PG&E CEO sees power shutoffs continuing for five years

Bill Johnson, President and CEO of California’s PG&E Corporation, recently said that it will probably take five years before Pacific Gas & Electric is able to largely eliminate the need for Public Safety Power Shutoffs (PSPS) that are aimed at mitigating the threat of wildfires, but he also expects a progression of shorter and fewer PSPS events.

“I think for us, in Northern California, it will take us probably five years to get to the point where we can largely eliminate this tool,” Johnson said at a Senate Energy and Natural Resources Committee hearing held in late December. The hearing focused on the impact of wildfires on electric grid reliability.

PG&E, which is a subsidiary of PG&E Corporation and filed for bankruptcy in early 2019, in recent months initiated a series of major power shutoffs aimed at mitigating the risk of wildfires.

“There are a number of things we can do to narrow the scope, narrow the duration” of such events, Johnson told lawmakers.

“We have better predictive capability, better technology,” he noted. “So I think over the next couple of years, you will see a progression of shorter, fewer PSPS events.”

Johnson said that the change in climate and weather is dramatic enough that “I don’t think we will see the end of it for some period of time.”

In response to the shutoffs, California Gov. Gavin Newsom outlined plans for PG&E in a Medium post and a news conference held on Nov. 1. Meanwhile, several cities in the state are pursuing efforts to purchase the assets of the utility.

As part of an effort to narrow the scope of future PSPS events and reduce the number of customers impacted, PG&E in December said it is seeking proposals for distributed generation enabled microgrid services.

Legal, regulatory steps advance PG&E bankruptcy process

While hurdles remain, PG&E appears closer to emerging from bankruptcy following key legal and regulatory action in late December.

San Francisco-based PG&E and PG&E Corp. filed for bankruptcy nearly a year ago in the face of an estimated $30 billion in wildfire-related liabilities.

In a key step in resolving the liabilities, a judge with the U.S. Bankruptcy Court for the Northern District of California on Dec. 17 approved two settlement agreements totaling $24.5 billion.

In one agreement about 70,000 victims of wildfires in 2015, 2017 and 2018 will receive $13.5 billion, split between cash and stock in a restructured company.

In the second agreement, insurance companies will receive $11 billion.

On the same day, PG&E and California Public Utilities Commission staff reached an agreement related to wildfires in Northern California in 2017 and 2018. The agreement, which must be approved by the PUC, covers wildfires from two years ago in Butte, Calaveras, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba counties, and the deadly 2018 Camp Fire.

Under the agreement, PG&E, with about 5.4 million customers, can’t recover in rates $1.63 billion in wildfire-related costs. The utility must also spend $50 million in shareholder funds through 2025 to strengthen its system to reduce wildfire risks and to improve communications with customers.

The enhancements would include vegetation management and electric operations programs, system-wide analyses, community engagement efforts and transparency and accountability initiatives, according to the PUC.

Up to a fifth of the spending can go to developing non-diesel generators to help deal with planned and unplanned outages as well as for creating temporary microgrids during planned fire-related power shutoffs.

The parties to the agreement are the PUC Safety and Enforcement Division, the PUC’s Office of the Safety Advocate, the California Coalition of Utility Employees and PG&E.

They asked the PUC to approve the agreement by the end of February so that PG&E’s Chapter 11 bankruptcy case can be resolved by June 30, enabling the utility to participate in the state’s wildfire fund to pay future wildfire claims.

The IOU wildfire fund, which could grow to $21 billion, grew out of legislation (A.B. 1054) that was signed into law in mid-July. Southern California Edison and San Diego Gas & Electric are participating in the fund, but PG&E must emerge from bankruptcy by June 30 before it can join the program.

To get out of bankruptcy, PG&E needs PUC approval and support from Newsom, who has said the utility’s current reorganization plan doesn’t meet requirements set in A.B. 1054.

“The amended [reorganization] plan and the restructuring transactions do not result in a reorganized company positioned to provide safe, reliable, and affordable service to its customers, as required by A.B. 1054,” Newsom said in a Dec. 13 letter to Johnson.

Among other things, PG&E’s reorganization plan should include a provision that allows the state or a third party to take over the utility if it fails to meet operational and safety standards, according to the letter.

PG&E intends to comply with A.B. 1054 and will address Newsom’s concerns, the utility said in a Dec. 16 statement. PG&E said it will continue trying to tackle those issues.