Most utility bankruptcies are caused by bad financial decisions. But Pacific Gas & Electric’s bankruptcy last week was driven by its massive potential liabilities for causing some of California’s most deadly and destructive wildfires of the past two years.
And while PG&E’s bankruptcy reorganization will take years to play out, it faces a major short-term challenge: doing its best to ensure that its power lines and equipment don’t start any more wildfires.
But how can PG&E best accomplish this goal? What standard should PG&E, and other California utilities, be held to when it comes to their responsibility for extreme weather, drought and other climate change-driven fire risks? How can state regulators ensure that it’s doing enough to prevent grid conditions that could cause fires? Should PG&E start de-energizing large parts of the grid during times of high fire risk, despite the disruption and danger such “public safety power shutoffs" can cause? And how can it afford to spend the money for all these fire prevention efforts, while it’s simultaneously going through bankruptcy?
These were some of the key questions PG&E attorneys faced during a heated hearing last week before U.S. District Court Judge William Alsup, who oversees PG&E’s probation for criminal convictions related to its role in the 2010 San Bruno pipeline explosion. Alsup said he is also prepared to use his authority as PG&E’s probation overseer to order the utility to undergo a massive new grid-inspection, tree-clearing and de-energization regime by the start of the 2019 fire season in July. His goal is for PG&E to start “zero fires” this year.
Alsup’s plan, which could be taken up in the coming months, has drawn a good deal of support from fire victims and long-time critics of PG&E’s safety record, who have been calling for a state takeover of the utility. But according to PG&E, while Alsup’s goals are commendable, his plan is both impossible to carry out and potentially harmful, since it could throw a wrench into its ongoing and expanding fire prevention efforts. The California Public Utilities Commission (CPUC) agreed, telling the judge in a filing this week that his proposed order “will in all likelihood conflict with and frustrate the extensive federal statutory and state Constitutional and statutory regulatory scheme.”
These conflicting views of PG&E’s proper role and responsibility in preventing wildfires have become an important subtext to the utility’s broader bankruptcy process. If PG&E can’t meet these aggressive — some would say impossible — goals set by the judge overseeing its criminal probation, what is it doing to prevent its equipment from causing more fires? And beyond the target of “zero fires” for 2019, what are the best ways to measure its progress toward its goals?