California regulators are considering whether Pacific Gas and Electric Co. should shake up its leadership, split its core operations into separate companies or be transformed into a publicly-owned utility.
In an announcement late Friday afternoon, the California Public Utilities Commission stressed it had not drawn conclusions but listed those possibilities among a series of provocative questions it will explore in the next phase of a long-running investigation into PG&E’s corporate culture.
The inquiry could have far-reaching consequences for PG&E, the state’s largest investor-owned utility, which is facing existential questions after two years of historically devastating wildfires and a recent pipeline record-keeping scandal that renewed questions about its commitment to safety in its gas operations.
“This seems to be a watershed moment — a turning point to PG&E’s history and, frankly, to PG&E’s future,” said Mark Toney, executive director of the Utility Reform Network, who praised the commission’s announcement Friday.
Commissioners opened the safety-focused investigation three years ago as part of the fallout from the 2010 San Bruno pipeline explosion, and they are now expanding the probe in light of recent wildfires.
State officials have determined PG&E equipment sparked 17 fires last year, and the utility could be found responsible for the two most destructive blazes in state history, the recent Camp Fire and last year’s Tubbs Fire.
Regulators will explore whether some or all of PG&E’s current board members should “resign and be replaced by directors with a stronger background and focus on safety,” commission president Michael Picker said in a written order Friday.
Commissioners will also look at whether PG&E should bring in new management or separate its natural gas and electric divisions into different companies.
Other options the commission will consider include whether PG&E’s corporate structure should be reorganized into regional subsidiaries and whether the commission should scrap the utility’s current holding company structure.
The commission is further asking if some or all of PG&E should be remade into a publicly-owned utility and whether PG&E should only provide electric distribution and transmission services, with the actual generation of power handled by someone else.
“This is not a punitive exercise,” Picker wrote. “Indeed, the keystone question is, compared to PG&E and PG&E Corp. as presently constituted, would any of the proposals provide Northern Californians with safer natural gas and electric service at just and reasonable rates?”
PG&E has shown no signs of resisting its regulators’ inquiry.
“We’re open to a range of solutions that will help make the energy system safer for the customers we serve,” Melissa Subbotin, a spokeswoman for the utility, said in an email. “PG&E’s most important responsibility must always be public and employee safety and we are committed to working together with policymakers, regulators and all stakeholders to provide safe and reliable energy that our customers expect and deserve.”
Picker’s order echoed some of the comments made Thursday by a key state lawmaker who authored legislation that will let PG&E endure the 2017 wildfires in part by passing some costs along to customers.
Sen. Bill Dodd, D-Napa, called for “systematic change” in the executive and boardroom leadership of PG&E after the commission’s staff investigation that found the utility repeatedly falsified data about the location and marking of its natural gas pipelines from 2012 to 2017.
Dodd called Picker’s order an “encouraging step.”
“There needs to be a change in leadership and culture, and I hope the (commission’s) ultimate action will force PG&E to heed my calls for a new direction if they won’t do it voluntarily,” Dodd said in a statement.
The commission’s announcement was also praised by state Sen. Jerry Hill, D-San Mateo, a longtime critic of PG&E.
“Those are the exact areas that we have been looking at and the questions that we’ve raised legislatively,” he said.
The commission said opening comments in the new phase of the investigation are due Jan. 30.
Regulators also on Friday moved closer to implementing the process through which PG&E can respond to wildfire costs as allowed by Dodd’s legislation, SB901.
The commission will consider a proposal at its Jan. 10 meeting for how to create a “stress test” that will measure how much PG&E can pay for wildfire costs before customers are harmed or the public put at risk.
After that point, SB901 allows PG&E to cover remaining costs by issuing bonds its customers would pay off over time.
In a statement, the commission stressed its proposal was about creating criteria and not cost recovery for any specific fires.
PG&E wants a “timely resolution of the proceeding,” Subbotin said in her email.
“All Californians would benefit from the (commission) accelerating this important work to support the wildfire victims,” she said