Critics are calling on the state Public Utilities Commission to reject a proposed $1.68 billion wildfire regulatory settlement with PG&E, saying it effectively gives the utility “a get out of jail free card’’ for safety violations. They also note the agreement does not include or require PG&E to pay a single penny in actual fines.
The deal does set up $50 million in specific “system enhancement” spending, and credits the utility for shareholder financed post-fire wildfire safety inspections and improvements.
Regulators and PG&E described the deal as the largest wildfire regulatory settlement in state history, calling it reasonable, consistent with the law and “in the public interest.”
But critics, including the head of the utility watchdog group TURN, call it a “fake deal.” They say it credits the utility for spending now, while ignoring the fact that the company neglected safety spending for decades -- possibly contributing to the Camp Fire last year that left 85 people dead, and destroyed the town of Paradise in Butte County.
“These supposed fines are not real fines,” TURN Executive Director Mark Toney said. “When pg&e was found negligent because of the worn hooks on the transmission lines, for burning down Paradise, they become responsible for paying to rebuild Paradise.”
Robert Cagen, a retired CPUC veteran regulatory laywer, said that even though state regulators determined PG&E’s flawed inspection program provided proof of negligence, the utility won’t actually have to admit to any wrongdoing under the proposed deal.
“There is no acknowledgement that PG&E did a single thing that was unlawful in the Camp Fire,” he said. “That’s a terrible thing for future safety.”
State Sen. Jerry Hill said he worries about another clause in the settlement -- one that prevents regulators from going after the utility for uncharged violations that regulators may not yet know exist from the 2017 and 2018 fires.
“What the PUC is doing with this settlement with PG&E is they’re giving a get out of jail free card to a convicted felon that’s currently on probation,” Hill said. “That’s absurd.”
Hill believes the agreement could keep regulators from taking further action in the Tubbs fire. Although Cal Fire exonerated the utility, PG&E has admitted that it broke brush clearance rules near the origin of the fire, and discarded potential evidence in the form of blown fuses.
“It amazes me that the commission staff agreed to it,” Cagen said. “They know better than that -- or they sure should.”
Cagen says he’s concerned about the ramifications for safety.
“PG&E has no incentive to do anything with this kind of settlement -- if it’s adopted by the commission -- in the future but throw money at whatever happens to their system that kills more people.”
But in the language of the settlement, both the utility and regulators say the deal is “a reasonable compromise” that reflects PG&E’s financial plight and its recent investments in safety and the multi-billion settlement with wildfire victims.
“By settling now, the settling parties are ensuring that PG&E can begin to work on the system enhancement initiatives without the delay of engaging in a lengthy litigated proceeding, the outcome of which is unpredictable.”
The state’s Public Utilities Commission still has to sign off the deal, but critics hope they can convince the commission to reject it.
“The CPUC has a chance to show that it’s got a back bone,” Mark Toney said, “and that it’s not going to let PG&E get away with negligence and they’re not going to let the safety division sweep all the unknown violations under the rug.”
NOTE: When we asked PG&E for comment today they referred us to a statement released earlier this week. Here is that statement in its entirety.
SAN FRANCISCO, Calif. — Today, Pacific Gas and Electric Company (PG&E or the Utility) submitted a comprehensive, multi-party settlement agreement to the California Public Utilities Commission (CPUC) related to 2017 and 2018 wildfires in Northern California.
Earlier this month, the CPUC approved a decision to include the 2018 Camp Fire in the existing 2017 Northern California Wildfires Order Instituting Investigation (Wildfire OII).
The settlement agreement was reached in collaboration with the CPUC's Safety Enforcement Division (SED), the Coalition of California Utility Employees and the Office of the Safety Advocate. It proposes that PG&E pay $50 million for shareholder-funded system enhancements, specifically on the company's electric transmission and distribution system. It also proposes that PG&E not seek customer rate recovery associated with certain wildfire-related costs in the amount of $1.625 billion.
PG&E has been working toward a comprehensive settlement agreement involving several parties since August 2019 and has been holding frequent discussions with all parties. This settlement agreement would allow for additional investments that will further strengthen the company's electric operations and ensure compliance with applicable rules.
"We remain deeply sorry about the role our equipment had in tragic wildfires in recent years, and we apologize to all those affected. None of us wants to see another catastrophic wildfire in the communities we call home. This settlement agreement underscores our commitment to learning from the past and doing what's right for safety in the future," said Bill Johnson, CEO and President, PG&E Corporation.
"We recognize our fundamental obligation to operate our system safely. We share the same objectives as the Commission and other state leaders – namely in reducing the risk of wildfire in our communities, even in a rapidly changing environment. While we have taken unprecedented actions to do so, we recognize that more must be done."
This proposed multi-party settlement agreement is separate from other major financial commitments announced by the company pertaining to the 2017 and 2018 wildfires, including:
- Reaching a settlement agreement with representatives of individual wildfire victims for $13.5 billion;
- Announcing an $11 billion settlement to resolve all insurance subrogation claims arising from the 2017 Northern California wildfires and 2018 Camp Fire;
- Announcing a $1 billion settlement with cities and counties impacted by the 2017 Northern California wildfires and 2018 Camp Fire; and
- Establishing a $105 million Wildfire Assistance Fund to aid those displaced by the 2017 Northern California wildfires and 2018 Camp Fire who are either uninsured or need assistance with the cost of substitute or temporary housing or other urgent needs.
The Wildfire OII settlement agreement, as described in today's filing (PDF, 5.1 MB), prohibits PG&E from seeking rate recovery of certain wildfire-related expenses and capital expenditures totaling $1.625 billion, and requires PG&E to undertake 21 shareholder-funded system enhancements totaling $50 million, including:
- Developing a vegetation management oversight pilot;
- Instituting a tree crew training and certificate program;
- Instituting a pre-inspector training and certificate program;
- Hiring an independent wildfire safety auditor;
- Conducting safety town halls with the public led by PG&E's officers;
- Quarterly public reporting on electric maintenance work;
- Local government vegetation management and system hardening data sharing; and
- Accelerating commercialization of non-diesel temporary generation.
The proposed settlement will be reviewed by the assigned Administrative Law Judge and/or the assigned Commissioner, and is subject to CPUC approval. Other parties that did not join the settlement will have an opportunity to provide comments before a final CPUC decision is issued. PG&E has requested that the CPUC approve the settlement on an expedited basis by the end of February 2020.
Overall Wildfire Risk Reduction
In addition to the terms of the settlement, PG&E has taken and continues to take critical actions to strengthen its electric operations and vegetation management processes and culture, including:
- Creating and executing a Wildfire Safety Inspection Program in which the company inspected all of its transmission, distribution and substation equipment in high fire threat areas in 2019. Throughout the inspection process, PG&E has been addressing and repairing conditions that pose an immediate safety risk as they are identified, while completing other high-priority repairs on an accelerated basis.
- Conducting enhanced vegetation management, including meeting and exceeding important state standards regarding clearances around power lines in high fire-threat areas.
- Improving the quality of training programs and clarifying the required qualifications for PG&E's contracted vegetation management personnel.
- Conducting system hardening and resiliency, including replacing wood poles with more resilient poles, replacing bare overhead conductor with covered conductor, targeted undergrounding, and establishing temporary microgrids.
- Revising distribution design standards to increase overall strength and mitigate against impacts of external contacts (such as contact with vegetation) of approximately 150 circuit miles by the end of 2019. PG&E will continue mitigation efforts in other high fire-risk locations across its service area over the next decade.
- Appointing new leadership throughout the company, including a new Board, new Corporation and Utility CEOs, and new leaders in electric operations.
Visit PG&E's Community Wildfire Safety Program website for more information about PG&E's ongoing and expanded efforts to further reduce wildfire risks and keep its customers and communities safe.
Pacific Gas and Electric Company, a subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combined natural gas and electric energy companies in the United States. Based in San Francisco, with more than 20,000 employees, the company delivers some of the nation's cleanest energy to nearly 16 million people in Northern and Central California. For more information, visit pge.com and pge.com/news.
This press release contains forward-looking statements that are not historical facts, including statements about the beliefs, expectations, estimates, future plans and strategies of PG&E Corporation and the Utility, including but not limited to the timing of the shareholder-funded system enhancement spending. These statements are based on current expectations and assumptions, which management believes are reasonable, and on information currently available to management, but are necessarily subject to various risks and uncertainties. In addition to the risk that these assumptions prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include factors disclosed in PG&E Corporation and the Utility’s joint Annual Report on Form 10-K for the year ended December 31, 2018, their joint Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, June 30, 2019 and September 30, 2019, and their subsequent reports filed with the Securities and Exchange Commission. Additional factors include, but are not limited to, those associated with the voluntary cases commenced by each of PG&E Corporation and the Utility under Chapter 11 on January 29, 2019. PG&E Corporation and the Utility undertake no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events or otherwise, except to the extent required by law.