Proposal: PG&E could lose license if electricity or gas system is unsafe

PG&E could lose its license to operate in California if the embattled company fails to run a safe utility and take detailed actions in the wake of a catastrophic wildfire or explosion, a top regulator has proposed.

“I am very concerned about PG&E’s pattern of safety-related failures,” Marybel Batjer, president of the powerful state Public Utilities Commission, said in comments that accompanied her proposal to rein in what a number of critics believe is PG&E’s unsafe behavior.

Among the failures raised by PG&E skeptics: a catastrophic explosion in San Bruno in 2010 that killed eight people, a fatal wildfire in Amador County and Calaveras County in 2015, a series of deadly infernos that scorched the North Bay Wine Country and nearby regions in 2017, a lethal blaze that roared through Butte County and destroyed the town of Paradise in 2018, and blunders linked to the company’s deliberate shutoffs of electricity in 2019 in a quest to forestall wildfires.

“These failures were most recently exemplified by PG&E’s management of last October’s Public Safety Power Shut-off events, which raises questions about its ability to effectively plan and execute on decisions and actions within its control,” Batjer wrote in a proposal that will be considered by the powerful five-member PUC that she leads.

The commissioner’s proposal lays out several major benchmarks that PG&E must follow successfully, in a certain order. PG&E would face the loss of its license if it failed to navigate the path set out by the commission president.

Among the benchmarks included in the 16-page proposal:

• PG&E must submit a corrective action plan if it fails to gain approval for a wildfire mitigation program or if it fails to make progress in gas and electricity system safety measures.

• A corrective action plan will be required if an event occurs that causes the destruction of 1,000 or more residential or commercial buildings, or the company fails to notify state authorities about a safety violation, or it fails to operate reliably, such as with the intentional power shutoffs.

• If PG&E fails to obtain or maintain its safety certificate as required by AB 1054, an independent monitor will be appointed to supervise the company.

• A chief restructuring officer will be appointed to supervise — and direct — an array of PG&E activities if it is determined the company repeatedly violated state regulations, was grossly negligent, seriously violated the law, is found to have willfully violated PUC rules, or becomes ineligible for assistance from a $20 billion wildfire fund.

• A receiver will be appointed to seize control of PG&E if it is found the company still is not complying with or is violating these earlier requirements.

• The final milestone would require a review of PG&E’s license to operate in California, along with the prospect that the license would be revoked and the state government could seize the company.

These proposals have emerged in response to PG&E’s bankruptcy proceeding that was ushered in by a mountain of debts and wildfire-linked liabilities.

The state PUC is potentially the most important state government player in PG&E’s efforts to exit its $51.69 billion bankruptcy and reorganize its shattered finances. The PUC must approve any reorganization plan crafted in the bankruptcy court.

“We welcome President Batjer’s input regarding our plan for emerging from Chapter 11 and building a reimagined PG&E,” the company stated in emailed comments. “We look forward to continuing to participate in the CPUC’s open and transparent public process.” PG&E also said it continues to receive feedback from an array of key parties, including Gov. Gavin Newsom.

And there’s additional pressure on everyone: PG&E must be out of bankruptcy by June 30 — with a state-approved plan — or it won’t be able to tap a $20 billion wildfire fund.

“The PUC president left no stone unturned in the recommendations and the changes that will be required of PG&E,” state Sen. Jerry Hill said Wednesday in an interview. “PG&E is a unique private corporation that has continuously failed California. Extreme measures are needed if PG&E is to exit bankruptcy and keep operating.”

The PUC president’s proposal also demands that at least half of PG&E’s board of directors consist of people who are California residents at the time they are selected to the board.

“No more games are going to be played here,” Hill said. “This is serious business. The commission and the governor are taking serious steps here.”