CPUC Commissioner’s Proposal Would Impose Nearly $2 Billion in Penalties Against PG&E for 2017 and 2018 Wildfires
The California Public Utilities Commission (CPUC) today issued a proposal by Commissioner Clifford Rechtschaffen that would impose $1.937 billion in penalties against Pacific Gas and Electric Company (PG&E), the largest penalty ever assessed by the CPUC, for the utility’s role in the catastrophic 2017 and 2018 wildfires. Resolving this investigation is an important step for PG&E to emerge from bankruptcy. The proposal will be on the CPUC’s May 7, 2020 Voting Meeting agenda.
The proposal, termed a Decision Different, approves with modifications a settlement between PG&E, the CPUC’s Safety and Enforcement Division and Office of the Safety Advocate, and the Coalition of California Utility Employees. Commissioner Rechtschaffen’s proposal effectively increases the penalty amount in the settlement by $262 million due to the strong evidence of pervasive violations and unprecedented harm, including loss of life, that resulted from the wildfires. In addition, any realized tax savings associated with shareholder funded operating expenses under the modified settlement agreement will be returned to PG&E customers. These benefits could be as much as several hundred million dollars.
If deemed acceptable to PG&E and the other settling parties, and approved by the full CPUC, penalties of $1.937 billion would be imposed on PG&E consisting of:
- $1.823 billion in disallowances for wildfire-related expenditures (an increase of $198 million from the settlement agreement), meaning that PG&E shareholders will pay the cost of expenditures that it would otherwise seek to recover from customers
- $114 million in System Enhancement Initiatives and corrective actions to further protect public safety (an increase of $64 million from the settlement agreement), including:
- Root cause analysis for wildfires where ignition involved PG&E facilities, and the implementation of recommended actions to prevent similar events
- Funding local Fire Safe Councils that focus on community-based wildfire prevention and mitigation efforts
- Funding to the California Foundation for Independent Living Centers to support the safety and welfare of vulnerable customers before, during, and after disasters and Public Safety Power Shut-off events
The proposal also imposes a $200 million fine, with the obligation to pay permanently suspended, in order to ensure that payment of the fine does not reduce the funds available to satisfy the claims of wildfire victims and given the unique circumstances of PG&E’s bankruptcy.
The wildfires that occurred in Northern California in October 2017 and November 2018 were unprecedented in size, scope, destruction, and loss of life. At the peak of the “October 2017 Fire Siege” there were 21 major wildfires that, in total, burned 245,000 acres. Eleven thousand firefighters battled the fires that forced 100,000 people to evacuate, destroyed an estimated 8,900 structures, and took the lives of 44 people (including 22 people during the Tubbs fire for which PG&E equipment is not implicated). In the early morning hours of November 8, 2018, the Camp Fire ignited in Butte County, resulting in approximately 153,336 acres burned, destruction of the town of Paradise, 18,804 structures destroyed, and 85 fatalities.
Following an extensive CPUC staff investigation, on June 27, 2019 the CPUC opened a formal investigation into the maintenance, operations, and practices of PG&E with respect to its electric facilities that were involved in igniting these fires, and to determine the appropriate penalties for violation of CPUC rules and regulations that were found by the CPUC’s Safety and Enforcement Division. PG&E subsequently pled guilty to 84 counts of involuntary manslaughter for its role in causing the Camp Fire.
The Decision Different is available at: http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M333/K877/333877539.PDF.
Documents related to this proceeding are available at: https://apps.cpuc.ca.gov/apex/f?p=401:56:0::NO:RP,57,RIR:P5_PROCEEDING_SELECT:I1906015.
The CPUC regulates services and utilities, safeguards the environment, and assures Californians’ access to safe and reliable utility infrastructure and services. For more information on the CPUC, please visit www.cpuc.ca.gov.
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