NewsCovering California

Actions

State agency penalizes PG&E nearly $2 billion for recent wildfires

Rain in wildfire-scarred Northern California will end fire threat, bring new ones
Posted at 1:20 PM, May 07, 2020
and last updated 2020-05-07 16:20:36-04

SAN FRANCISCO, Calif. — On Thursday, the California Public Utilities Commission (CPUC) imposed $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 2017 and 2018 Northern California wildfires.

The decision was approved with modifications to 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. The penalty amount in the settlement was increased by $262 million due to the pervasive nature of the identified violations and unprecedented harm caused by PG&E, 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. Although these ratepayer benefits are uncertain, PG&E estimates that these benefits may be $425.5 million.

The CPUC’s Commissioners give final approval of settlements and may include modifications, however, the settlement process requires agreement to modifications by all the settlement parties. Over the course of this process the CPUC improved the terms of the settlement to better benefit PG&E ratepayers through an initial proposal on February 27, 2020 from a CPUC Administrative Law Judge, and a subsequent proposal by Commissioner Clifford Rechtschaffen issued on April 20, 2020.

“The scope of the devastation caused by PG&E’s misconduct demands this record penalty,” said Commissioner Clifford Rechtschaffen. “It is one of many aggressive steps being taken by the CPUC to hold PG&E accountable for failing to keep public safety a top priority.”

The penalties of $1.937 billion imposed on PG&E consist of:

· $1.823 billion in disallowances for wildfire-related expenditures (an increase of $198 million from the original 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:

o Root cause analysis for wildfires where ignition involved PG&E facilities, and the implementation of recommended actions to prevent similar events;

o Funding local Fire Safe Councils that focus on community-based wildfire prevention and mitigation efforts; and,

o 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 decision 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 disallowances of cost recovery, PG&E residential customers should save approximately 3 percent on their bills in 2021 and beyond.

For more information on the CPUC, please visit www.cpuc.ca.gov