California Regulators to Review PG&E’s Corporate Structure, Safety Culture in Wake of Deadly Fires

California regulators have launched a review of Pacific Gas
& Electric’s “corporate governance, structure and
operations,” to address the safety problems that led to the
utility’s deadly San Bruno pipeline explosion and may have played
a role in the deadly wildfires of the past two years.  

California Public Utilities Commission President Michael Picker
announced the review on Thursday, as part of the CPUC’s decision
to order PG&E to implement a wide-ranging set of safety
measures in response to the 2010 pipeline explosion, which killed
eight people and destroyed a neighborhood. 

But it also comes as
PG&E is struggling
 with the threat of bankruptcy, if it’s
found liable for the multi-billion dollar damanges of last
year’s Tubbs Fire and this month’s Camp Fire. 

In a Thursday statement, Picker wrote that, “although there
are a few bright spots, PG&E appears not to have a clear vision
for safety programs and instead pursues many programs without
thought to how they fit together, despite eight years passing since
the explosion in San Bruno.” 

As a result, “I plan to open a new phase in this proceeding to
examine the corporate governance, structure, and operation of
PG&E to determine the best path forward for Northern California
to receive safe electrical and natural gas service,” he
wrote. 

PG&E has been hit hard by the state’s past two wildfire
seaons, and faces While state investigators haven’t confirmed the
cause of the Tubbs Fire, which killed 23 people and caused an
estimated $10 billion in damages, they have determined that
PG&E negligence led to a dozen smaller wildfires
that killed at least 15 people and razed over 5,000 homes last
fall. 

As for the Camp Fire, which has killed at least 88 people and
caused an estimated $7.5 billion to $10 billion in damages,
PG&E has reported that one of its transmission lines
malfunctioned at the time and place of the fire’s start. It also
reported that it considered, but decided against, a “public
safety power shutoff” in the area, a decision that’s put the
utility’s procedures for de-energizing power lines under a
spotlight. 

Picker’s statement is the strongest indication yet that
PG&E may face a CPUC review of whether or not it should
continue to exist in its current corporate form, or be subjected to
some sort of change, such as a break-up, as some of its critics
have proposed.

Speaking of the third-party investigation that yielded
Thursday’s safety recommendations, Picker wrote that “I found
myself asking how Northern California can be served better and
whether there is a different model to ensure safe and reliable
electric and natural gas service.” 

At the same time, Picker has been vocal about his hopes that
California can avoid the disruptive effects of a PG&E
bankruptcy. After the utility reported it had withdrawn
all the cash from its revolving creditlines
 — a $3.1
billion move that some analysts said could presage a bankruptcy
filing — Picker took the unusual step of personally
briefing Wall Street analysts
, telling them that the CPUC was
ready to take strong action to combat the threat of a PG&E
bankruptcy. 

“One of the challenges of changing an institution such as
PG&E is that the utility must continue to operate every day,”
he wrote in Thursday’s statement. “To operate the grid in a
safe manner, PG&E must be able to sign contracts and raise
capital.” 

PG&E managed to keep operating the grid through its previous
bankruptcy after the state’s 2001 energy crisis — although at a
cost of roughly $10 billion to its customers, and tens of billions
of dollars to the state as a whole. But today, PG&E is much
more closely intertwined with the state’s ambitious green energy
and carbon reduction goals, with billions of dollars in renewable
energy procurement, grid modernization and distributed energy
integration investment at stake. 

State lawmakers passed a bill in September that extends some
financial options for PG&E, including the ability to raise
bonds to cover the cost of liability for last year’s fires. But
the bill, SB 901, didn’t extend that option for fires in 2018 
— a gap that lawmakers
have promised to fix
 with emergency legislation next
week. 

Source: FS – GreenTech Media
California Regulators to Review PG&E’s Corporate Structure, Safety Culture in Wake of Deadly Fires