For more than a century, one private corporation has delivered electricity to much of Northern and Central California. It may not stay that way.
In just the past decade, Pacific Gas and Electric Co. has been tied to a gas pipeline explosion and series of major fires that collectively killed dozens of people and burned thousands of homes to the ground, leaving entire neighborhoods in ruins and almost destroying the town of Paradise.
The company was convicted of multiple felonies in connection with the explosion and subsequent investigations, and is still serving a five-year probation sentence imposed in January 2017. In January, PG&E filed for bankruptcy protection because of the wildfires it caused in 2017 and 2018.
Now, PG&E is forcing millions of people to repeatedly endure prolonged power outages so its equipment does not start more deadly fires when fast winds blow through dry California landscapes after months without much rain. And the strategy, which no utility has ever employed on such a large scale before, may not even work.
A high-voltage PG&E power line that remained on during a blackout last week malfunctioned just before a fast-moving blaze began in northern Sonoma County. The Kincade Fire has forced thousands of people to flee their homes as it rages largely uncontrolled, threatening several Wine Country communities, including ones that are still rebuilding after a brutal firestorm in October 2017. At least 123 buildings were destroyed by the fire and 90,000 were threatened as of Monday evening.
PG&E has also told state regulators that its equipment had issues around the start of some smaller Bay Area fires that broke out during a windstorm over the weekend — even while the company cut power to some 2.8 million people.
PG&E says it’s trying to get its act together. But after the San Francisco energy company’s disastrous record in recent years, many Californians are ready for bigger changes.
The company could be upended in several ways. San Francisco has offered to buy PG&E’s power lines and shift toward a government-run electric utility like the Los Angeles Department of Water and Power. The mayor of San Jose has suggested turning PG&E from an investor-owned company regulated by the state into a customer-owned cooperative.
PG&E has resisted both ideas, and Gov. Gavin Newsom has said he’s not interested in a full-blown state takeover. But Newsom has favored another idea: putting another private company in charge of PG&E’s system. One bidder the governor said he would be open to is Warren Buffett’s Berkshire Hathaway Energy, which controls Nevada’s NV Energy and Pacific Power, which has customers in California.
“I want as many people bidding for the assets of Pacific Gas & Electric as possible,” Newsom said Monday. “We continue to look for bidders large and small all across this country … I just hope more people make a bid for the assets.”
Berkshire Hathaway Energy did not respond to a request for comment from The Chronicle. And simply putting someone else in control of PG&E’s electric lines would not change the state of the equipment or the wildfire risk inherent in the company’s 70,000-square-mile service territory that reaches from the Humboldt County coast to Kern County.
More than half of PG&E’s service area is categorized as a high fire threat, the company says. It also points to California’s recent drought that left millions of trees dead or dying, and climate change, which is fueling conditions that make wildfires worse.
“PG&E is taking steps to keep our customers and communities safe from severe and historic weather that’s impacting a majority of the state,” said company spokeswoman Lynsey Paulo. “We are coordinating with federal, state and local partners to minimize risks stemming from the recent (power shut-offs) until the extreme weather event has subsided. This is a safety issue, and we’re committed to doing what is necessary to keep our customers safe.”
Yet critics say blaming PG&E’s woes entirely on environmental factors obscures the company’s own negligence. While PG&E has scrambled to inspect its power lines and step up tree trimming in the last year, utility watchdogs think the company is playing catch-up after dropping the ball for years.
“This is a crisis decades in the making,” Toney said. He has suggested that regulators consider putting PG&E’s franchise up for bid, which would invite other electric companies a chance to take over.
Leah Stokes, an assistant professor of energy policy at UC Santa Barbara, said the problems are not confined to just PG&E — she also faulted the company’s regulator, the California Public Utilities Commission, for failing to take aggressive action earlier.
Stokes thinks the commission could have done more to compel PG&E to prepare for the climate disaster, especially as portended by the recent years-long drought that turned the hills and forests throughout the company’s service area into a tinderbox.
“These events are not really new,” Stokes said. “2017 was really historic and terrible and a lot of people died, and last year in Paradise a lot of people died. But the writing has been on the wall for a long time, and the utilities and the regulators have not been proactive.”
The commission signed off on PG&E’s state-mandated wildfire safety plan this year, which includes power shut-offs as one of its components. But they have the power to do more to make all of California’s investor-owned utilities better prepare for climate change and reduce the need for blackouts, Stokes said.
“It’s not like they are independent organizations that can do whatever they want,” she said. “They are monopolies that are regulated by the government.”
The utilities commission voiced extreme displeasure with the way PG&E implemented one of its mass blackouts earlier this month and it followed up with a series of new actions on Monday following the company’s even larger outage over the weekend. Safety staff at the agency will ask to open a formal investigation into the 2019 blackouts, and the commission will re-examine how utilities use power shut-offs and require them to expand their fire-prevention plans to include a focus on reducing the need for outages, among other actions.
“We are going to investigate all this,” Newsom said later Monday. He said state officials are considering imposing daily fines of up to $100,000 per incident if PG&E violates protocols for shutting off power.
Regardless of how regulators act, PG&E’s legal problems could change who controls the company.
In Bankruptcy Court, a group of bondholders and a committee of wildfire victims have teamed up to push their own plan to reorganize the business. It would give the bondholders, including Elliott Management, a controlling stake in PG&E. They would seek to install a new board and rebrand the business, among other changes.
And Toney thinks U.S. District Judge William Alsup, who is overseeing PG&E’s probation stemming from the 2010 San Bruno pipeline explosion, should consider appointing a court receiver to take over the embattled utility.
State lawmakers, frustrated with PG&E’s inability to stop subjecting their constituents to one disaster or another, have soured on the company. The Legislature just passed a law that creates a fund PG&E can use to pay future fire claims if it exits bankruptcy by June 30. But now, after the widespread PG&E blackouts this fire season, lawmakers are considering cracking down on the blackouts.
State Sen. Scott Wiener, D-San Francisco, already proposed his own bill to limit PG&E shut-offs. Two Republican lawmakers who represent the Butte County area devastated by the Camp Fire caused by a PG&E power line unveiled their own plan to address the blackouts on Monday. But it would require halting state renewable power mandates — a top priority of the Democrats who control both legislative chambers.
California’s congressional delegation is weighing in on PG&E’s crisis as well. Rep. Josh Harder, D-Turlock (Stanislaus County), said Monday that he was crafting legislation to penalize utilities if they pay bonuses to executives while implementing blackouts without properly investing in their infrastructure. Harder told The Chronicle that the measure was aimed at PG&E, which he described as a company that “has consistently put their short-term profit motives ahead of the interests of consumers.”
Also, Rep. Ro Khanna, D-Fremont, said in an interview on Fox Business that “PG&E has been a disaster” and “the state needs to take it over as a public utility. It needs to be broken up.”
State Sen. Bill Dodd, D-Napa, said he does not favor allowing big cities to buy pieces of PG&E because it would mean the remaining company would face the same amount of fire risk with far fewer customers who pay rates. Yet Dodd said he had spoken to San Jose Mayor Sam Liccardo about potentially turning PG&E into a cooperative.
“I’m intrigued,” Dodd said.
Barbara Hale, the assistant general manager for power at the San Francisco Public Utilities Commission, also called San Jose’s suggestion “an intriguing idea.” She said it could happen alongside San Francisco’s attempt to buy PG&E power lines, an effort the city is still pursuing despite the utility’s rejection of its offer.
Regardless of how those conversations play out, Dodd expects state officials to continue addressing the blackouts and wildfires when the Legislature gets into full swing again next year.
“I believe, as a result of what’s happened all up and down the state, there will be a lot of legislators that are looking at this with great anticipation for the legislative cycle to start,” he said.