Key PG&E plan wins regulators’ approval
Pacific Gas and Electric Co. took a major step toward emerging from bankruptcy Thursday when California regulators approved the company’s plan to restructure its finances and pay victims of wildfires it caused.
The unanimous vote by the California Public Utilities Commission was one of two essential hurdles PG&E is trying to clear by June 30 — the other is getting its restructuring plan approved in U.S. Bankruptcy Court. A trial about whether the court should confirm PG&E’s plan is under way this week.
In connection with the commission’s approval, PG&E is required to divide its operations into regional divisions, revamp its board and adhere to a new process of escalating enforcement if it
continues endangering public safety. PG&E’s operating license could be revoked at the most extreme end of the enforcement process.
The vote builds on PG&E’s progress toward meeting its statemandated June 30 deadline, which is required for the company to be eligible for a state fund that will pay future firevictim claims if necessary. But the company still faces lingering critiques from those who contend its restructuring plan is woefully insufficient.
Commissioners made their decision at a virtual meeting hours after a federal judge in a separate proceeding called PG&E a “recalcitrant criminal” that deserved prison time.
The utilities commission also expressed deep displeasure with PG&E, which is responsible for wildfires that killed more than 100 people and destroyed thousands of homes in recent years.
Marybel Batjer, the commission president, said she has at times agreed with the numerous people who are “angry, frustrated, finished with PG&E.”
“This distrust has deep roots, roots that have been born out of PG&E’s inability to prioritize the people it serves and its incessant and unfilled promises to do better tomorrow,” Batjer said. “PG&E is in bankruptcy because of years of mismanagement and failure to prioritize its customers’ safety — a failure that caused catastrophic destruction and death.”
Still, Batjer said the regulatory decision imposes new accountability measures, leadership changes and tougher oversight of PG&E.
“We have heard the feedback in today’s decision and know we must do better as a company,” Bill Johnson, CEO of parent company PG&E Corp., said in a statement after the vote. He said PG&E is on track to pay fire victims in short order and transform its operations. Federal regulators approved PG&E’s bankruptcy plan on May 12, according to the company.
Earlier Thursday, PG&E endured withering criticism from the federal judge overseeing its criminal probation from the 2010 San Bruno pipeline explosion.
“If ever there was a corporation that deserved to go to prison, it’s PG&E,” said U.S. District Judge William Alsup at a hearing. “PG&E is a recalcitrant criminal, and I am going to do everything within my power ... to protect the people of California from further crimes and further destruction by PG&E.”
Alsup had ordered PG&E to overhaul inspections and tree trimming, but the company asked him to reconsider partly because it said the conditions would interfere with the role of its regulators at the utilities commission.
Kevin Orsini, an attorney for PG&E, said company leaders share Alsup’s desire to prevent more deadly and destructive wildfires. But he defended the company’s safety efforts, which he said represent a “fundamental sea change from what PG&E has been doing in the past.”
Alsup was skeptical of PG&E’s insistence on deferring to regulators, noting that state oversight was in place even before the company’s power lines caused a series of devastating fires in the North Bay in 2017.
Orsini said the system had changed, noting new requirements for PG&E to develop fireprevention plans and new state regulatory staff who focus on utility wildfire safety.
“PG&E has responded to the failures of the past,” Orsini said.
Still, Alsup indicated he harbors serious reservations about PG&E’s ability to prevent more fires. When PG&E’s attorney said the company did not have a massive backlog in trees it needed to trim around power lines — with 22,000 out of 1.3 million still requiring work last year — Alsup said that comment should be referenced “whenever PG&E burns down another town or burns down another neighborhood.”
“You should not have even one tree in in the backlog,” Alsup said. “You’re very good at making excuses, but you’re not very good at complying with state law.”
Yet Alsup did not make a decision about the conditions he originally ordered, which are halted while he reviews them per PG&E’s request. The judge directed the utilities commission to submit a legal briefing to him in two weeks and for PG&E and federal prosecutors to meet with the company’s courtappointed monitor and report back in three weeks. Another hearing may take place afterward.