PG&E Says California Governor’s Fire Plan Not Enough

By Brian Eckhouse | July 30, 2018

California Governor Jerry Brown issued a plan this week to help the state’s embattled utilities facing liabilities from wildfires. For PG&E Corp., it’s not good enough.

“It’s insufficient,” PG&E Chief Executive Officer Geisha Williams said Thursday on the company’s second-quarter earnings call. “It’s just one of many things that need to be considered in a more comprehensive set of reforms.”

Brown’s plan would require a court to consider whether a utility acted “reasonably” when deciding whether it should end up on the hook for fire damages. However, the proposal wouldn’t affect potential liabilities PG&E and fellow utility Edison International face for blazes that devastated the state in 2017.

PG&E wants a structure where “your liabilities would be limited” once the California Public Utilities Commission approves a safety plan, said Kit Konolige, a New York-based analyst for Bloomberg Intelligence, said in an email Thursday.

Ali Bay, Brown’s deputy press secretary, declined to comment on Williams’s remarks.

Fire Liabilities
The overhang of the 2017 fires weighs heavily on PG&E. JPMorgan Chase & Co. has said the company’s liabilities for the blazes may be more than $17 billion.

PG&E has lost about 36 percent of its market value since mid-October, when a swarm of fires swept Northern California wind country, destroying thousands of homes and killing 44 people. Investigators have attributed PG&E equipment as the ignition source of 16 of them, and investors are still waiting for a report from the California Department of Forestry and Fire Protection on the company’s role in the Tubbs blaze – the deadliest of last year’s fires.

Brown has proposed changing the so-called inverse condemnation provision, which holds utilities strictly liable for fire damages regardless of negligence. Instead, a court would balance “the public benefit of the cause” of the fire with harm caused to private property and determine whether the utility acted “reasonably.”

Williams on Thursday said she is seeking three things from the state:

Permanent reforms to what she described as “the strict liability standard under inverse condemnation”. A way to directly address the 2017 wildfires that she said were “climate-driven”. Clarity on how regulators would handle operational compliance.

“The reforms we seek would not absolve investor-owned utilities from responsibility,” Williams said. “Negligence claims against PG&E can still be pursued.”

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