Calif. PUC moves to impose more than $2 bil in penalties for PG&E tied to wildfires

The California Public Utilities Commission on Feb. 27 issued a decision that calls for imposing $2.137 billion in penalties against Pacific Gas and Electric Company (PG&E), the largest penalty ever assessed by the CPUC, for the utility’s role in catastrophic 2017 and 2018 wildfires. 

The decision, called a Presiding Officer’s Decision, approves with modifications a settlement between PG&E, the CPUC’s Safety and Enforcement Division and Office of the Safety Advocate, and the Coalition of California Utility Employees.

The decision increases the penalty amount in the settlement by $462 million and provides additional benefits to PG&E customers, including the return of any future tax savings when they are realized by PG&E to the benefit of ratepayers, the PUC said.

If PG&E agrees to the modified settlement within 20 days, and no party appeals and no PUC Commissioner requests review, it becomes the decision of the CPUC.

PG&E shareholders would be liable for the $2.137 billion in penalties consisting of:

  • $1.823 billion in disallowances for wildfire-related expenditures (an increase of $198 million from the settlement agreement), meaning that PG&E shareholders will pay the cost of expenditures that it would otherwise seek to recover from customers;
  • A $200 million fine payable to California’s General Fund (the proposed settlement agreement did not include a fine); and
  • $114 million in system enhancement initiatives and corrective actions (an increase of $64 million from the settlement agreement), including: root cause analysis for wildfires where ignition involved PG&E facilities, and the implementation of recommended actions to prevent similar events, funding local Fire Safe Councils that focus on community-based wildfire prevention and mitigation efforts and funding to the California Foundation for Independent Living Centers to support the safety and welfare of vulnerable customers before, during, and after disasters and Public Safety Power Shut-off events.

In addition, the modified settlement requires any tax savings associated with the shareholder payments to be applied to the benefit of PG&E’s customers. These benefits which PG&E shareholders would otherwise be expected to realize are likely to be in excess of $500 million, the PUC said.

The wildfires that occurred in Northern California in October 2017 and November 2018 were unprecedented in size, scope, destruction, and loss of life, the commission noted.

At the peak of the “October 2017 Fire Siege” there were 21 major wildfires that, in total, burned 245,000 acres. 

In the early morning hours of November 8, 2018, the Camp Fire ignited near the community of Pulga in Butte County, resulting in approximately 153,336 acres burned, 18,804 structures destroyed, and 85 fatalities.

Following a CPUC staff investigation, on June 27, 2019 the CPUC opened a formal investigation into the maintenance, operations, and practices of PG&E with respect to its electric facilities that were involved in igniting these fires, and to determine the appropriate penalties for violation of CPUC rules and regulations.

PG&E filed for Chapter 11 bankruptcy court protection more than a year ago in the face of billions of dollars in liabilities stemming from its role in causing deadly wildfires in 2017 and 2018.

Since then, the utility has come under fired for its strategy of shutting down transmission lines to avoid the possibility that its lines might spark wildfires.

Calif. bill calls for turning PG&E into a public power utility

California State Senator Scott Wiener recently introduced legislation that would transform Pacific Gas and Electric into a public power utility.

In December, the city of Davis, Calif., became the latest city to support transforming PG&E into a customer-owned utility. Community choice aggregator Valley Clean Energy in late 2019 recently submitted a $300 million bid to purchase Pacific Gas & Electric’s lines, poles and other electricity distribution assets within Yolo County, Calif.

In June, the South San Joaquin Irrigation District (SSJID) forwarded to California Gov. Gavin Newsom a letter signed by the Mayors of the Cities of Escalon, Manteca, and Ripon renewing the cities’ endorsement of SSJID’s 15-year bid to takeover PG&E electric service for these Central Valley communities.