PG&E: Judge’s Proposal Could Cost Utility $150 Billion

Pacific Gas & Electric (PG&E) on Jan. 23 said a federal judge's proposal that the utility mitigate fire danger in its service territory by trimming trees, along with inspecting and repairing thousands of miles of power lines, could cost the company as much as $150 billion this year.

William Alsup, a judge in the U.S. District Court for Northern California, earlier this month said he could order PG&E to remove or trim all trees that could threaten the utility's equipment and possibly lead to wildfires. The judge said the work would need to be done by June 21.

The California Public Utilities Commission (CPUC), which regulates the state's utilities, is expected to express its opinion of Alsup's proposal by Jan. 25. A hearing on the proposal is scheduled for Jan. 30 in San Francisco, the day after PG&E is expected to file for bankruptcy.

Alsup is supervising PG&E's probation term that began in 2017 after PG&E was convicted of felony charges stemming from a 2010 natural gas pipeline explosion in San Bruno, Calif., that left eight people dead. PG&E was fined $1.6 billion by the CPUC and $3 million by a federal judge after the San Bruno incident.

Investigators: Utility's Equipment to Blame for Fires

The California Department of Forestry and Fire Protection (Cal Fire) has said PG&E equipment was responsible for starting at least a dozen of the 2017 wine country fires in the state, and it is investigating whether a faulty transmission tower caused the deadly Camp Fire last November. That fire killed 86 people.

The judge is trying to determine whether PG&E's role in the wildfires represents a violation of its probation. He already has said that state investigators have determined that the utility's equipment led to 18 wildfires in 2017, including 12 that could lead to criminal charges.

PG&E earlier this month gave its workers notice that it is preparing to file for bankruptcy, likely on Jan. 29. The company is reeling from the investigations into its role in the 2017 and 2018 wildfires that devastated California, burning hundreds of thousands of acres and leaving more than 100 people dead. PG&E's stock price has been hammered and its credit rating has been cut to junk, and reports have said the company could be liable for as much as $30 billion in damages.

PG&E, in a response filed with the court Wednesday concerning Alsup's proposal, said the work could cost as much as $150 billion and require 650,000 employees. The company in its filing said it "does not have the ability to raise those funds." It said "the proposal is not feasible," adding it could not hire the number of tree trimmers needed to meet the judge's deadline, which was set with the start of the summer fire season in mind.

The $150 billion figure is five times the amount of PG&E's expected liabilities for its role in the wildfires, and the company said it would have to "turn to California ratepayers for funding, resulting in a substantial increase-an estimated one-year increase of more than five times current rates in typical utility bills." The company already has asked state regulators for a $1 billion rate increase to help support a planned wildfire safety effort.

PG&E also said the judge's plan would create safety risks, as it would have to remove 100 million trees in its service territory. It also said the plan is a judicial over-reach that would "impermissibly intrude" on federal and state regulators' oversight of PG&E, including the CPUC.

"The path forward to mitigating wildfire risk is best designed not through probation conditions, but rather through careful coordination with state and federal regulators, after appropriate consultation with other interested parties, based on the best science and engineering advice, with policy analysis that accounts for the full range of important but often conflicting social goals," the company wrote in its filing.

The utility said it is committed to performing electrical system upgrades and wildfire forest mitigation, but said the separate criminal case against the company in Alsup's court is not the venue to address those measures. Federal prosecutors have asked Alsup to work with a court-appointed monitor to determine ways San Francisco-based PG&E could prevent its equipment from starting fires.

Deliberate Blackouts

Alsup also has said he could require PG&E to deliberately turn off its power grid and cause blackouts during high-wind events, or if other dangerous conditions pose a risk to the utility's equipment. PG&E began taking that step last fall, though it also said Alsup underestimates the complexity of intentional blackouts, and the associated risks to the public.

The company in its filing said, "PG&E understands and shares the court's concern about the human and financial cost of the wildfires and the death and destruction they have wrought. PG&E knows that it must play a leading role to implement changes to substantially mitigate the risk of wildfire, and PG&E is embracing that role."

Federal prosecutors in a separate filing Wednesday said Judge Alsup should defer to the court-ordered monitor who has been overseeing PG&E's safety efforts since 2017. The monitor is Mark Filip, a partner with the Chicago and Washington, D.C.-based firm Kirkland & Ellis. Filip, who has represented several companies involved in government investigations into their operations (including BP in the Deepwater Horizon disaster case), in a court filing in early January wrote that he is trying "to push and drive PG&E to become a safer organization," though he has not said whether progress has been made.

-Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).

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