Will Regulators Break Up Scandal-Plagued PG&E?

VENTURA, CA - DECEMBER 5: A home is destroyed by brush fire as Santa Ana winds help propel the flames to move quickly through the landscape on December 5, 2017 in Ventura, California. (Photo by Marcus Yam / Los Angeles Times via Getty Images)

A California Public Utilities Commission report that Pacific Gas & Electric failed to fulfill its responsibilities to properly maintain natural gas lines from 2012 to 2017 even after a natural gas explosion killed eight people in San Bruno in 2010 may be the last straw for state regulators.

On Dec. 21, the CPUC released a dramatic statement saying it would consider drastic steps to address the “serious safety problems” it says the utility has long condoned. The commission said a break-up of the agency into smaller regional utilities or a state takeover would be among the possible changes it examined.

“This process will be like repairing a jetliner while it’s in flight. Crashing a plane to make it safer isn’t good for the passengers,” said CPUC President Michael Picker. “This is not a punitive exercise. The keystone question is would, compared to PG&E and PG&E Corp. as presently constituted, any of the proposals provide Northern Californians with safer natural gas and electric service at just and reasonable rates.”

CPUC looking at seven possible major changes

The CPUC statement said seven possible changes would be considered.

– Having “some or all of PG&E be reconstituted as a publicly owned utility or utilities.”

– Replacing some members of PG&E’s Board of Directors with members “with a stronger background and focus on safety.”

– The replacement of existing corporate management.

– Adoption of a new corporate management structure with regional leaders overseeing regional subsidiaries.

– Linking PG&E’s “return on equity” – the profits it shares with its investor-owners – to its safety performance.

– Breaking the utility’s natural gas operations and its electric transmission operations into separate companies.

– Ending the arrangement in which PG&E is controlled by a holding company so it becomes “exclusively a regulated utility.”

Picker’s statement was a remarkable turnaround from his comments on Nov. 15, when his upbeat remarks about the ability of PG&E to survive its fourth consecutive year of devastating wildfires in Northern California led the utility’s stock price tospike.

It reflected the anger among CPUC officials over a staff report released Dec. 14 that found the utility had systematicallyneglected natural gas infrastructure despite being fined $1.6 billion and convicted of six felonies in federal court over the 2010 disaster in San Bruno, a suburb of San Francisco.

Utility facing 500 lawsuits relating to fires it may have caused

Even if PG&E survives in something like its present form after the CPUC’s review, its future is still very cloudy.

Because of claims that PG&E was responsible for the devastating Camp Fire that killed 85 people in Butte County in November, U.S. District Judge William Alsup announced he was reviewing whether PG&E had violated terms of its federal probation in the San Bruno case.

PG&E also disclosed to the U.S. Securities and Exchange Commission that it is facing roughly 500 lawsuits with more than 3,100 plaintiffs over claims the utility was responsible for many of the dozens of wildfires in Northern California since 2016.

It is also facing wildfire-related lawsuits from the state Office of Emergency Services, Cal Fire, Calaveras County and other government agencies.

But while the CPUC is apparently ready for major changes at the utility, it’s not clear yet how state lawmakers feel.

On Nov. 19 – even as criticism of PG&E swelled as confirmed deaths grew in the Camp Fire – Assemblyman Chris Holden, D-Pasadena, was reported to be considering introducing legislation to help the utility deal with wildfire costs.

Holden helped pass a law earlier this year that allowed PG&E to spread out the costs from the liabilities it faced from 17 wildfires in 2017.

This article was originally published by CalWatchdog.com

Comments

  1. The outcome will be decided on how much PG&E has contributed to California politicians (?) the past many years. One glaring fact that the average voter (?) in California doesn’t realize is that the politicians “do nothing” unless there is a benefit in some way or means to them.

  2. Daniel Wright says

    The state and environmentalist activists also share in the responsibility. The POTUS is right. Dead trees and accumulated underbrush should be cleared out constantly. They claim the trees and brush are home to endangered species and should remain. Have they now considered how many of those species were barbecued by the fires? Has anyone considered that the dry tinder the state refused to clear was partly responsible for the deaths of so many innocent people?

  3. It’s all right here…
    Moonbeam, Moonbeam’s sister and Newsom are all enriched by the mismanagement of CA utilities…

    https://www.bizjournals.com/prnewswire/press_releases/2018/06/18/DC30727

  4. Jack Guffey says

    Imagine the state running PG&E….. DMV, High Speed Rail, Water retention facilities (dams) just to name a few examples

  5. The PUC is nothing more than a group of micro managing bureaucrats.
    They are looking over the shoulder th PG&E every minute. If they were concerned about saftey there would be a paper trail they could hang their hat on. Brown is calling the kettle black.

  6. Just take it; socialize it and get it over with. Just like the water, so called, private property and everything else.

    • Bite your tongue. Don’t we have enough problems to deal with already? The New World Order is what Obama, Soros, Bezos, Gates, Streisand, Jolie, etc., etc., etc.

  7. Skeptical Rick says

    The CPUC fails to mention that its inadequate oversight and overly generous return on equity, well above what AAA corporate bonds are yielding, falls squarely in the lap of lax regulators. PG&E has had poor oversight for decades by the CPUC.

    This defective governance occurs with each and every one of the 50 public utilities commissions. The cozy relationship between the regulated, publicly-owned utilities and their overseers does not serve the public interest.

    The mere possibility that PG&E will have its service territory transferred to government control should send shivers down the spine of every sane Californian given the reckless governance of Los Angeles’ Department of Water and Power and CAISO (California Independent System Operator).

    California’s government entities fail at everything they touch. Why will it be any different if the CPUC arbitrarily and capriciously eviscerates the shareholders’ equity (what’s left of it) and turn this private corporation into a public entity subject to the political whims of the entrenched bureaucrats.

  8. Where was CPUC’s oversight while this was happening?
    Where were the state inspectors?

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