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

by Chris Reed | October 27, 2017 8:27 am

Pacific Gas & Electric and its shareholders could face a huge financial blow from this month’s massive wildfires[1] 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 [2]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 [3]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[4] 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 [5]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 [6]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 [7]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[8], PG&E is an iconic California company that has endured its share of hard times, including going into Chapter 11 bankruptcy [9]from 2001-2004 because of huge losses during the 2000-2001 state energy crisis[10].

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[11] 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[12] in 2015.

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