Business & Real Estate

PG&E says judge’s wildfire safety plan would cost $75 billion, lead to huge rate hike

6 things to know about the PG&E bankruptcy filing and how it affects you

PG&E is about to go bankrupt. Will the troubled utility keep the lights on as it finds a resolution of the billions of dollars it faces in potential liabilities from the Camp Fire and the wine country wildfires.
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PG&E is about to go bankrupt. Will the troubled utility keep the lights on as it finds a resolution of the billions of dollars it faces in potential liabilities from the Camp Fire and the wine country wildfires.

PG&E on Wednesday blasted a federal judge’s plan for wildfire safety as unrealistic, saying his proposal for the utility to inspect every inch of its electrical grid and remove dangerous trees would cost $75 billion to $150 billion and lead to staggering rate hikes.

The embattled utility, which plans to file for bankruptcy because of wildfire claims, said it “does not have the ability to raise those funds” and would have to turn to ratepayers for more money. At the low end, a $75 billion increase in costs would generate a rate hike “of more than five times current rates in typical utility bills,” the company said in a filing in U.S. District Court.

The company has already asked state regulators for a $1 billion rate increase, in part to fund a more modest safety effort that it says is better suited for reducing California’s considerable wildfire risks than the judge’s plan.

“The proposal is not feasible,” the company said of the judge’s plan, adding that it would be impossible to recruit the huge army of tree trimmers needed to comply with the order before the June fire season begins.

It also said the plan amounts to a judicial over-reach that would “impermissibly intrude” on federal and state regulation of PG&E, including the state Public Utilities Commission.

PG&E’s filing marks the latest twist in the company’s run-up to Chapter 11 bankruptcy, which doesn’t begin until Jan. 29 but has already created enormous headaches for regulators and new Gov. Gavin Newsom. The bankruptcy raises the prospect that wildfire survivors won’t get paid in full for their damages.

Judge William Alsup, who oversees the criminal case against PG&E over the San Bruno pipeline explosion, on Jan. 9 proposed a stringent safety program designed to “reduce to zero” the number of wildfires caused by PG&E’s equipment this year. That included forcing PG&E to re-inspect its entire electrical grid, a stretch covering 100,000 miles of power lines, as well as trim or remove any tree that “could fall onto its power lines,” all before the start of the fire season in June.

PG&E’s own wildfire safety plan is less ambitious; for example, the company says it will inspect 5,500 miles of power lines in high-risk areas this year.

Alsup also said he might require PG&E to impose deliberate blackouts during high winds or other dangerous conditions. That’s something the company already began doing last fall, when it cut power to 59,000 homes for two days in October, but it warned that Alsup is going overboard in his blackout plan.

“De-energizing power lines is a tool of last resort because it presents significant public safety risks,” the company said. Also, because PG&E’s transmission lines are part of a multi-state grid, the judge’s order could lead to blackouts in “large parts of the Western United States and Canada,” the filing said.

The company also said Alsup’s tree-trimming program would force the removal of at least 100 million trees, which it called an enormous mistake. “Clear-cutting on such a drastic scale would have significant environmental consequences, including reducing watershed protection and increasing runoff, erosion and flooding,” PG&E’s lawyers wrote. They said Alsup is ignoring the extraordinary red tape involved in undertaking such a massive forestry program.

“PG&E understands and shares the court’s concern about the human and financial cost of the wildfires and the death and destruction they have wrought,” the company said in its legal brief. “PG&E knows that it must play a leading role to implement changes to substantially mitigate the risk of wildfire, and PG&E is embracing that role.”

A watchdog group for ratepayers criticized PG&E’s response, saying the utility is acting in bad faith and should have taken the opportunity to explain to the judge and the public in detail what it is doing to reduce fire risk.

Critic Mark Toney, head of The Utility Reform Network, said he remains unpersuaded that PG&E needs to file for bankruptcy.

“What they have failed to do is to present a plan that shows their willingness to do as much as possible to follow the judge’s recommendations to reduce the wildfire risk,” Toney said. “That really doesn’t give the public a lot of confidence.”

State Sen. Bill Dodd of Sonoma, who led a successful legislative effort to help prop up PG&E last year, said he isn’t confident that PG&E will be able to make its power grid safe for this summer fire season. He suggested the utility focus on danger areas for maintenance and upgrades.

“It is important for us to prioritize the most dangerous miles of the state and advance on that every single year,” he said. That includes residents of fire-danger areas doing more work creating defensible space around their homes. He said he wants to see the PUC push forward with standards for when utility companies should shut down sections of their power grids as a safety precaution during high-fire danger days.

Alsup is supervising the utility’s probation term imposed in 2017 after PG&E was convicted of felony charges in connection with the 2010 natural gas pipeline disaster in San Bruno. Cal Fire has blamed PG&E equipment for a dozen of the 2017 wine country fires and is investigating whether a faulty transmission tower was the cause of the November Camp Fire, which killed 86 people and destroyed the town of Paradise in Butte County.

The judge is trying to determine whether the wildfires represent a violation of the probation terms. PG&E said, in effect, the judge should stand aside.

“The path forward to mitigating wildfire risk is best designed not through probation conditions, but rather through careful coordination with state and federal regulators, after appropriate consultation with other interested parties, based on the best science and engineering advice, with policy analysis that accounts for the full range of important but often conflicting social goals,” the company wrote in its brief.

Federal prosecutors seemed to side with PG&E. In a separate filing Wednesday, they said the judge should defer to the court-ordered monitor who has been overseeing Pacific Gas and Electric Co.’s safety efforts since 2017. The monitor, a Chicago lawyer named Mark Filip, said in a court filing in early January that he is continuing his efforts “to push and drive PG&E to become a safer organization,” although he didn’t make a judgment on how much progress the company has made.

The Public Utilities Commission, the primary regulator of PG&E, is expected to weigh in on the judge’s plan by Friday. A hearing on the proposal is scheduled for Jan. 30 in San Francisco, one day after the utility and its parent, PG&E Corp., are expected to file for bankruptcy.

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