for them to get the sympathy they wanted.” Former San Francisco Mayor Frank Jordan, who lost his home in the Tubbs Fire, said Friday that PG&E is attempting to avoid responsibility in Sacramento. “We expect professional accountability,” said Jordan, who is suing PG&E. “They should be owning up to what’s happened. It’s the management and top echelon (of PG&E) avoiding their responsibility.”