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Wildfire plan endorsed by legislative panel, critics label it a PG&E "bailout"

  • Aug 29, 2018
San Jose Mercury News

Aug. 29--SACRAMENTO -- "We strongly oppose this total bailout of PG&E," Mark Toney, executive director of The Utility Reform Network, told lawmakers a few minutes before the Conference Committee on Wildfire Preparedness and Response vote to recommend the legislative package to the full state Legislature, which is due to act on the proposal this week.

At the heart of the fresh criticism: newly crafted language in the legislative package that appears to primarily benefit PG&E, whose equipment was deemed to be the cause of a number of the lethal firestorms that roared through several North Bay regions in October 2017.

The legislation that the conference committee approved on a 7-1 vote orders the powerful state Public Utilities Commission to determine whether a utility company should be allowed to recover its costs and expenses arising from a destructive fire that occurred during 2017 -- a narrowly worded provision that would certainly include the Wine Country firestorms. When the PUC allows a utility such as PG&E to recover its costs, the money recapture usually occurs in the form of higher monthly power bills.

"In an application by an electrical corporation to recover costs and expenses arising from, or incurred as a result of, a catastrophic wildfire with an ignition date in the 2017 calendar year, the PUC shall determine whether those costs and expenses are just and reasonable," stated a passage in the plan that the conference committee approved.

The legislation also directs the PUC to determine -- and set a cap that defines -- the maximum amount a power company should be obliged to pay for its role in a wildfire. Utilities also would be allowed to apply for a plan to borrow money to cover their wildfire related expenses.

"This can only be viewed as a bailout for PG&E," Michael Shaw, a vice president with the California Manufacturers & Technology Association, told the panel.

Sen. Bill Dodd, committee co-chair and a Democrat whose district includes parts of Napa, Sonoma, Solano, Yolo, Sacramento and Contra Costa counties, acknowledged that the bill seems destined to infuriate an array of interests.

"It may be encouraging that both the ratepayers and the utilities have a problem with this," Sen. Dodd said, referring to the package that the panel approved and sent to the state Assembly and state Senate for final decisions in the two chambers. The two lawmaking bodies are scheduled to adjourn late Friday night, so legislators have been under intense pressure to complete their work ahead of that ultimate deadline. Under state law, the conference compromise had to be OK'd by 72 hours before the vote could be taken, so the approval came barely in time.

Among the key elements that the panel's lawmakers crafted: protection for past and future fire victims, upgrades to electricity grid safety, establishing past and future wildfire-related financial responsibilities for PG&E and other power companies, ensuring that the money burdens don't shove PG&E and other power companies into bankruptcy and protecting utility company employees.

State fire investigators determined that PG&E's equipment and facilities caused 16 wildfires last fall, including 12 of the October wildfires in Northern California. Of the 16 fire incidents, state investigators have alleged that the company violated laws requiring proper maintenance of their facilities in 11 of them.

The October 2017 infernos scorched the North Bay Wine Country and nearby regions, killed 44 people and destroyed at least 8,900 structures.

PG&E has faced major controversies in recent years, including the aftermath of a natural gas explosion that killed eight and wrecked a San Bruno neighborhood in 2010. In 2015, state regulators imposed a $1.6 billion penalty on PG&E for causing the lethal blast, the largest financial punishment ever levied on an American utility. In 2016, PG&E was branded a convicted felon when a federal jury found the company guilty for crimes committed before and after the explosion.

One provision in the proposal, which is using SB 901 as a vehicle to navigate the legislative maze, could allow PG&E to use revenue bonds to pay off wildfire costs dating back to 2015, according to an AARP analysis released Tuesday. That time frame is crucial, AARP officials said, because it covers lethal events such as the fires that scorched the Wine Country and nearby regions in 2017 and the deadly Butte fire.

"This is absolutely a bailout" of PG&E and other big utility companies, Blanca Castro, AARP's advocacy director, said Tuesday in an interview with this news organization.

Still, some who attended the committee hearing warned that ratepayers could be on the hook for billions of dollars in higher monthly power bills, depending on how the PUC exercises its oversight or what sorts of costs and expenses PG&E and other utility behemoths seek to recover and pass along to their customers.

"This bill sets a cap on how much PG&E and other utilities would have to pay" for wildfire costs, Toney said. "But there is no cap for what ratepayers might have to pay."


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