Reg­u­la­tors weigh new li­a­bil­ity rules

Pro­test­ers dis­rupt state Pub­lic Util­i­ties Com­mis­sion meet­ing, declar­ing ‘No PG&E bailout’

The Mercury News Weekend - - FRONT PAGE - By Thomas Peele [email protected]­yare­anews­

SAN FRAN­CISCO » As pro­test­ers shouted the names of peo­ple who died in the Camp Fire, the state Pub­lic Util­i­ties Com­mis­sion on Thurs­day voted to be­gin writ­ing new rules that will al­low util­i­ties like PG&E to pass on the costs of wild­fires to con­sumers.

Hold­ing signs that said “No PG&E bailout,” about 30 pro­test­ers drowned out com­mis­sion­ers as they tried to dis­cuss what might oth­er­wise have been a per­func­tory vote cre­at­ing a sys­tem

where wild­fire costs would hit ratepay­ers in their wal­lets.

“We are here to speak for the peo­ple killed in the fire,” a woman shouted.

The wild­fire cost passthrough was man­dated by the state leg­is­la­ture last year in the wake of North Bay fires in 2017. For­mer Gov. Jerry Brown signed the leg­is­la­tion about two months be­fore the Camp Fire — the dead­li­est and most de­struc­tive wild­fire in state his­tory — de­stroyed the town of Par­adise in Butte County, killing 86 peo­ple. Cal Fire has not de­ter­mined the cause of the dev­as­tat­ing in­ferno, but in­ves­ti­ga­tors have ze­roed in on a dam­aged PG&E high ten­sion tower lo­cated in the Feather River canyon on the out­skirts of Par­adise.

It was the Camp Fire and other PG& E safety is­sues that had ten­sions boil­ing over at the meet­ing.

The com­mis­sion’s vote came as the gi­ant util­ity com­pany is stag­ger­ing — its stock price was down to $17.64 at noon Thurs­day from $24.40 on Jan. 4 amid bank­ruptcy fears.

U.S. Dis­trict Court Judge Wil­liam Al­sup on Wed­nes­day warned he is lean­ing to­ward chang­ing the terms of the com­pany’s crim­i­nal pro­ba­tion stem­ming from the 2010 San Bruno pipe­line ex­plo­sion. Al­sup wrote that PG&E could be re­quired to con­duct a mas­sive safety re­view of its elec­tri­cal grid with a goal of not caus­ing any wild­fires next year. PG&E is also un­der­go­ing a com­pany-wide in­ter­nal re­view of its op­er­a­tions as it searches for a way for­ward.

Much could be de­cided dur­ing a Jan. 30 hear­ing when Al­sup re­views ev­i­dence al­leg­ing the util­ity failed to no­tify its pro­ba­tion of­fi­cers that it had set­tled fire law­suits, and also about a crim­i­nal in­ves­ti­ga­tion re- lated to a fire it caused.

A PG&E spokesman said Wed­nes­day that it is study­ing Al­sup’s or­der and it re­mains com­mit­ted to safety.

PUC Pres­i­dent Michael Picker an­nounced last month the com­mis­sion will con­sider re­mov­ing PG& E di­rec­tors and break­ing up the util­ity into smaller re­gional com­pa­nies be­cause of its poor safety record, among other pos­si­ble ac­tions. The reg­u­la­tors could even pull the power com­pany’s plug al­to­gether and al­low the state to take it over as a pub­licly run util­ity.

One critic of the com­pany said Thurs­day that change could be com­ing.

“I think they will lose the fran­chise and some other provider will come in,” said Mark Toney, ex­ec­u­tive di­rec­tor of The Util­ity Re­form Net­work, or TURN.

If it can sur­vive, PG& E needs to re­place its board mem­bers “with engi­neers and safety ex­perts” who can rad­i­cally change the com­pany’s cul­ture, he said.

Toney was in­sis­tent that the cost of a pro­gram like that or­dered by the judge not be passed on to cus­tomers, un­like the PUC’s ac­tion Thurs­day.

An­other lead­ing critic of PG&E, state Sen. Jerry Hill, D-San Ma­teo, agreed.

Any­thing “that is part of crim­i­nal pun­ish­ment” shouldn’t be passed on to ratepay­ers, he said.

Jes­sica To­var, who helped or­ga­nize the protest, said the com­mis­sion’s process doesn’t al­low real de­bate or true pub­lic in­put on ma­jor de­ci­sions.

“Next fall there will be more deaths and more fires,” she said.

PG&E is fac­ing “ap­prox­i­mately 500” law­suits in­volv­ing “at least 3,100 plain­tiffs” stem­ming from North­ern Cal­i­for­nia wild­fires, ac­cord­ing to re­cent doc­u­ments on file with the U.S. Se­cu­ri­ties and Ex­change Com­mis­sion. Many are from the North Bay fires, where the state blames 12 of the blazes on PG&E equip­ment fail­ures.

Also, Cal Fire is seek­ing to re­coup more than $87 mil­lion in costs for putting out the Butte Fire in Calav­eras County in 2015, which it blamed on a pine tree com­ing in con­tact with an elec­tric line. It claims the con­tact oc­curred be­cause of PG& E’s fail­ure to prop­erly man­age veg­e­ta­tion in the area. The state Of­fice of Emer­gency Ser­vices, Calav­eras County and other agen­cies are also su­ing PG&E.

PG&E is the early steps of ask­ing for a rate hike to help pay for its trou­bles. SEC fil­ings show it has $1.4 bil­lion in wild­fire in­sur­ance for the pe­riod of Aug. 1, 2018, through July 31, 2019, and that po­ten­tial li­a­bil­i­ties from the Camp Fire are likely to dwarf that dol­lar amount.

“If the util­ity’s equip­ment is de­ter­mined to be the (Camp Fire’s) cause, the util­ity could be sub­ject to sig­nif­i­cant li­a­bil­ity in ex­cess of in­sur­ance cov­er­age that would be ex­pected to have a ma­te­rial im­pact on (the com­pany’s) fi­nan­cial con­di­tion, re­sults of op­er­a­tions, liq­uid­ity, and cash flows,” com­pany of­fi­cials wrote in an SEC fil­ing.

Mean­while Thurs­day, PG& E filed hun­dreds of pages of in­ter­nal records in re­sponse to an ear­lier or­der by Al­sup ask­ing for records re­lated to the deadly 2017 At­las Fire in Napa and more than a dozen other blazes linked to PG&E equip­ment the same year. The records pro­vide de­tails of weather con­di­tions, par­tic­u­larly wind speeds, at the time and lo­ca­tion of those fires, as well as fur­ther de­tails on the causes of the blazes.

The records in­clude a Cal Fire re­port that found two oak trees caused wires to go down at the At­las Fire start­ing points. The util­ity also turned over veg­e­ta­tion main­te­nance re­ports for those ar­eas that de­tailed tree trim­ming ef­forts.


Pa­cific Gas & Elec­tric crews work to re­store power lines in Par­adise in 2018.

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