Legal barrage has PG&E on the ropes
Pacific Gas and Electric Co. is fighting for its financial survival, facing a potential $30 billion in liability from deadly wildfires as its legal problems continue to mount.
While PG&E defends itself against two years of fire-fueled lawsuits, regulators and lawmakers are starting to examine its management, safety practices and corporate structure.
The looming questions add up to an existential threat to California’s largest investor-owned utility.
Steven Weissman, a former administrative law judge for the California Public Utilities Commission, which regulates PG&E, could not identify a situation that comes close to the company’s legal and regulatory quagmire.
“This is a new level of complexity,” said Weissman, an emeritus lecturer at UC Berkeley’s Goldman School of Public Policy. “There are questions being raised multiple times a day
about the impacts of this recent action or that one. There’s a level of scrutiny here that I’ve never seen with any other regulatory issue.”
In addition to the legal battle in which PG&E has been defending itself over last year’s North Bay firestorm, the San Francisco company now faces mounting claims over the Camp Fire, the deadliest and most destructive wildland inferno in state history.
Further complicating matters, a federal judge overseeing the utility’s probation in the deadly 2010 San Bruno pipeline blast directed PG&E last week to answer questions about the Camp Fire and other blazes.
Meanwhile, regulators plan to widen an investigation into the utility’s safety practices, and state lawmakers may give PG&E a close look of their own. And North Bay district attorneys may still pursue criminal charges against PG&E because of the 2017 fires.
Travis Miller, a utilities analyst with Morningstar Research Services, said he had not seen PG&E face so much simultaneous legal and regulatory pressure since he began following the company more than a decade ago.
But the company is also put in a difficult position because of its size, location and the fact that “the public loves to hate its utility,” he said.
“PG&E is in a tough area of the country: It’s an area with a lot of environmental issues, obviously, risk, and very engaged ratepayers who pay quite high rates,” Miller said. “That’s a tough situation to manage.”
PG&E did not answer specific questions about its legal and regulatory difficulties.
“There will be a time and place for discussing this and other matters,” spokeswoman Lynsey Paulo said in an email. “Right now, we are focused on assessing infrastructure, safely restoring power where possible, and helping our customers recover and rebuild.”
Still, the outcome of PG&E’s various problems will be crucial to determining whether the beleaguered utility survives — and in what form.
Last year’s Northern California fires and the Camp Fire this year have exposed PG&E to billions of dollars in liability, should the company be deemed responsible for the worst infernos. Citigroup estimates that the 2017 fires could cost it $15 billion, and the Camp Fire the same.
The cause of the Tubbs Fire, 2017’s most destructive wildfire, and the Camp Fire are still under investigation. But speculation has centered on the utility’s equipment in both cases.
Last week, U.S. District Judge William Alsup, who is overseeing PG&E’s probation in the San Bruno case, ordered an “accurate and complete statement” of any role the utility played in the cause and reporting of the fire. Alsup also asked what requirements of last year’s judgment against the company — including an order not to commit any more crimes — could apply “were any wildfire started by reckless operation or maintenance of PG&E power lines.”
Alsup ordered responses by Dec. 31 from PG&E, the U.S. attorney’s office — which prosecuted the San Bruno case — and the federal monitor appointed to oversee the company.
His inquiry is being closely watched by attorneys suing PG&E in the fire cases.
“I am waiting patiently to see what PG&E is going to say,” said Frank Pitre, one of the lead attorneys for plaintiffs in the North Bay fire litigation. “Because I want to test what they have to say, when I get a chance to cross-examine their officers and directors under oath, to see whether or not what they say is matched by their actions.”
PG&E’s answers to Alsup’s questions may reveal some kind of “criminal recklessness,” said Noreen Evans, a Santa Rosa attorney and former state legislator who is also involved in the North Bay fire litigation. And that could help plaintiffs recover damages that could, in turn, motivate the company to change its practic-