Nearly two years after one of the deadliest corporate crimes in California history — a utility-sparked wildfire that killed scores of people and destroyed the city of Paradise in rural Butte County — state and federal officials have staked out differing positions on how to prevent history from repeating itself.
Gov. Gavin Newsom and his Public Utilities Commission created a new division to monitor wildfire safety plans from California utilities, including Pacific Gas & Electric, whose equipment and negligence ignited the Camp Fire in November 2018.
They restructured their oversight and enforcement process, requiring PG&E to meet a series of safety metrics beyond what was already required and they reasserted regulators’ ability to impose penalties for non-compliance.
They also did away with a century-old rule requiring utilities to demonstrate that they acted prudently before they can pass along wildfire damages to ratepayers.
Most notable for customers of San Diego Gas & Electric, Newsom created a new multibillion-dollar fund, largely paid for by customers of SDG&E and other power companies to cover claims for wildfires that have not yet happened.
“Strengthening our state’s wildfire prevention, preparedness and mitigation efforts will continue to be a top priority for my administration and our work with the legislature,” Newsom said last summer, when he signed the bill that will cost ratepayers an extra $900 million each year for 15 years.
Nowhere in Newsom’s wildfire-prevention efforts is PG&E being required to proactively comply with safety regulations the company skirted before the Camp Fire — or other deadly fires it caused in recent years.
Instead, that strategy is being pursued by U.S. District Court Judge William Alsup, who is overseeing the five-year probation sentence PG&E received after being convicted of six felonies related to a pipeline explosion in San Bruno that killed eight people a decade ago.
On April 29, Alsup amended the utility’s probation conditions to include a requirement that it hire additional tree-trimmers to make sure vegetation is at least four feet from power lines. He also ordered the company to create an inventory of its aging equipment so executives can better determine when it might break down or cause new fires.
“PG&E remains years away from compliance with California law and with its own wildfire mitigation plan,” the judge wrote. “Twenty-two thousand trees identified by PG&E as ‘hazardous’ remain unworked.”
Alsup made it clear he does not trust PG&E to comply with state regulations governing utility equipment maintenance and the clearance rules for energized power lines.
“If there ever was a corporation that deserved to go to prison, it’s PG&E,” he said at a hearing last month. “And the number of people it killed in California. And the judge who’s overseeing this probation has got to take the public interest and the safety, the safety of the people of California into account.”
Utility lawyers attacked Alsup’s order on two fronts. On May 13, they appealed the decision to the 9th U.S. Circuit Court of Appeals and filed a separate motion with Alsup to reconsider his orders.
The “reconsideration is warranted because the Order rests on clear error and fails to consider relevant facts and law,” the lawyers wrote. “The imposition of the Court’s untested conditions will interfere with the ongoing work underway at PG&E to mitigate wildfire risk.”
PG&E said it recognizes the growing threat of wildfires in its service area and is working diligently to reduce those risks, but the extra steps “are likely to hurt” prevention efforts.
“The new conditions are substantively unreasonable because they interfere with California’s regulatory regime,” utility lawyers argued. ”And the conditions, even if they could be met, would not improve safety and may well increase wildfire risk.”
Neither the Governor’s Office nor the Public Utilities Commission would answer questions about the judge’s order or say whether they agreed with the ruling.
Newsom’s press office issued a statement last week saying the governor has demanded a fundamental transformation of PG&E so it can provide safe, reliable, affordable and clean power.
“The state has and will continue to hold PG&E accountable, and significant progress has been made to pave the way for transformation of this utility so it works in the best interest of Californians, and continues to invest in the safety of our state and our resources,” spokeswoman Vicky Waters wrote.
Spokeswoman Terrie Prosper said the commission’s new Wildfire Safety Division began conducting field inspections last month, including more than 250 reviews of PG&E’s compliance activities related to General Order 95, the primary state regulation dictating equipment maintenance and utility operating standards.
“The division expects to complete more than 2,000 inspection activities statewide before the end of 2020,” she said.
Prosper also provided a copy of the commission’s June 11 comments to the court, urging Alsup not to interfere with the state’s regulatory authority.
“Derailment of PG&E’s focus on the CPUC’s integrated plans to mitigate wildfires, and tension that PG&E might face if having to choose between a federal court order and the CPUC’s orders, would ill serve public safety and impose additional costs on ratepayers without a public vetting,” commission lawyers told the judge.
“The health, safety, and well-being of Californians will be best served if the CPUC is permitted the flexibility to exercise its broad ratemaking, health and safety authority with wide discretion on wildfire mitigation.”
Even so, the commission was not equipped to evaluate the utilities’ mitigation plans without outside help. Last year, regulators requested and received $8.6 million in taxpayer funds to hire a consulting firm to do the work.
“CPUC does not have staff to develop a Wildfire Mitigation Plan evaluation framework and is therefore requiring a contractor to provide policy consultants to assist with this process,” the commission wrote in its funding request.
By January 2019, PG&E was confronting billions of dollars in damage claims from victims of the Camp Fire, which killed 85 people and destroyed 18,000 homes and other buildings. The utility sought protection from people filing claims and other creditors in U.S. Bankruptcy Court.
Newsom had just been sworn in as California’s 40th governor, and stakeholders — from labor and business leaders to environmental and clean-energy groups — all wanted to know how he planned to respond.
The governor set up a strike team to confront the growing wildfire threat and help PG&E out of bankruptcy court.
After a series of private meetings, the strike team issued a series of recommendations that became draft legislation. Assembly Bill 1054 raced through the statehouse in less than two weeks, and Newsom signed it into law last July.
For the first time in California history, the bill called on consumers to pay into a special fund — not to finance new utility equipment or stricter tree-trimming practices — but to pay future damages for future wildfires.
Those actions did not prevent the next utility-caused wildfires. PG&E equipment ignited the Kincade Fire in October, burning 77,000 acres and more than 400 homes and business in Sonoma County.
Earlier this month, the Public Utilities Commission approved new wildfire mitigation plans submitted by PG&E, SDG&E and other utilities.
“Today’s actions will increase accountability, reporting, and public safety,” Commissioner Clifford Rechtschaffen said after the June 11 vote. “Utilities will have to report how they are prioritizing investments to get the most risk reduction per dollar spent.”
But former utilities commission member Catherine Sandoval, now a law professor at Santa Clara University, said the plan submitted by PG&E was deficient.
She said in a commission filing that the PG&E plan lacks detail, fails to adequately consider fire risks and does not show PG&E has learned any lessons from its own lapses in management or those made by other utilities after their equipment caused wildfires.
“PG&E’s lack of analytical foundation and explanation pervades its WMP ” Sandoval wrote, referring to its wildfire mitigation plan.
She also said the commission’s new Wildfire Safety Division was not doing enough to prevent fires.
“The condition WSD proposes to address this deficiency does not specifically require PG&E to examine and explain factors such as equipment age or the interrelationship between drivers of PG&E equipment failure,” wrote Sandoval, who sat on the California Public Utilities Commission from 2011 to 2017.
84 guilty pleas
One condition in the San Bruno probation case required PG&E to obey all laws — a condition CEO Bill Johnson admitted was violated when on behalf of the utility he confessed to 84 counts of felony involuntary manslaughter as a result of the Camp Fire.
During an emotional two-day hearing last week, relatives of fire victims told the court how the tragedy had affected them.
“Jesus Fernandez was my father and best friend,” Zachary Fernandez said Wednesday in a statement read by prosecutors who said because the surviving son could not bear to read it himself. “He will always be in my memory, and a day does not go by that I don’t think about him.”
Late last week, PG&E was sentenced to pay $4 million in fines and court costs.
The impact of 84 new criminal convictions is unclear. PG&E was already on probation when the Camp Fire started — and in 2017, when the utility caused a spate of wildfires that ravaged Napa and Sonoma counties.
Months after those fires, which killed more than two dozen people and leveled 6,000-plus homes, PG&E assured the public in a news release that it had developed a “comprehensive community wildfire safety program” to prevent power line fires in the future.
“Our system and our mindset need to be laser-focused on working together to help prevent devastating wildfires like the ones in the North Bay in October,” PG&E executive Pat Hogan said in March 2018, eight months before the Camp Fire. “Extraordinary times call for extraordinary measures, which is what the community wildfire safety program is all about.”
The Utility Reform Network, a San Francisco consumer group, said California’s governor and the federal judge both have roles to play in preventing utility-caused wildfires.
“All the mitigation plans in the world won’t make a difference if PG&E continues to operate its system negligently,” TURN spokeswoman Mindy Spatt said. “And the commission’s recent approval of a six-step process for revoking PG&E’s license is a few steps too many.”
Spatt said Judge Alsup must find a way to stop PG&E from continuing the reckless behavior that led to more than 100 deaths in recent years.
“PG&E’s resistance to the judge’s orders is gravely concerning,” Spatt said. “While the company claims it wants to do everything possible to reform and put safety first, it is obviously not willing to put its money where its mouth is.”
The nation’s largest utility is expected to emerge from bankruptcy by the end of the month in a complicated deal that restructures company leadership and transfers billions of dollars in stock to fire victims. U.S. Bankruptcy Judge Dennis Montali said Friday he would approve the deal.
Alsup is expected to rule on PG&E’s request to modify his order in coming days or weeks.