PG&E says ratepayers should pay for disaster it may have started

Pacific Gas & Electric and its shareholders could face a huge financial blow from this month’s massive wildfires in the wine country of Northern California – unless they can get the state Public Utilities Commission to overturn a recent precedent-setting ruling made by its staff involving disastrous wildfires in 2007 in San Diego County. The PUC apparently is taking the request seriously, putting off a decision on whether to uphold the ruling.

The Bay Area News Group reported on Oct. 10 that Sonoma County fire dispatchers received many calls about downed PG&E power lines and exploding electrical transformers the night of Oct. 8, when fast-spreading fires began that eventually killed 42 people, incinerated nearly 9,000 structures and burned more than 245,000 acres. Cal Fire and the PUC are investigating whether PG&E is partly or entirely responsible for the inferno because it failed to trim trees near power lines, as is required by state law.

Now the Bay Area News Group is reporting that PG&E officials are pleading with the PUC to be able to shift the cost of such disasters to ratepayers even if a utility is to blame. PG&E faces billions of dollars in claims from this month’s fires but says it only has $800 million in insurance.

A PG&E official told PUC staffers that the state’s three giant investor-owned utilities – PG&E, Southern California Edison and San Diego Gas & Electric – have been put in an “untenable situation” because of growing wildfire risks and a tough insurance market.

PUC judges said SDG&E couldn’t escape $379 million in wildfire costs

But two months ago, two PUC administrative law judges – S. Pat Tsen and Sasha Goldberg – rejected a request for $379 million in relief from SDG&E in a case with parallels to PG&E’s situation. The ruling dealt with three 2007 fires in San Diego County that killed two people, destroyed 1,300-plus homes and charred more than 206,000 acres.

Based on evidence gathered by Cal Fire and PUC investigators, the judges concluded that SDG&E was responsible for the fires because of failure to do adequate tree trimming near a power line and because of slow responses to equipment malfunctions. The judges also rejected claims that excessive winds that couldn’t have been expected were responsible – a claim PG&E is making about this month’s fires despite evidence to the contrary.

Because of these circumstances, the judges said it would be improper to ask SDG&E ratepayers to cover the $379 million in costs that the utility had to pay after settling billions of dollars in claims and getting reimbursed by its insurers.

Suggesting it might have some sympathy for both PG&E and SDG&E, the PUC on Thursday again put off a vote on whether to ratify the administrative law judges’ decision.

PG&E’s call to let it shift disaster costs to ratepayers was immediately slammed by consumer groups – and not just because they saw this as the utility trying to duck responsibility for this month’s massive fire. They warned it would lead the state’s three large utilities to cut back on wildfire safety efforts, knowing they wouldn’t be held responsible for their lax efforts.

Fears that PG&E already does an inadequate job were bolstered Tuesday by the San Francisco Chronicle’s report that over a recent five-year span, PG&E missed the deadlines to complete more than 3,500 work orders in Sonoma County, many of which were safety-related.

With roots dating back to 1852, PG&E is an iconic California company that has endured its share of hard times, including going into Chapter 11 bankruptcy from 2001-2004 because of huge losses during the 2000-2001 state energy crisis.

But 2017 is shaping up as the 112-year-old utility’s most fraught year ever. On Jan. 26, a federal judge found PG&E guilty of five felonies for its failings in preventing a 2010 explosion of its gas line in San Bruno, a suburb of San Francisco, and a sixth felony for obstructing the National Transportation Safety Board’s official inquiry into the disaster. Judge Thelton Henderson leveled the maximum fine possible of $3 million.

Eight people were killed and 38 homes were destroyed in the San Bruno explosion and fire, which led to a record $1.6 billion PUC fine in 2015.

4 comments

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  1. Dallas
    Dallas 27 October, 2017, 12:43

    1.6 billion in fines and sticking PG&E with the wildfires may put them into the condition of Puerto Rico’s utility where incompetence is dominate.

    Having transformers blow up in the fires is expected after the activist and government regulators forced the shift in coolants back to hydrocarbon compounds instead of PCB’s and other non-flammable coolants. Not a bad decision, but required a complete redesign of the transformers to utilize both oil/water cooling (oil around the high voltage inside and water for heat transfer to the air.

    Meanwhile, the top management of our utilities in the state has shifted from “engineer types” who actually know how these complex network system work to Lawyers and politicians who know how regulators work. Expect more technical failures in the future.

    Reply this comment
  2. Donna Gilmore
    Donna Gilmore 28 October, 2017, 15:30

    You haven’t seen anything yet. Just wait until the nuclear waste cans at Diablo and elsewhere start leaking lethal radionuclides and potentially explode. They know they can crack and leak, but have no plan in place to prevent leaks or deal with leaks after they occur. SanOnofreSafety.org

    Reply this comment
  3. Da Judge
    Da Judge 8 November, 2017, 16:54

    Are your eyes brown?

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Chris Reed

Chris Reed

Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.

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