PG&E is Spending Big in Sacramento

SACRAMENTO >> Reeling from the prospect of paying billions in damages from last year’s North Bay wildfires, Pacific Gas & Electric has poured hundreds of thousands of dollars into efforts to change state laws in recent months, records show, nearly doubling its lobbying expenses in a critical attempt to shift the financial responsibility when its power lines cause wildfires.

At stake for the giant publicly traded utility is what one activist called a “big get out of jail free card” that would allow it to pass on liability costs to ratepayers. PG&E argues that utility companies can’t assume the same level of responsibility for California’s wildfires that they have in the past, given that the overall danger has increased because of climate change. To garner support, its spending on policy makers and lobbyists to influence state law has skyrocketed.

The utility spent nearly $584,000 in the first quarter of the year, a 91 percent increase over what it spent during the same time period last year, according to the most recent disclosure documents filed with the Secretary of State. The figure dwarfs what PG&E spent on lobbying and influence in each of the four quarters following the September 2010 San Bruno pipeline explosion, which killed eight people. PG&E was eventually found guilty of six felonies for breaking federal safety laws.

In 2015, the state Public Utilities Commission hit PG&E with the largest penalty ever levied on a U.S. utility company — $1.6 billion — for the San Bruno disaster. It also fined the company another $97.5 million fine for improper communications, including by lobbyists, with the PUC’s own staff and board members. It is too early to say whether the company will face penalties in the Wine Country fires.

“Their lobbyists are working very hard. PG&E has no limits on how much they can spend,” said Mark Toney, executive director of The Utility Reform Network, a consumer advocacy group also in opposition.

But its lobbying costs are a pittance compared to what the giant, publicly-traded utility could face if it were found liable for a significant portion of damages from the fires, given that the total amount “could significantly exceed” $10 billion, the company reported Thursday in a Securities and Exchange Commission filing, an amount that would far surpass its insurance coverage.

PG&E also announced Thursday it was taking a $2.5 billion charge — a reduction in its earnings — this quarter to pay for potential liabilities. It is facing hundreds of lawsuits.

This year’s first quarter lobbying spending came before the state determined that PG&E was responsible for 12 of the North Bay fires, primarily because of trees crashing into power lines, with others around the state still under investigation. The fires killed 44 people and destroyed 8,000 structures.

Lobbying reports for April, May and June will not be available until July.

A spokeswoman for the utility declined to answer specific questions about its lobbying efforts.

In an email, spokeswoman Lynsey Paulo wrote: “Lobbying expenses are paid for with shareholder funds, not utility customer dollars. Like many individuals and businesses, PG&E participates in the legislative process, and holds itself to the highest standards of public disclosure and compliance with all applicable laws and regulations.”

California’s minimum reporting requirements, however, allow companies largely to avoid disclosing where the money goes when they pay to lobby and influence state legislators said Nicolas Heidorn of California Common Cause.

The company reported $430,000 spending in “payments to influence legislative or administrative action” between January and March, but is not required to itemize the expenses. That amount can include advertising meant to shape public opinion to create pressure on lawmakers.

It was required to reveal the $22.97 breakfast on Feb. 27 with state Sen. Bill Dodd, D-Napa, but it did not list who met with him or what was discussed. Days earlier Dodd had introduced legislation pushed by PG&E to reform how the state requires utilities to prepare for disasters.

“Nothing discloses how much money is going for a bill,” Heidorn said. Unless there is a reportable individual expense, like Dodd’s breakfast, the public is entitled to “absolutely nothing” about meetings between lobbyists and lawmakers, he said.

Dodd’s S.B. 1088, would allow utilities to pass fire-related costs on to ratepayers. It would require that power companies file annual “safety, reliability and resilience” plans with the state Public Utilities Commission, which would determine if the plan is “reasonable and prudent.” Utilities couldn’t be held liable for an incident such as a fire if an investigation showed it was in “substantial compliance” with that plan.

Critics argue that the bill would allow utilities to pass on both planning and fire prevention and damage costs to ratepayers.

“This bill stinks. It’s a blank check,” Toney said, arguing that the planning it requires won’t improve safety. “This bill is absolutely a top priority for PG&E.”

But it’s what’s not in the bill that seems to be getting a bigger push from PG&E.

Under state law, the utility is financially responsible for property damage caused by its equipment, even if investigators can’t prove negligence, such as failures to trim trees or maintain equipment. It’s based on a legal principle called “inverse condemnation.”

PG&E wants that changed to reflect what company CEO Geisha Williams calls the “new normal”: Climate change giving California a drier and more fire-prone environment.

It is that message that lobbyists are pushing on law and policy makers far from public view, said Sen. Jerry Hill, D-San Mateo, a PG&E critic who has repeatedly said the company is trying duck responsibility for its failures.

While legislation has not yet been introduced to address such a significant change to PG&E’s liability, Hill said he expects S.B. 1088 to be amended later in the legislative session to include it.

“No one has been approached with language,” Hill said. “It could be added in.” If that happens in the session’s closing days, Hill said, the bill could be swept up in the blitz of last minute votes and passed without much scrutiny.

A spokesman for Dodd said on Friday that there are no current plans to amend the bill. “It doesn’t do anything to address civil liability,” the spokesman, Paul Payne, said.