Why Pg and E Charge Me Again From October 2018

Pacific Gas & Electric Chief Executive Bill Johnson promised his visitor would emerge from bankruptcy a "reimagined utility."

Only equally PG&E prepares for life afterward Chapter 11 — a Bankruptcy Courtroom judge filed a written decision Wednesday saying he would corroborate the company's reorganization plan — it's unclear there's anything fundamentally dissimilar about the utility, which over the last decade has caused a deadly pipeline explosion, mortiferous fires and days-long power close-offs affecting millions of people.

At the urging of Gov. Gavin Newsom, the California Public Utilities Commission canonical PG&Eastward'south reorganization plan just after calculation several atmospheric condition designed to forcefulness the company to practice better. PG&E is being required to revamp its lath of directors and create local operating regions. The committee also set up a process by which it can revoke PG&E'due south license to operate in the consequence the utility keeps causing deadly disasters or otherwise fails to live upwardly to its legal responsibilities — in theory, a strong deterrent.

Just PG&E is still a shareholder-endemic utility, one of the nation'south largest. It is non the customer-owned cooperative envisioned by San Jose Mayor Sam Liccardo, or the public-private entity proposed by state Sen. Scott Wiener, or the purely public utility alluded to in a Bernie Sanders campaign ad. San Francisco will not accept an opportunity to buy its portion of PG&E'southward electric grid.

The monopoly utility will however be tasked with balancing the demands of shareholders and ratepayers as information technology works to deliver electricity and natural gas to 16 million people at affordable rates, upgrade an crumbling network of power lines and pipelines to reduce condom hazards and add growing amounts of solar and wind ability to its resource mix to satisfy California'due south renewable energy laws.

And all those tasks will be set confronting the backdrop of a warming climate, which is contributing to larger, more destructive fires.

Is the latest iteration of PG&E up to the challenge?

"There are important signs of change, but there are also enormous central concrete challenges that the company has to overcome in guild to have a ameliorate safety record," said Michael Wara, a Stanford University energy and climate police professor who was appointed past Newsom to a country commission on wildfire costs. "The proof will be in the pudding. Trust but verify."

The Military camp fire near Pulga, Calif., in Nov 2018 was ignited by a faulty Pacific Gas & Electric electric line.

(Carolyn Cole / Los Angeles Times)

U.S. Bankruptcy Gauge Dennis Montali said he would officially approve PG&E's reorganization plan this week. In his decision Wednesday, he responded to concerns raised by William Abrams, a Tubbs fire survivor who opposed PG&E's plan.

"Mr. Abrams' desire for a meliorate PG&East, for a better environment and a better Northern California, safe from wildfires, while aspirational and well-intended, is not something the Bankruptcy Code or this court can deliver," Montali wrote.

The defalcation was PG&E'due south 2d. The visitor previously filed for Chapter eleven protection in 2001, its finances wrecked by an energy crisis that saw Enron Corp. and other bad actors exploit California's poorly designed deregulation of the utility manufacture.

This fourth dimension, PG&Due east is grappling with the fallout from crises of its ain making.

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The visitor is yet on federal criminal probation following a 2010 gas pipeline explosion that killed 8 people in San Bruno.

In 2017 and 2018, wildfires ignited by the utility'south electric grid infrastructure killed more than 100 people, the vast majority of the deaths resulting from the Military camp fire, which destroyed the town of Paradise. To reduce the likelihood of additional blazes while it upgrades its infrastructure, PG&Due east has turned to massive ability close-offs during burn down season, angering customers and politicians.

PG&E filed for bankruptcy protection in January 2019 to shield itself from tens of billions of dollars in potential fire liabilities.

Although the company has restructured its debts and agreed to pay $25.5 billion in fire-related claims, it notwithstanding faces huge risks. PG&E is exiting bankruptcy with $38 billion in debt, far more than the $22 billion with which it entered bankruptcy. And if it causes some other catastrophic bonfire anytime soon, investors and lenders might flee permanently, forcing California to take over the utility.

"The company has to take a stable period, or we are not out of this," Wara said.

PG&E volition accept admission to a $21-billion wildfire liability fund fabricated possible by state lawmakers last year under Assembly Pecker 1054, a hastily approved bill that critics derided every bit a utility bailout. But some other inferno like the Camp fire could drain even that fund.

Asked about PG&E'southward finances and debt load, spokesman James Noonan said in an e-mail that the utility "has made substantial progress toward emerging from bankruptcy equally a financially stable visitor positioned to proceed prioritizing safe operations and customer focus while meeting California's energy needs and clean energy goals in a changed climate."

Just this week, he noted, credit rating agencies assigned investment-grade ratings to the secured bonds the company is issuing as it exits defalcation.

"Additional progress includes making the necessary safety and wildfire mitigation investments in the coming years, partnering with the state in achieving its bold clean energy goals and implementing needed changes beyond our business to go a new and transformed company to meet our commitments to California and our customers," Noonan said.

Despite those assurances, state Sen. Jerry Loma (D-San Mateo) is preparing for the possibility PG&E will fail again.

Under Hill'southward Senate Beak 350, which is advancing through the Legislature, PG&E would become a nonprofit public do good corporation known as Gold State Energy if the company's operating license is revoked past the Public Utilities Commission.

PG&E intends to "render this legislation unnecessary," Noonan said.

To Hill — who has been one of the company's leading critics since the San Bruno gas pipeline explosion in his district — the legislation "provides our country with a neglect-prophylactic in instance the new PG&E falls short of expectations," he told lawmakers this month.

(Don Bartletti / Los Angeles Times)

That said, Hill is cautiously optimistic most PG&Eastward's time to come every bit a private company.

He thinks the local operating regions will assistance bring PG&Eastward management closer to customers. He's too hopeful the country'due south newly appointed safe monitor — another status imposed by the Public Utilities Commission — will provide critical oversight.

And he expects PG&E executives to have safe more seriously due to the threat of the visitor'south license existence revoked.

"I have been struggling for the last 10 years to get my colleagues and others to empathise the systemic bug" with PG&E, Loma said in an interview. "I believe that because of the governor's history of being mayor of San Francisco, knowing the visitor as I'm sure he did, he had a similar insight.... He recognized afterwards the wildfires, the explosions, that change was necessary."

Other observers are more skeptical. They say the utilities commission'due south process for revoking PG&East's license may be too long and cumbersome to act every bit an effective deterrent. They also annotation that an existing rubber monitor — appointed as part of the utility's probation from the San Bruno explosion — was watching PG&East during the 2017 wine state fires and the 2018 Camp burn.

PG&E also appear a new board of directors this month, to satisfy another requirement from the Public Utilities Commission. Eleven of the 14 members are new to the board, and 8 are California residents. Gone are several hedge fund managers, replaced past veteran free energy industry executives and a old ambassador of the Federal Emergency Management Agency.

The board's outgoing chair, Nora Mead Brownell, said in a written statement that the new directors are "a critical component of PG&East's plan to sally from bankruptcy as a re-imagined utility — i that is in bear on with its customers and communities."

Just skeptics aren't convinced the new board will make much of a deviation on its own.

"To me it's virtually indistinguishable from a typical corporate lath. So I'thousand non exactly sure what the point of that practise was," said Marker Toney, executive director of the Utility Reform Network, a public involvement advancement grouping based in San Francisco.

Toney thinks the utility'southward time to come could hinge in large function on who the lath selects as the visitor'southward next chief executive.

Current CEO Beak Johnson will retire June xxx after little more than a year on the task, to be replaced on an interim basis past electric current board fellow member Bill Smith. The replacement for Smith will exist the fifth CEO since Geisha Williams took the helm in March 2017.

PG&E ratepayers need "a strong, defended, effective leader who is going to stick around for the long haul," Toney said.

"That'due south part of the problem we've had holding PG&E accountable, because nobody is held accountable to any of the promises of the by," he said. "They say, 'I didn't make those promises. I can't be held responsible.' And and so they're gone in a year or two."

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The magnitude of the challenges facing PG&E'southward adjacent CEO is daunting.

The visitor operates 125,000 miles of electric power lines, many of which run through rural, forested areas where faulty wires tin ignite out-of-control blazes. PG&E has nether-invested in maintenance for decades — and even now, afterward several years of wildfire-driven chaos, the utility is far from coming together its goals for burn down prevention projects such as tree trimming and grid hardening.

A coalition of local officials is making the instance that PG&E should shift to a customer-owned co-op model.

(Richard Drew / Associated Printing)

Liccardo, who for five years has led San Jose, the largest city in PG&E's service territory, doesn't recollect the utility is up to the task.

"It appears to be a company that is financially weaker, with less access to majuscule, with greater need to infringe — all of which tells me that ratepayers, residents and wildfire victims are worse off today than they were a twelvemonth ago," the mayor said in an interview.

Liccardo built a coalition of more than 200 mayors, canton supervisors, city council members and other local officials — together representing a majority of PG&E'due south customers — who called for the utility to get a customer-owned cooperative. They made the example that a co-op structure would align the interests of the visitor and its customers, while allowing for lower rates because the utility wouldn't have to generate profits for shareholders and could borrow money more cheaply than a private company.

Liccardo's co-op proposal didn't get traction with the bankruptcy court or regulators. But he isn't giving up.

"There's plenty of reason to question whether this company is going to exist financially viable, whether or not capital markets volition respond in such a way that volition enable information technology to survive," he said. "And so when that moment comes — if it's back in bankruptcy — there may be an opportunity and then to make a new bid."

Some experts say there'due south no guarantee a customer-owned version of PG&East would provide safer, cleaner or cheaper electricity.

But there'due south also no guarantee the shareholder-owned PG&East will emerge from defalcation any ameliorate at fulfilling those duties.

Public Utilities Committee President Marybel Batjer acknowledged as much when her agency approved the business firm'southward get out program. PG&E, she said, "needs to transform into a well-run company that has at its core the safety, caring and noesis of its customers."

"In today'southward proposed decision, we deploy a set of regulatory tools to aid drive this visitor frontward. But PG&Eastward needs to embrace the need for key change," Batjer said before last month's vote. "This takes leadership with a vision and subject to transform the company into a model of good corporate citizenship, where Principal Street is far more important than Wall Street."

Although the commission voted unanimously to approve PG&E'south reorganization program, Commissioner Martha Guzman Aceves applauded Loma's legislation, saying information technology would requite California "the tools to replace PG&Eastward" should the company continue to neglect.

"We at present accept a existent backstop alternative in Golden State Free energy," Guzman Aceves said.

In add-on to the changes imposed by the commission, at least 1 other shift is coming to PG&Due east. The utility said this month information technology will cut costs by moving its headquarters to Oakland from San Francisco, the city where information technology was founded more than 100 years ago.

Quondam Gov. Jerry Brown once made a similar shift, moving from San Francisco to Oakland after his failed 1992 presidential bid. He ended up reviving a moribund political career, getting elected mayor of Oakland and later winning two more terms as governor.

It's yet to be seen if crossing the Bay Bridge will have a similarly transformative effect on PG&E.

(Marcio Jose Sanchez / Associated Press)

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Source: https://www.latimes.com/environment/story/2020-06-17/pge-bankruptcy-new-pge-looks-like-old-pge

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