California Utility Chief Hits PG&E With Record $2.14B Fine for Wildfires

SAN FRANCISCO (CN) – Pacific Gas and Electric will pay $2.14 billion for its role in sparking a series of destructive wildfires in 2017 and 2018, the largest fine ever assessed by California’s utility regulator, under the terms of a settlement approved Thursday.

The California Public Utilities Commission investigated PG&E’s role in 15 fires and found the utility likely violated at least 50 regulations. The commission’s Safety Enforcement Division concluded that PG&E failed to properly inspect and maintain equipment, prune and clear trees near power lines, correctly prioritize safety hazards, keep records, and preserve evidence.

Nov. 15, 2018 photo shows the remains of residences leveled by the Camp wildfire in Paradise, California. (AP file photo/Noah Berger)

PG&E had negotiated a $1.67 billion settlement to make amends for its role in the wildfires, but an administrative law judge for the commission found that amount inadequate given the severity of the utility’s conduct.

“We’re disappointed in today’s presiding officer decision which increased fines and penalties for the 2017 and 2018 wildfires in Northern California by $462 million to $2.137 billion,” PG&E spokesman James Noonan said.

Noonan said the utility worked over many months with multiple stakeholders to negotiate a settlement that “would allow for additional investments to further strengthen the company’s electric operations.”

PG&E shareholders will be liable to pay the entire $2.14 billion fine, meaning the company will not be permitted to seek reimbursement from ratepayers. The fine will cover $1.8 billion in wildfire-related costs that could have been passed on to customers. Another $200 million will go to California’s general fund, and $114 million will pay for system enhancements and corrective actions, including a study to determine the root causes of PG&E-sparked wildfires, fire safety and prevention programs and aid to vulnerable customers impacted by PG&E’s public safety power shutoffs.

The settlement also requires a potential $500 million in tax savings that could be realized from the fine must be applied to benefit PG&E’s 16 million customers.

The $2.14 billion fine dwarfs the prior record-breaking fine of $1.6 billion that PG&E was ordered to pay five years ago for pipeline safety violations related to the 2010 San Bruno gas line explosion that killed eight people and injured dozens more. PG&E is still under a five-year criminal probation for felony convictions related to that incident.

Thursday’s fine is expected to be added to the $25.5 billion PG&E has already agreed to pay in settlements to wildfire victims, insurers and local governments in its bankruptcy case. The company must exit bankruptcy by June 30 in order to gain access to a state-established insurance fund to protect it from future wildfire liabilities.

According to a 76-page decision by Chief Administrative Law Judge Anne Simon, PG&E disagreed with many of the findings and argued that the regulator misinterpreted and misapplied several state regulations. PG&E did not contest nine alleged violations, but also refused to admit any wrongdoing. The company said only one of those nine violations, involving an incomplete patrol prior to re-energizing a line, was related to the ignition of a fire.

“There is no question that the physical and economic harm resulting from the 2017 and 2018 wildfires is unprecedented,” Simon wrote in her decision.

A total of 21 wildfires, most of which are believed to have been sparked by PG&E equipment, burned hundreds of thousands of acres in Northern California in 2017 and 2018. The fires killed at least 129 people and destroyed nearly 28,000 buildings.

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