A California Public Utilities Commission report that Pacific Gas & Electric failed to fulfill its responsibilities to properly maintain

On Dec. 21, the CPUC released a dramatic statement saying it would consider drastic steps to address the “serious safety problems” it says the utility has long condoned. The commission said a break-up of the agency into smaller regional utilities or a state takeover would be among the possible changes it examined.

“This process will be like repairing a jetliner while it’s in flight. Crashing a plane to make it safer isn’t good for the passengers,” said CPUC President Michael Picker. “This is not a punitive exercise. The keystone question is would, compared to PG&E and PG&E Corp. as presently constituted, any of the proposals provide Northern Californians with safer natural gas and electric service at just and reasonable rates.”

CPUC looking at seven possible major changes

The CPUC statement said seven possible changes would be considered.

– Having “some or all of PG&E be reconstituted as a publicly owned utility or utilities.”

– Replacing some members of PG&E’s Board of Directors with members “with a stronger background and focus on safety.” 

– The replacement of existing corporate management.

– Adoption of a new corporate management structure with regional leaders overseeing regional subsidiaries.

– Linking PG&E’s “return on equity” – the profits it shares with its investor-owners – to its safety performance.

– Breaking the utility’s natural gas operations and its electric transmission operations into separate companies.

– Ending the arrangement in which PG&E is controlled by a holding company so it becomes “exclusively a regulated utility.”

Picker’s statement was a remarkable turnaround from his comments on Nov. 15, when his upbeat remarks about the ability of PG&E to survive its fourth consecutive year of devastating wildfires in Northern California led the utility’s stock price to spike.

It reflected the anger among CPUC officials over a staff report released Dec. 14 that found the utility had systematically neglected natural gas infrastructure despite being fined $1.6 billion and convicted of six felonies in federal court over the 2010 disaster in San Bruno, a suburb of San Francisco.

Utility facing 500 lawsuits relating to fires it may have caused

Even if PG&E survives in something like its present form after the CPUC’s review, its future is still very cloudy.

Because of claims that PG&E was responsible for the devastating Camp Fire that killed 85 people in Butte County in November, U.S. District Judge William Alsup announced he was reviewing whether PG&E had violated terms of its federal probation in the San Bruno case.

PG&E also disclosed to the U.S. Securities and Exchange Commission that it is facing roughly 500 lawsuits with more than 3,100 plaintiffs over claims the utility was responsible for many of the dozens of wildfires in Northern California since 2016.

It is also facing wildfire-related lawsuits from the state Office of Emergency Services, Cal Fire, Calaveras County and other government agencies.

But while the CPUC is apparently ready for major changes at the utility, it’s not clear yet how state lawmakers feel.

On Nov. 19 – even as criticism of PG&E swelled as confirmed deaths grew in the Camp Fire – Assemblyman Chris Holden, D-Pasadena, was reported to be considering introducing legislation to help the utility deal with wildfire costs.

Holden helped pass a law earlier this year that allowed PG&E to spread out the costs from the liabilities it faced from 17 wildfires in 2017.

Pacific Gas & Electric – the giant investor-owned utility that serves 16 million Californians – appears to be facing its gravest crisis since its founding in 1905.

The initial indications that PG&E’s equipment may have sparked the Camp Fire that killed at least 88 people in Butte County – the deadliest blaze in state history – initially led at least some state lawmakers to consider new legislation to try to insulate PG&E from potentially devastating liabilities. Earlier this year, the Legislature passed and Gov. Jerry Brown signed into law a measure that lets PG&E spread out the costs from 17 Northern California wildfires in 2017 and have its customers pay some of its bills.

The Bloomberg news service reported that Assemblyman Chris Holden, D-Pasadena, may introduce legislation to help PG&E in coming days.

But a federal judge and the president of the California Public Utilities Commission have shaken PG&E’s hopes that it can avoid crushing new blows.

Judge demands answers on PG&E, Camp Fire

U.S. District Judge William Alsup has ordered PG&E to provide evidence proving its negligence didn’t cause the Camp Fire – raising the prospect that the utility could be found guilty of violating the terms of its five-year criminal probation that began in January 2017.

The probation was imposed then by U.S. District Judge Thelton Henderson – along with the maximum possible fine of $3 million – after PG&E was convicted of six felonies related to the 2010 San Bruno disaster (pictured above). A PG&E natural gas pipeline that was found to have been poorly maintained exploded, killing eight, injuring more than 50 and wiping out 38 homes. The utility was convicted of five felonies for failing to keep the pipeline safe and a sixth felony for impeding investigators.

Judge Alsup was assigned to monitor PG&E’s probation. In a statement, Alsup said his goal was determining what “federal, state or local crimes might be implicated were any wildfire started by reckless operation or abandonment of PG&E power lines” or “inaccurate, slow or failed reporting of information about any wildfire.” If Alsup concludes that PG&E violated its probation, the utility could face unprecedented punishment from the judge.

Two days after Alsup’s announcement, CPUC President Michael Picker said he had concerns about whether PG&E’s “culture” had enough of a commitment to public safety. At a CPUC board meeting in San Francisco, the utility was ordered to implement 60 safety recommendations from a commission consultant.

Picker’s critique came less than two weeks after he stuck up for PG&E, challenging the idea that the Camp fire could or should put the utility into bankruptcy. “It’s just not good policy,” Picker told the San Francisco Chronicle. “It doesn’t work out.” This stabilized PG&E’s stock price.

The new tone from Picker was a departure from the normally close relationship between the CPUC and PG&E.

Those who have called for the CPUC to be reformed and to be much tougher with the utilities it oversees often cite the $1.6 billion “fine” the utility commission levied in 2016 on PG&E for the San Bruno disaster. More than half of the fine – $850 million – was actually a requirement that the utility upgrade its natural gas pipeline system.

Critics said this amounted to likening the improvements that PG&E had to make to a penalty.

Picker joined in the 4-0 CPUC board vote for the “fine.”

Fictional pirate Jack Sparrow seems to be taking his tricky ways outside the lucrative “Pirates of the Caribbean” Disney movie franchise and into real life.

The Walt Disney Company joined forces on July 17 with Pacific Gas and Electric Co., Southern California Edison, and the Wildlife Conservation Society to endorse a clever plan to avoid costly hostage prices for buying California Cap and Trade emission credits.

Cap and trade is a system set up by AB 32, the Global Warming Solutions Act of 2006. Administered by the California Air Resources Board in quarterly auctions, it “caps” emissions in California, but allows companies to “trade” emissions “credits.”

Part of the cap and trade idea was to use the money raised to fund green projects in California. But a new, piratical proposal would permit California industries to use the credits from cheaper forestry preservation projects in other states, and even foreign countries, to comply with the cap-and-trade requirements.  Disney even wants to buy pollution credits in Jack’s backyard in the Caribbean.

Bloomberg.com ran an article, “PG&E, Wildlife Group Unite to Back Foreign Offsets in California.” It found the proposal would allow private industries to find cheaper ways to offset pollution than only from in-state mitigation projects. The proposal would mitigate pollution “at the lowest possible cost,” said Michael Hertel, Edison’s director of corporate policy.

Reportedly, San Diego Gas and Electric is already being allowed to buy cap-and-trade pollution credits in a wind farm in Canada.  And a Federal Court of Appeals judge has recently ruled that mandating the purchase of only in-state green power in unconstitutional. That’s because, under the U.S. Constitution, only the federal government can regulate interstate trade and foreign trade, not the several states themselves.

Forced to come up with ways to cut costs under AB 32, these companies seem to have been inspired by Jack Sparrow’s words, “It’s funny what a man will do to forestall his final judgment.”

Better REDD than dead

Edison, PG&E, the Climate Markets and Investment Association, and the Disney Company have already endorsed a United Nations forestry preservation program called REDD, for Reducing Emissions from Deforestation and Forest Degradation.

In response, there is already a massive anti-REDD propaganda effort online by environmentalists in California.

And ironically, those Tea Party members paranoid about a globalist U.N. Agenda 21 imposing environmental regulations on U.S. communities have it backward.  It is California that might export environmental regulations to foreign countries.

The opponents of the REDD program seem to be inspired by “Pirates” movie villain Captain Barbossa, who said, “Perhaps you’ll conjure up another miraculous escape, but I doubt it. Off you go.”

But like their character Jack Sparrow, we know Disney likely will escape. Allowing foreign pollution credits would end run California’s plan to restrict the allowances to monopoly-like in-state projects where hostage prices can be exacted from industries, and green jobs created here.

Opposition living in Fantasyland

Opposing this proposal by private industry and public utilities are democratic legislators in low-income areas who were hoping to divert all pollution credits to projects within their jurisdictions inside the California.

State Senate Bill 535, the Greenhouse Gas Reduction Fund, is sponsored by state Sen. Kevin de Leon, D-Los Angeles. It limits the use of pollution credits to benefit mostly “disadvantaged communities.” Critics have accused SB 535 of turning pollution into “political pork.”

The justification for limiting pollution credit projects to in-state areas is that low-income areas are mostly impacted by air pollution and should get the benefit of green policies.

But that justification is pure fantasy. Low-income communities such as Oxnard, Oakland, Alameda and National City are located along the coastline and have relatively better air quality.  Conversely, wealthy foothill communities like Pasadena, San Marino, Bradbury and Claremont in Southern California have poorer air quality.

As to the corporate pirates gaming the cap-and-trade system, as Jack Sparrow advised, “The only rules that really matter are these: What a man can do and what a man can’t do.”