Michele Kearney's Nuclear Wire - Major Energy and Environmental News and Commentary affecting the Nuclear Industry. Nuclear Activities
Saturday, May 4, 2019
For Trump, His Election Was a Hostile Takeover
For Trump, His Election Was a Hostile Takeover: There is a persistent belief that business people are what you need in the Oval Office. It was one of the credentials on Donald Trump’s resume. That, too, may be one of the underlying weaknesses of…
Friday, May 3, 2019
Could California Take Public Ownership of PG&E? - Pacific Standard
Could California Take Public Ownership of PG&E? - Pacific Standard: The debate around private ownership of essential utilities is becoming a national issue.
PG&E should get out of the energy sales business, local governments say - Los Angeles Times
PG&E should get out of the energy sales business, local governments say - Los Angeles Times: Pacific Gas & Electric could do a better job preventing wildfires if it doesn't have to buy and sell electricity anymore, say community choice aggregators, or CCAs.
PG&E: After Q1 Results, SEC Probe Might Drive Its Stock - Market Realist
PG&E: After Q1 Results, SEC Probe Might Drive Its Stock - Market Realist: PG&E (PCG) stock fell more than 3% on May 2 after it reported its first-quarter earnings.
PG&E unable to reach deal over power contracts worth billions of dollars - NextEra Energy, Inc. (NYSE:NEE) | Seeking Alpha
PG&E unable to reach deal over power contracts worth billions of dollars - NextEra Energy, Inc. (NYSE:NEE) | Seeking Alpha: PG&E (PCG) was unable to strike a deal with NextEra Energy (NEE) and other companies with which it has power contracts in a dispute over the bankrupt utili
PG&E unable to strike deal over renewable power contracts: court documents
PG&E unable to strike deal over renewable power contracts: court documents
https://www.reuters.com/article/us-pg-e-us-renewables/pge-unable-to-strike-deal-over-renewable-power-contracts-court-documents-idUSKCN1S91W6
Lawmakers revise plan to rescue Ohio's nuclear plants - SFChronicle.com
Lawmakers revise plan to rescue Ohio's nuclear plants - SFChronicle.com: TOLEDO, Ohio (AP) — Ohio lawmakers who've been peppered with complaints about a proposal to rescue the state's two nuclear power plants are making changes to address some of those concerns. Yet the pending legislation still calls for adding a surcharge to every electric bill in the state. House Republicans backing the plan say it won't cost electricity users more money because the legislation will eliminate existing charges for renewable energy and efficiency incentives. Opponents argue electric bills will increase and the measure only benefits FirstEnergy Solutions' struggling plants, which are likely to close if the legislation isn't approved. The revised plan announced Thursday calls for phasing in rate increases during the first year. It also says there must be a review to determine whether the surcharges are still needed after 10 years.
PENNSYLVANIA: Workers rally at Capitol amid debate over nuclear power bill -- Thursday, May 2, 2019 -- www.eenews.net E&E News -- Start a free trial
PENNSYLVANIA: Workers rally at Capitol amid debate over nuclear power bill -- Thursday, May 2, 2019 -- www.eenews.net E&E News -- Start a free trial: Hundreds of nuclear power plant workers rallied at Pennsylvania's Capitol amid hearings on legislation to charge ratepayers more to subsidize nuclear power.
TASS: Business & Economy - Russia, Uzbekistan coordinate site for construction of nuclear power plant in republic
TASS: Business & Economy - Russia, Uzbekistan coordinate site for construction of nuclear power plant in republic: Regular consultations between Rosatom’s administration and the colleagues from Uzbekistan will be held in the near future, Russian Foreign Minister Sergey Lavrov said
Uzbekistan, Russia agree on site for nuclear plant | Eurasianet
Uzbekistan, Russia agree on site for nuclear plant | Eurasianet: Russia is going to help Uzbekistan build a nuclear power plant, which will become the first of its kind in Central Asia. Russian Foreign Minister Sergei Lavrov says they have already chosen a site
China's fleet of nuclear-armed subs has the Pentagon worried - Task & Purpose
China's fleet of nuclear-armed subs has the Pentagon worried - Task & Purpose: Western military officials say privately that in operational terms, America and its allies - including Japan, Australia and the United Kingdom - are already attempting to track the movements of China's missile submarines as if they are fully armed and on deterrence patrols.
Clean Energy and Advanced Manufacturing: A Market Opportunity for Nuclear Energy? | RealClearEnergy
Clean Energy and Advanced Manufacturing: A Market Opportunity for Nuclear Energy? | RealClearEnergy: The World Nuclear Association (WNA)[1] reports that the US is the world's largest producer of nuclear power, accounting for more than 30% of worldwide nuclear generation of electricity. Moreover,...
Should UMass Build a Nuclear Power Plant? – Amherst Wire
Should UMass Build a Nuclear Power Plant? – Amherst Wire: There’s a very clear threat that if something isn’t done soon, the damage done will become irreversible.
PG&E profits shrink due to costs linked to wildfires, bankruptcy case | The Sacramento Bee
PG&E profits shrink due to costs linked to wildfires, bankruptcy case | The Sacramento Bee: PG&E posted profits of $136 million during the first three months of 2019, a period that included the start of bankruptcy proceedings for PG&E, the disgraced power company reported Thursday.
Wildfires Drove Dramatic Population Shifts In California Last Year | HuffPost
Wildfires Drove Dramatic Population Shifts In California Last Year | HuffPost: The state experienced its most destructive and deadliest wildfire ever in 2018.
PG&E's Wildfire Mitigation Plan 'Not a Blank Check': Judges - NBC Bay Area
PG&E's Wildfire Mitigation Plan 'Not a Blank Check': Judges - NBC Bay Area: Two state regulatory judges ruled Monday that while PG&E’s proposed wildfire mitigation plan meets the provisions of the state mandate, it isn’t a 'blank check,' and the utility has to do more to make sure...
Former PG&E CEO got pay increases during wildfire years
Former PG&E CEO got pay increases during wildfire years: PG&E's former chief executive officer Geisha Williams was awarded a pay increase for her performance during 2018 -- the second of two consecutive years during which the disgraced utility's equipment caused, or was directly linked to, lethal and disastrous wildfires, an SEC filing shows.
Butte County DA: PG&E equipment started Camp Fire, unclear if it was a crime | abc10.com
Butte County DA: PG&E equipment started Camp Fire, unclear if it was a crime | abc10.com: District Attorney Mike Ramsey says all other causes have been ruled out, but investigators are still trying to determine whether charges as serious as manslaughter could apply.
PG&E Says S.E.C. Is Investigating Its Wildfire Disclosures - The New York Times
PG&E Says S.E.C. Is Investigating Its Wildfire Disclosures - The New York Times: The California utility disclosed in a filing that securities regulators are looking into how it disclosed and accounted for losses from fires in recent years.
Fukushima Update 5/3/19
The latest Fukushima evacuee compensation figures are posted... An unregistered key to an F. Daiichi building is discovered missing, violating NRA rules.
http://www.hiroshimasyndrome.c
Quarterly uranium output decreases in Kazakhstan and USA - World Nuclear News
Quarterly uranium output decreases in Kazakhstan and USA - World Nuclear News: Kazatomprom's uranium production for the first quarter of 2019 was 4% down from the same period in 2018 as the Kazakh company continues with its plan to reduce production. Meanwhile, US uranium production for the quarter was 74% down from 2018.
Advanced fuel for Calvert Cliffs - World Nuclear News
Advanced fuel for Calvert Cliffs - World Nuclear News: Framatome, the French fuel and technology company said "two full fuel assemblies" of its Enhanced Accident Tolerant Fuel would be loaded at Exelon's Calvert Cliffs plant in February 2021.
UK generates usable electricity from americium - World Nuclear News
UK generates usable electricity from americium - World Nuclear News: The UK's National Nuclear Laboratory and University of Leicester have generated usable electricity from the chemical element americium in what it believes to be a global first. The achievement is seen as a step towards potential use of americium in so-called space batteries, which may mean future space missions can be powered for up to 400 years.
Iter, a reactor in France, may deliver fusion power as early as 2045 - Fusion research
Iter, a reactor in France, may deliver fusion power as early as 2045 - Fusion research: PROVENCE, IN south-east France, is known for its pleasant weather, ratatouille and thickly wooded mountainsides. But it is also the site of what will be, if and when finished, one of the most complicated machines ever built.
NRC approves new South Korean advanced nuclear reactor - Power Engineering
NRC approves new South Korean advanced nuclear reactor - Power Engineering: Absent challenges, the rule will become effective 120 days following its publication in the Federal Register.
Barrasso looks to climate change to nudge Democrats to back Yucca project - The Nevada Independent
Barrasso looks to climate change to nudge Democrats to back Yucca project - The Nevada Independent: U.S. Sen. John Barrasso, a Republican from Wyoming, has opened a new front in the battle over whether to store nuclear waste in Nevada, and he has put addressing climate change at the center of his argument in favor of building a repository at Yucca Mountain.
SC Senate panel rejects Gov. McMaster's nominee Charlie Condon as Santee Cooper chair | Palmetto Politics | postandcourier.com
SC Senate panel rejects Gov. McMaster's nominee Charlie Condon as Santee Cooper chair | Palmetto Politics | postandcourier.com: The Senate Judiciary Committee voted 19 to 4 to take the rare step of unfavorably reporting former S.C. Attorney General Charlie Condon's nomination to the floor for a full Senate
US Chamber urges Senate Energy and Natural Resources Committee to advance Nuclear Energy Leadership Act - Daily Energy Insider
US Chamber urges Senate Energy and Natural Resources Committee to advance Nuclear Energy Leadership Act - Daily Energy Insider: The U.S. Chamber of Commerce recently sent a letter to Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-AK) and Ranking Member Joe Manchin (D-WV) urging the committee to advance S. 903, the Nuclear ... Read More »
Atlanta CEO predicts long wait before next nuclear power project
Atlanta CEO predicts long wait before next nuclear power project: Georgia Power's parent company says it expects a long wait after the expansion of Plant Vogtle before attempting another nuclear energy project.
GPI 20th Anniversary Leadership Interview Series: Vice President Brendan Jordan, Transportation & Fuels | The Energy Collective Daily
GPI 20th Anniversary Leadership Interview Series: Vice President Brendan Jordan, Transportation & Fuels | The Energy Collective Daily |
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- GPI 20th Anniversary Leadership Interview Series: Vice President Brendan Jordan, Transportation & Fuels
- Despite floods, Nebraska utility leaders still hesitant to address climate change
- In 2025 the USA Could Produce More Oil Than Saudi Arabia and Russia Combined
- On Climate, Washington State Back in the Lead
- Climate indicators
- EUROPE'S GAS DIVERSIFICATION
- Valero Q1 results: renewable diesel sales up as ethanol income drops
- Valero Q1 results: renewable diesel sales up as ethanol income drops
- CCC net-zero report, industry response
World Institute of Nuclear Security May 2019 Issue
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Nuclear Plant Journal
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The Digital version of Nuclear Plant Journal's March-April 2019 issue is now available online. To access this issue, click here or cut-and-paste the link given below in your browser:
http://digitaleditions.
This issue includes WANO's contribution to improve safety, worldwide. Big Data applications to nuclear power plant equipment and instruments, including online monitoring has been described. Advanced education and certification in the nuclear power industry is emphasized. Summary of several Advanced Reactor projects in the US and abroad, including details of eVinci Micro Reactor is provided. Overview of the State of Nuclear Industry and launch of a test reactor project are described.
Industry innovation articles include cable aging management, wireless data communication and control room glass top simulator project description.
The issue also includes utility, industry & corporation news; industry's new products & contracts; new document announcements, a meeting and training calendar; and research & development efforts.
The digital version is "user friendly". The Table of Content on page 5 is linked to the respective referenced pages. All the listed advertisements on page 8 in the List of Advertisers are linked to the respective advertisements. All e-mails and web site URLs in the Journal are live. Web site listings in the Advertiser Web Directory on page 8 are also live.
Contact michelle@goinfo.com for any questions.
Forward this email to a peer or colleague and have them go here to subscribe or copy and paste this link https://www.cdsreportnow.
With best regards.
Yours Sincerely
Newal Agnihotri
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Website: http://www.
Senate bill to create Nuclear Waste Administration - Daily Energy Insider
Senate bill to create Nuclear Waste Administration - Daily Energy Insider: Legislation recently introduced in the Senate to create a pathway for the safe and permanent disposal of the nation’s stockpiles of spent nuclear fuel from sites across the country.© Shutterstock The bill, the Nuclear Waste ... Read More »
Many electric utilities are struggling – will more go bankrupt?
Many electric utilities are struggling – will more go bankrupt?: The electric utility is seeing rapid changes and threats that affect consumers, from more wind and solar to wildfires. How they react depends in large part on regulators.
INL head calls for more nuke research at Senate hearing | Local | idahostatejournal.com
INL head calls for more nuke research at Senate hearing | Local | idahostatejournal.com: The director of Idaho National Laboratory was in Washington, D.C., on Tuesday to testify in favor of a bill to boost nuclear energy research.
Will China Be Able To Meet Its Lofty Nuclear Power Goals? | OilPrice.com
Will China Be Able To Meet Its Lofty Nuclear Power Goals? | OilPrice.com: Despite a late entrance to the nuclear game, China has climbed to the third highest position in worldwide nuclear power generation, and it could climb even higher
The Green New Deal — an Imperfect Force in 2020? – InsideSources
The Green New Deal — an Imperfect Force in 2020? – InsideSources: Not since Newt Gingrich, Dick Armey and The Heritage Foundation cooked up the Contract with America in 1994, has there been such a clever piece of
PG&E faces SEC investigation into public disclosures of wildfire losses | Utility Dive
PG&E faces SEC investigation into public disclosures of wildfire losses | Utility Dive: Utility industry news, voices and jobs for energy industry professionals. Optimized for your mobile phone.
Thursday, May 2, 2019
PG&E Profits Plummet Amid Bankruptcy, and SEC Probe Adds to Utility's Troubles | The California Report | KQED News
PG&E Profits Plummet Amid Bankruptcy, and SEC Probe Adds to Utility's Troubles | The California Report | KQED News: Company blames wildfire legal fees and reorganization for hit to bottom line. And it revealed Thursday that SEC is investigating whether losses related to
PG&E says SEC investigating it for disclosures, losses for wildfires - Nasdaq.com
PG&E says SEC investigating it for disclosures, losses for wildfires - Nasdaq.com: May 2- PG&E Corp said on Thursday the U.S. Securities and Exchange Commission is investigating the company regarding public disclosures and losses.
SEC opens probe into PG&E over wildfire losses - MarketWatch
SEC opens probe into PG&E over wildfire losses - MarketWatch: PG&E Corp. said the Securities and Exchange Commission has opened an investigation into the company's disclosures and accounting for losses related to...
PG&E Faces SEC Investigation Related to Wildfire Accounting - WSJ
PG&E Faces SEC Investigation Related to Wildfire Accounting - WSJ: PG&E said the SEC has opened an investigation into its disclosures and accounting for losses related to California wildfires. The utility also reported a lower first-quarter profit.
PG&E SEC Document Form 10-Q
Document
NOTE 10: WILDFIRE-RELATED CONTINGENCIES
PG&E
Corporation and the Utility have significant contingencies arising from
their operations, including contingencies related to wildfires. A
provision for a loss contingency is recorded when it is both probable
that a liability has been incurred and the amount of the liability can
be reasonably estimated. PG&E Corporation and the Utility evaluate
which potential liabilities are probable and the related range of
reasonably estimated losses and record a charge that reflects their best
estimate or the lower end of the range, if there is no better estimate.
The assessment of whether a loss is probable or reasonably possible,
and whether the loss or a range of losses is estimable, often involves a
series of complex judgments about future events. Loss contingencies
are reviewed quarterly and estimates are adjusted to reflect the impact
of all known information, such as negotiations, discovery, settlements
and payments, rulings, advice of legal counsel, and other information
and events pertaining to a particular matter. PG&E Corporation’s
and the Utility’s provision for loss and expense excludes anticipated
legal costs, which are expensed as incurred. PG&E Corporation’s and
the Utility’s financial condition, results of operations, liquidity,
and cash flows may be materially affected by the outcome of the
following matters.
41
Wildfire-Related Claims
Wildfire-related
claims on the Condensed Consolidated Financial Statements include
amounts associated with the 2018 Camp fire, the 2017 Northern California
wildfires, and the 2015 Butte fire.
For the three months ended March 31, 2019 and 2018, the Utility’s Condensed Consolidated Statements of Income include estimated losses offset by insurance recoveries of $7 million for the three months ended March 31, 2018, with no recoveries in the same period in 2019.
In addition, during the three months ended March 31, 2019, the Utility incurred $13 million and $34 million of legal and other costs related to the 2018 Camp fire and the 2017 Northern California wildfires, respectively.
At March 31, 2019 and December 31, 2018,
the Utility’s Condensed Consolidated Balance Sheets include estimated
liabilities in respect of total wildfire-related claims as follows:
Balance at
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(in millions)
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March 31, 2019
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December 31, 2018
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2015 Butte fire
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$
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212
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$
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226
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2017 Northern California wildfires
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3,500
|
3,500
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2018 Camp fire
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10,500
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10,500
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Total wildfire-related claims (1)
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$
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14,212
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$
|
14,226
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(1) On the Petition Date all wildfire-related claims were classified as subject to compromise and all pending litigation was stayed. (For more information see Note 2 of the Condensed Consolidated Financial Statements.)
2018 Camp Fire Background
On
November 8, 2018, a wildfire began near the city of Paradise, Butte
County, California (the “2018 Camp fire”), which is located in the
Utility’s service territory. Cal Fire’s Camp Fire Incident Information
Website as of January 4, 2019 (the “Cal Fire website”) indicated that
the 2018 Camp fire consumed 153,336 acres. On the Cal Fire website, Cal Fire reported 86 fatalities and the destruction of 13,972 residences, 528 commercial structures and 4,293
other buildings resulting from the 2018 Camp fire. On February 7,
2019, the Butte County Sheriff’s Office reported that the number of
fatalities resulting from the 2018 Camp fire had been reduced from 86 to 85. There have been no subsequent updates of this information on the Cal Fire website or by the Butte County Sheriff’s Office.
Although
the cause of the 2018 Camp fire is still under investigation, based on
the information currently known to PG&E Corporation and the Utility
and reported to the CPUC and other agencies, including the facts
described below, PG&E Corporation and the Utility believe it is
probable that the Utility’s equipment will be determined to be an
ignition point of the 2018 Camp fire.
The Utility submitted two Electric Incident Reports (the “EIRs”) to the CPUC: one on November 8, 2018 and one on November 16, 2018. On December 11, 2018, the Utility publicly released a letter to the CPUC supplementing the EIRs (the “20-Day Electric Incident Report”), which stated:
•
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On
the Cal Fire website, Cal Fire has identified coordinates for the 2018
Camp fire near Tower :27/222 on the Utility’s Caribou-Palermo 115 kV
Transmission Line and has identified the start time of the 2018 Camp
fire as 6:33 a.m. on November 8, 2018.
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•
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On
November 8, 2018, at approximately 6:15 a.m., the Utility’s
Caribou-Palermo 115kV Transmission Line relayed and deenergized. At
approximately 6:30 a.m. that day, a Utility employee observed fire in
the vicinity of Tower :27/222, and this observation was reported to 911
by Utility employees. That afternoon, the Utility observed damage on
the line at Tower :27/222. Specifically, an aerial patrol identified
that a suspension insulator supporting a transposition jumper had
separated from an arm on Tower :27/222.
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42
•
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On
November 14, 2018, the Utility observed a broken C-hook attached to the
separated suspension insulator that had connected the suspension
insulator to a tower arm, along with wear at the connection point. In
addition, the Utility observed a flash mark on Tower :27/222 near where
the transposition jumper was suspended and damage to the transposition
jumper and suspension insulator.
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•
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In
addition to the events on the Caribou-Palermo 115kV Transmission Line,
on November 8, 2018, at approximately 6:45 a.m., the Utility’s Big Bend
1101 12 kV Circuit experienced an outage. On November 9, 2018, a
Utility employee on patrol arrived at the location of the pole with Line
Recloser (“LR”) 1704 on the Big Bend 1101 Circuit and observed that the
pole and other equipment were on the ground with bullets and bullet
holes at the break point of the pole and on the equipment. On November
12, 2018, a Utility employee was patrolling Concow Road north of LR 1704
when he observed wires down and damaged and downed poles at the
intersection of Concow Road and Rim Road. At this location, the
employee observed several snapped trees, with some on top of the downed
wires.
|
The information contained in the EIRs and the 20-Day
Electric Incident Report is factual and preliminary and does not
reflect a determination of the causes of the 2018 Camp fire. These
incidents remain under investigation by Cal Fire and the CPUC. With
respect to the potential ignition point on the Utility’s Big Bend 1101
12 kV Circuit, although Cal Fire has identified this location as a
potential ignition point, based on the condition of the site, PG&E
Corporation and the Utility have not been able to determine whether the
Big Bend 1101 12 kV Circuit may be a probable ignition point for the
2018 Camp fire. Neither Cal Fire nor the CPUC has publicly issued any
news releases or other determinations for the 2018 Camp fire. The
timing and outcome of the investigations are uncertain. PG&E
Corporation and the Utility are cooperating with Cal Fire and the CPUC.
Further,
the CPUC’s SED is conducting investigations to assess the compliance of
electric and communication companies’ facilities with applicable rules
and regulations in fire-impacted areas. According to information made
available by the CPUC, investigation topics include, but are not limited
to, maintenance of facilities, vegetation management, and emergency
preparedness and response. Various other entities, including fire
departments, may also be investigating the fire. It is uncertain when
the investigations will be complete and whether the SED will release any
preliminary findings before its investigations are complete.
2017 Northern California Wildfires Background
Beginning
on October 8, 2017, multiple wildfires spread through Northern
California, including Napa, Sonoma, Butte, Humboldt, Mendocino, Lake,
Nevada, and Yuba Counties, as well as in the area surrounding Yuba City
(the “2017 Northern California wildfires”). According to the Cal Fire
California Statewide Fire Summary dated October 30, 2017, at the peak of
the 2017 Northern California wildfires, there were 21 major fires that, in total, burned over 245,000 acres and destroyed an estimated 8,900 structures. The 2017 Northern California wildfires resulted in 44 fatalities.
43
Cal Fire has issued its determination on the causes of 19
of the 2017 Northern California wildfires, and alleged that all of
these fires, with the exception of the Tubbs fire, involved the
Utility’s equipment. Cal Fire has not publicly announced any
determination of cause on the remaining wildfires.
During the second quarter of 2018, Cal Fire issued news releases announcing its determination on the causes of 16
of the 2017 Northern California wildfires (the La Porte, McCourtney,
Lobo, Honey, Redwood, Sulphur, Cherokee, 37, Blue, Norrbom, Adobe,
Partrick, Pythian, Nuns, Pocket and Atlas fires, located in Mendocino,
Lake, Butte, Sonoma, Humboldt, Nevada and Napa counties). According to
the Cal Fire news releases:
•
|
the La Porte, McCourtney, Lobo and Honey fires “were caused by trees coming into contact with power lines”, and
|
•
|
the Redwood, Sulphur, Cherokee, 37, Blue, Norrbom, Adobe, Partrick,
Pythian, Nuns, Pocket and Atlas fires “were caused by electric power and
distribution lines, conductors and the failure of power poles.”
|
Cal
Fire has not yet released its investigation reports related to the
McCourtney, Lobo, Sulphur, Blue, Norrbom, Adobe, Partrick, Pythian,
Pocket and Atlas fires and stated in its news releases that these
investigations, and the investigation related to the Honey fire, have
been referred to the appropriate county District Attorney’s offices for
review “due to evidence of alleged violations of state law.” (See
“District Attorneys’ Offices’ Investigations” below for further
information regarding the investigations by the District Attorneys’
offices related to these fires.)
Also
during the second quarter of 2018, Cal Fire released its investigation
reports related to the Redwood, Cherokee, 37, Nuns and La Porte fires.
Cal Fire did not refer these fires to District Attorney offices for
investigation.
On
October 9, 2018, Cal Fire issued a news release announcing the results
of its investigation into the Cascade fire, located in Yuba County,
concluding that the Cascade fire “was started by sagging power lines
coming into contact during heavy winds” and that “the power line in
question was owned by Pacific Gas and Electric Company.” On October 10,
2018, Cal Fire released its investigation report related to the Cascade
fire. (See “District Attorneys’ Offices’ Investigations” below for
further information regarding the investigations of the Cascade fire by
the Office of the District Attorney of Yuba County.)
On
January 24, 2019, Cal Fire issued a news release and its investigation
report into the cause of the Tubbs fire. Cal Fire has determined that
the Tubbs fire was caused by a private electrical system adjacent to a
residential structure.
Cal
Fire has not publicly issued any news releases or other determinations
for the Maacama, Pressley and Point wildfires. The timing and outcome
of the Cal Fire investigation into these fires is uncertain.
Further,
the SED is conducting investigations to assess the compliance of
electric and communication companies’ facilities with applicable rules
and regulations in fire-impacted areas. According to information made
available by the CPUC, investigation topics include, but are not limited
to, maintenance of facilities, vegetation management, and emergency
preparedness and response. Various other entities, including fire
departments, may also be investigating certain of the fires. It is
uncertain when the investigations will be complete and whether the SED
will release any preliminary findings before its investigations are
complete.
44
The Utility has submitted 23
electric incident reports to the CPUC associated with the 2017 Northern
California wildfires where Cal Fire or the Utility has identified a
site as potentially involving the Utility’s facilities in its
investigation and the property damage associated with each incident
exceeded $50,000.
The information contained in these reports is factual and preliminary
and does not reflect a determination of the causes of the fires.
Third-Party Claims, Investigations and Other Proceedings Related to the 2018 Camp Fire and 2017 Northern California Wildfires
If
the Utility’s facilities, such as its electric distribution and
transmission lines, are determined to be the substantial cause of one or
more fires, and the doctrine of inverse condemnation applies, the
Utility could be liable for property damage, business interruption,
interest and attorneys’ fees without having been found negligent.
California courts have imposed liability under the doctrine of inverse
condemnation in legal actions brought by property holders against
utilities on the grounds that losses borne by the person whose property
was damaged through a public use undertaking should be spread across the
community that benefited from such undertaking, and based on the
assumption that utilities have the ability to recover these costs from
their customers. Further, California courts have determined that the
doctrine of inverse condemnation is applicable regardless of whether the
CPUC ultimately allows recovery by the utility for any such costs. The
CPUC may decide not to authorize cost recovery even if a court decision
were to determine that the Utility is liable as a result of the
application of the doctrine of inverse condemnation. (See “Loss
Recoveries-Regulatory Recovery” below for further information regarding
potential cost recovery related to the wildfires, including in
connection with SB 901.)
In
addition to claims for property damage, business interruption, interest
and attorneys’ fees, the Utility could be liable for fire suppression
costs, evacuation costs, medical expenses, personal injury damages,
punitive damages and other damages under other theories of liability,
including if the Utility were found to have been negligent.
Further,
the Utility could be subject to material fines, penalties, or
restitution orders if the CPUC or any law enforcement agency were to
bring an enforcement action, including a criminal proceeding, and it
were determined that the Utility had failed to comply with applicable
laws and regulations.
As of January 28, 2019, PG&E Corporation and the Utility are aware of approximately 100 complaints on behalf of at least 4,200 plaintiffs related to the 2018 Camp fire, nine
of which seek to be certified as class actions. The pending civil
litigation against PG&E Corporation and the Utility related to the
2018 Camp fire, which is currently stayed as a result of the
commencement of the Chapter 11 Cases, includes claims under multiple
theories of liability, including inverse condemnation, trespass, private
nuisance, public nuisance, negligence, negligence per se, negligent
interference with prospective economic advantage, negligent infliction
of emotional distress, premises liability, violations of the Public
Utilities Code, violations of the Health & Safety Code, malice and
false advertising in violation of the California Business and
Professions Code. The plaintiffs principally assert that PG&E
Corporation’s and the Utility’s alleged failure to maintain and repair
their distribution and transmission lines and failure to properly
maintain the vegetation surrounding such lines were the causes of the
2018 Camp fire. The plaintiffs seek damages and remedies that include
wrongful death, personal injury, property damage, evacuation costs,
medical expenses, establishment of a class action medical monitoring
fund, punitive damages, attorneys’ fees and other damages. PG&E
Corporation’s and the Utility’s obligations with respect to such claims
are expected to be determined through the Chapter 11 process.
As of January 28, 2019, PG&E Corporation and the Utility are aware of approximately 750 complaints on behalf of at least 3,800 plaintiffs related to the 2017 Northern California wildfires, five
of which seek to be certified as class actions. These cases have been
coordinated in the San Francisco County Superior Court. As of the
Petition Date, the coordinated litigation was in the early stages of
discovery. A trial with respect to the Atlas fire was scheduled to
begin on September 23, 2019. The pending civil litigation against
PG&E Corporation and the Utility related to the 2017 Northern
California wildfires, includes claims under multiple theories of
liability, including inverse condemnation, trespass, private nuisance
and negligence. This litigation, including the trial date with respect
to the Atlas fire, currently is stayed as a result of the commencement
of the Chapter 11 Cases. The plaintiffs principally assert that
PG&E Corporation’s and the Utility’s alleged failure to maintain and
repair their distribution and transmission lines and failure to
properly maintain the vegetation surrounding such lines were the causes
of the 2017 Northern California wildfires. The plaintiffs seek damages
that include wrongful death, personal injury, property damage,
evacuation costs, medical expenses, punitive damages, attorneys’ fees
and other damages. PG&E Corporation’s and the Utility’s obligations
with respect to such claims are expected to be determined through the
Chapter 11 process.
45
Insurance
carriers who have made payments to their insureds for property damage
arising out of the 2017 Northern California wildfires have filed 52
subrogation complaints in the San Francisco County Superior Court and
the Sonoma County Superior Court as of January 28, 2019. These
complaints allege, among other things, negligence, inverse condemnation,
trespass and nuisance. The allegations are similar to the ones made by
individual plaintiffs. As of January 28, 2019, insurance carriers have
filed 39
similar subrogation complaints with respect to the 2018 Camp fire in
the Sacramento County Superior Court and the Butte County Superior
Court. PG&E Corporation’s and the Utility’s obligations with
respect to such claims are expected to be determined through the Chapter
11 process.
Various
government entities, including Yuba, Nevada, Lake, Mendocino, Napa and
Sonoma Counties and the Cities of Santa Rosa and Clearlake, also have
asserted claims against PG&E Corporation and the Utility based on
the damages that these government entities allegedly suffered as a
result of the 2017 Northern California wildfires. Such alleged damages
include, among other things, loss of natural resources, loss of public
parks, property damages and fire suppression costs. The causes of
action and allegations are similar to the ones made by individual
plaintiffs and the insurance carriers. With respect to the 2018 Camp
fire, Butte County has filed similar claims against PG&E Corporation
and the Utility, and PG&E Corporation and the Utility expect
additional similar claims to be made by other government entities.
PG&E Corporation’s and the Utility’s obligations with respect to
such claims are expected to be determined through the Chapter 11
process.
On
March 16, 2018, PG&E Corporation and the Utility filed a demurrer
to the inverse condemnation cause of action in the 2017 Northern
California wildfires litigation. On May 21, 2018, the court overruled
the motion. On July 20, 2018, PG&E Corporation and the Utility
filed a writ in the Court of Appeal requesting appellate review of the
trial court’s decision, which was denied on September 17, 2018. On
September 27, 2018, PG&E Corporation and the Utility filed a
petition for review to the California Supreme Court. On November 14,
2018, the California Supreme Court denied PG&E Corporation’s and the
Utility’s petition for review.
PG&E
Corporation and the Utility expect to be the subject of numerous
additional claims in connection with the 2018 Camp fire and 2017
Northern California wildfires. PG&E Corporation’s and the Utility’s
obligations with respect to such claims are expected to be determined
through the Chapter 11 process.
PG&E
Corporation and the Utility are continuing to review the evidence
concerning the 2018 Camp fire and 2017 Northern California wildfires.
PG&E Corporation and the Utility have not yet had access to all of
the evidence collected by Cal Fire as part of its investigations or to
many of the investigation reports prepared by Cal Fire. PG&E
Corporation and the Utility and plaintiffs are in discussions with Cal
Fire about access to the evidence and the remaining reports. No
schedule on gaining access has been set. (See “District Attorneys’
Offices’ Investigations” below for information regarding certain
investigations related to the 2018 Camp fire and 2017 Northern
California wildfires.)
Regardless
of any determinations of cause by Cal Fire with respect to any
pre-petition fire, ultimately PG&E Corporation’s and the Utility’s
liability will be resolved through the Chapter 11 process, regulatory
proceedings and any potential enforcement proceedings, all of which
could take a number of years to resolve. The timing and outcome of
these and other potential proceedings are uncertain.
PG&E
Corporation and the Utility, as part of their efforts to emerge from
bankruptcy, are engaged in discussions with holders of claims related to
the 2017 Northern California wildfires and the 2018 Camp Fire in an
attempt to reach a global settlement of such claims. PG&E
Corporation and the Utility cannot predict the outcome or timing of such
discussions. Even if discussions with claimholders were successful,
the consummation of such an agreement would likely be contingent on
numerous uncertain conditions, including Bankruptcy Court approval and
governmental action.
Potential Losses in Connection with the 2018 Camp Fire and 2017 Northern California Wildfires
On
January 28, 2019, the California Department of Insurance issued a news
release announcing an update on property losses in connection with the
2018 wildfires in Southern California (which are not in the Utility’s
service territory) and the 2018 Camp fire, stating that, as of such
date, “more than $11.4 billion in insured losses have been reported from the November 2018 fires,” of which approximately $8.4
billion relates to statewide claims from the 2018 Camp fire. On
September 6, 2018, the California Department of Insurance issued a news
release announcing that insurers have received nearly 55,000 insurance claims totaling more than $12.28 billion in losses, of which approximately $10 billion relates to statewide claims from the 2017 Northern California wildfires.
46
The dollar amounts announced by the California Department of Insurance represent an aggregate amount of approximately $18.4
billion of insurance claims made as of the above dates related to the
2018 Camp fire and 2017 Northern California wildfires. PG&E
Corporation and the Utility expect that additional claims have been
submitted and will continue to be submitted to insurers, particularly
with respect to the 2018 Camp fire. These claims reflect insured
property losses only. The $18.4
billion of insurance claims made as of the above dates does not account
for uninsured or underinsured property losses, interest, attorneys’
fees, fire suppression and clean-up costs, evacuation costs, personal
injury or wrongful death damages, medical expenses or other costs, such
as potential punitive damages, fines or penalties, or losses related to
claims that have not manifested yet (“future claims”), each of which
could be significant. The scope of all claims related to the 2018 Camp
fire and 2017 Northern California wildfires is not known at this time
because of the applicable statutes of limitations under California law.
Potential
liabilities related to the 2018 Camp fire and 2017 Northern California
wildfires depend on various factors, including but not limited to the
cause of each fire, contributing causes of the fires (including
alternative potential origins, weather and climate related issues), the
number, size and type of structures damaged or destroyed, the contents
of such structures and other personal property damage, the number and
types of trees damaged or destroyed, attorneys’ fees for claimants, the
nature and extent of any personal injuries, including the loss of lives,
the extent to which future claims arise, the amount of fire suppression
and clean-up costs, other damages the Utility may be responsible for if
found negligent, the amount of any penalties or fines that may be
imposed by governmental entities, and the amount of any penalties,
fines, or restitution orders that might result from any criminal charges
brought.
There
are a number of unknown facts and legal considerations that may impact
the amount of any potential liability. Among other things, it is
uncertain at this time as to the number of wildfire-related claims that
will be filed in the Chapter 11 Cases, the number of current and future
claims that will be allowed by the Bankruptcy Court, how claims for
punitive damages and claims by variously situated persons will be
treated and whether such claims will be allowed, and the impact that
historical settlement values for wildfire claims may have on the
estimation of wildfire liability in the Chapter 11 Cases. If PG&E
Corporation and the Utility were to be found liable for certain or all
of the costs, expenses and other losses described above with respect to
the 2018 Camp fire and 2017 Northern California wildfires, the amount of
such liability could exceed $30
billion, which amount does not include potential punitive damages,
fines and penalties or damages related to future claims. This estimate
is based on a wide variety of data and other information available to
PG&E Corporation and the Utility and their advisors, including
various precedents involving similar claims, and accounts for property
losses (including insured, uninsured and underinsured property losses),
interest, attorneys’ fees, fire suppression and clean-up costs,
evacuation costs, personal injury or wrongful death damages, medical
expenses and certain other costs. This estimate is not intended to
provide an upper end of the range of potential liability arising from
the 2018 Camp fire and 2017 Northern California wildfires. In certain
circumstances, PG&E Corporation’s and the Utility’s liability could
be substantially greater than such amount.
If
PG&E Corporation and the Utility were to be found liable for any
punitive damages or subject to fines or penalties, the amount of such
punitive damages, fines and penalties could be significant. PG&E
Corporation and the Utility have received significant fines and
penalties in connection with past incidents. For example, in 2015, the
CPUC approved a decision that imposed penalties on the Utility totaling $1.6
billion in connection with the natural gas explosion that occurred in
the City of San Bruno, California on September 9, 2010 (the “San Bruno
explosion”). These penalties represented nearly three times the
underlying liability for the San Bruno explosion of approximately $558
million incurred for third-party claims, exclusive of shareholder
derivative lawsuits and legal costs incurred. The amount of punitive
damages, fines and penalties imposed on PG&E Corporation and the
Utility could likewise be a significant amount in relation to the
underlying liabilities with respect to the 2018 Camp fire and 2017
Northern California wildfires. PG&E Corporation’s and the Utility’s
obligations with respect to such claims are expected to be determined
through the Chapter 11 process. Such proceedings are not subject to the
automatic stay imposed as a result of the commencement of the Chapter
11 Cases; however, collection efforts in connection with fines or
penalties arising out of such proceedings are stayed.
2018 Camp Fire and 2017 Northern California Wildfires Accounting Charge
Following
accounting rules, PG&E Corporation and the Utility record a
liability when a loss is probable and reasonably estimable. In
accordance with U.S. generally accepted accounting principles, PG&E
Corporation and the Utility evaluate which potential liabilities are
probable and the related range of reasonably estimated losses, and
record a charge that is the amount within the range that is a better
estimate than any other amount or the lower end of the range, if there
is no better estimate. The assessment of whether a loss is probable or
reasonably possible, and whether the loss or a range of losses is
estimable, often involves a series of complex judgments about future
events.
47
2018 Camp Fire
In
light of the current state of the law and the information currently
available to the Utility, including, among other things, the facts
described in the EIRs and the 20-Day
Electric Incident Report, PG&E Corporation and the Utility have
determined that it is probable they will incur a loss for claims in
connection with the 2018 Camp fire, and accordingly PG&E Corporation
and the Utility recorded a charge in the amount of $10.5
billion for the year ended December 31, 2018. This charge corresponds
to the lower end of the range of PG&E Corporation’s and the
Utility’s reasonably estimated losses, and is subject to change based on
additional information.
PG&E
Corporation and the Utility currently believe that it is reasonably
possible that the amount of the loss related to the 2018 Camp fire and
2017 Northern California wildfires will be greater than the amount
accrued, but are unable to reasonably estimate the additional loss and
the upper end of the range because there are a number of unknown facts
and legal considerations that may impact the amount of any potential
liability, including the total scope and nature of claims that may be
asserted against PG&E Corporation and the Utility. PG&E
Corporation and the Utility intend to continue to review the available
information and other information as it becomes available, including
evidence in Cal Fire’s possession, evidence from or held by other
parties, claims that have not yet been submitted, and additional
information about the nature and extent of personal and business
property damage and losses, the nature, number and severity of personal
injuries, and information made available through the discovery process.
The
process for estimating losses associated with claims requires
management to exercise significant judgment based on a number of
assumptions and subjective factors, including but not limited to factors
identified above and estimates based on currently available information
and prior experience with wildfires. As more information becomes
available, management estimates and assumptions regarding the financial
impact of the 2018 Camp fire may change, which could result in material
increases to the loss accrued.
The $10.5
billion charge does not include any amounts for potential penalties or
fines that may be imposed by governmental entities on PG&E
Corporation or the Utility, or punitive damages, if any, or any losses
related to future claims for damages that have not manifested yet, each
of which could be significant.
2017 Northern California Wildfires
In
light of the current state of the law on inverse condemnation and the
information currently available to the Utility, including, among other
things, the Cal Fire determinations of cause as stated in Cal Fire’s
press releases and their released reports, PG&E Corporation and the
Utility have determined that it is probable they will incur a loss for
claims in connection with 17
of the 2017 Northern California wildfires referred to as the La Porte,
McCourtney, Lobo, Honey, Redwood, Sulphur, Cherokee, Blue, Pocket,
Atlas, Cascade, Point and Sonoma/Napa merged fires (which include the
Nuns, Norrbom, Adobe, Partrick and Pythian fires). Accordingly,
PG&E Corporation and the Utility recorded a charge in the amount of $2.5 billion during the quarter ended June 30, 2018 and a charge in the amount of $1.0 billion during the quarter ended December 31, 2018, for a total charge in the amount of $3.5
billion for the year ended December 31, 2018. This charge corresponds
to the lower end of the range of PG&E Corporation’s and the
Utility’s reasonably estimated losses and is subject to change based on
additional information.
PG&E
Corporation and the Utility currently believe that it is reasonably
possible that the amount of the loss related to the 2017 Northern
California wildfires and the 2018 Camp fire will be greater than the
amount accrued, but are unable to reasonably estimate the additional
loss and the upper end of the range because there are a number of
unknown facts and legal considerations that may impact the amount of any
potential liability, including the total scope and nature of claims
that may be asserted against PG&E Corporation and the Utility.
PG&E Corporation and the Utility intend to continue to review the
available information and other information as it becomes available,
including evidence in Cal Fire’s possession, evidence from or held by
other parties, claims that have not yet been submitted, and additional
information about the nature and extent of personal and business
property damage and losses, the nature, number and severity of personal
injuries, and information made available through the discovery process.
The
process for estimating losses associated with claims requires
management to exercise significant judgment based on a number of
assumptions and subjective factors, including but not limited to factors
identified above and estimates based on currently available information
and prior experience with wildfires. As more information becomes
available, management estimates and assumptions regarding the financial
impact of the 2017 Northern California wildfires may change, which could
result in material increases to the loss accrued.
48
The $3.5
billion charge does not include any amounts for potential penalties or
fines that may be imposed by governmental entities on PG&E
Corporation or the Utility, or punitive damages, if any, or any losses
related to future claims for damages that have not manifested yet, each
of which could be significant.
The $3.5
billion charge also does not include any amounts in connection with the
37, Tubbs, Maacama and Pressley fires because at this time PG&E
Corporation and the Utility have not concluded that a loss arising from
those fires is probable. However, in the future it is possible that
facts could emerge that lead PG&E Corporation and the Utility to
believe that a loss is probable, resulting in the accrual of a liability
at that time, the amount of which could be significant.
ITEM 1. LEGAL PROCEEDINGS
In
addition to the following proceedings, PG&E Corporation and the
Utility are parties to various lawsuits and regulatory proceedings in
the ordinary course of their business. For more information regarding
PG&E Corporation’s and the Utility’s contingencies, see Notes 10 and
11 of the Notes to the Condensed Consolidated Financial Statements in
Item 1 and Part I, MD&A: “Enforcement and Litigation Matters.”
U.S. District Court Matters and Probation
On
August 9, 2016, the jury in the federal criminal trial against the
Utility in the United States District Court for the Northern District of
California, in San Francisco, found the Utility guilty on one count of
obstructing a federal agency proceeding and five counts of violations of
pipeline integrity management regulations of the Natural Gas Pipeline
Safety Act. On January 26, 2017, the court issued a judgment of
conviction against the Utility. The court sentenced the Utility to a
five-year corporate probation period, oversight by the Monitor for a
period of five years, with the ability to apply for early termination
after three years, a fine of $3 million to be paid to the federal
government, certain advertising requirements, and community service.
The
probation includes a requirement that the Utility not commit any local,
state, or federal crimes during the probation period. As part of the
probation, the Utility has retained the Monitor at the Utility’s
expense. The goal of the Monitor is to help ensure that the Utility
takes reasonable and appropriate steps to maintain the safety of its gas
and electric operations, and to maintain effective ethics, compliance
and safety related incentive programs on a Utility-wide basis.
On
November 27, 2018, the court overseeing the Utility’s probation issued
an order requiring that the Utility, the United States Attorney’s Office
for the Northern District of California (the “USAO”) and the Monitor
provide written answers to a series of questions regarding the Utility’s
compliance with the terms of its probation, including what requirements
of the Utility’s probation “might be implicated were any wildfire
started by reckless operation or maintenance of PG&E power lines” or
“might be implicated by any inaccurate, slow, or failed reporting of
information about any wildfire by PG&E.” The court also ordered the
Utility to provide “an accurate and complete statement of the role, if
any, of PG&E in causing and reporting the recent 2018 Camp fire in
Butte County and all other wildfires in California” since January 2017
(“Question 4 of the November 27 Order”). On December 5, 2018, the court
issued an order requesting that the Office of the California Attorney
General advise the court of its view on “the extent to which, if at all,
the reckless operation or maintenance of PG&E power lines would
constitute a crime under California law.” The responses of the Attorney
General were submitted on December 28, 2018, and the responses of the
Utility, the USAO and the Monitor were submitted on December 31, 2018.
On
January 3, 2019, the court issued a new order requiring that the
Utility provide further information regarding the Atlas fire. The court
noted that “[t]his order postpones the question of the adequacy of
PG&E’s response” to Question 4 of the November 27 Order. On January
4, 2019, the court issued another order requiring that the Utility
provide “with respect to each of the eighteen October 2017 Northern
California wildfires that [Cal Fire] has attributed to [the Utility’s]
facilities,” information regarding the wind conditions in the vicinity
of each fire’s origin and information about the equipment allegedly
involved in each fire’s ignition. The responses of the Utility were
submitted on January 10, 2019.
96
On
January 9, 2019, the court ordered the Utility to appear in court on
January 30, 2019, as a result of the court’s finding that “there is
probable cause to believe there has been a violation of the conditions
of supervision” with respect to reporting requirements related to the
2017 Honey fire. In addition, on January 9, 2019, the court issued an
order (the “January 9 Order”) proposing to add new conditions of
probation that would require the Utility, among other things, to:
•
|
prior
to June 21, 2019, “re-inspect all of its electrical grid and remove or
trim all trees that could fall onto its power lines, poles or equipment
in high-wind conditions, . . . identify and fix all conductors that
might swing together and arc due to slack and/or other circumstances
under high-wind conditions[,] identify and fix damaged or weakened
poles, transformers, fuses and other connectors [and] identify and fix
any other condition anywhere in its grid similar to any condition that
contributed to any previous wildfires;”
|
•
|
“document the foregoing inspections and the work done and . . . rate each segment’s safety under various wind conditions;” and
|
•
|
at
all times from and after June 21, 2019, “supply electricity only
through those parts of its electrical grid it has determined to be safe
under the wind conditions then prevailing.”
|
The
Utility was ordered to show cause by January 23, 2019 as to why the
Utility’s conditions of probation should not be modified as proposed.
The Utility’s response was submitted on January 23, 2019. The court
requested that Cal Fire file a public statement, and invited the CPUC to
comment, by January 25, 2019. On January 30, 2019, the court found
that the Utility had violated a condition of its probation with respect
to reporting requirements related to the 2017 Honey fire. The court
issued an order stating that a sentencing hearing on the probation
violation will be set at a later date. Also, on January 30, 2019, the
court ordered the Utility to submit to the court on February 6, 2019 the
2019 Wildfire Safety Plan that the Utility was required to submit to
the CPUC by February 6, 2019 in accordance with SB 901, and invited
interested parties to comment on such plan by February 20, 2019. In
addition, on February 14, 2019, the court ordered the Utility to provide
additional information, including on its vegetation clearance
requirements. The Utility submitted its response to the court on
February 22, 2019. As of April 30, 2019, to the Utility’s knowledge, no
parties have submitted comments to the court on the 2019 Wildfire
Safety Plan.
On
March 5, 2019, the court issued an order proposing to add new
conditions of probation that would require the Utility, among other
things, to:
•
|
“fully comply with all applicable laws concerning vegetation management and clearance requirements;”
|
•
|
“fully
comply with the specific targets and metrics set forth in its wildfire
mitigation plan, including with respect to enhanced vegetation
management;”
|
•
|
submit
to “regular, unannounced inspections” by the Monitor “of PG&E’s
vegetation management efforts and equipment inspection, enhancement, and
repair efforts” in connection with a requirement that the Monitor
“assess PG&E’s wildfire mitigation and wildfire safety work;”
|
•
|
“maintain
traceable, verifiable, accurate, and complete records of its vegetation
management efforts” and report to the Monitor monthly on its vegetation
management status and progress; and
|
•
|
“ensure
that sufficient resources, financial and personnel, including
contractors and employees, are allocated to achieve the foregoing” and
to forego issuing “any dividends until [the Utility] is in compliance
with all applicable vegetation management requirements as set forth
above.”
|
The
court ordered all parties to show cause by March 22, 2019, as to why
the Utility’s conditions of probation should not be modified as
proposed. The responses of the Utility, the USAO, Cal Fire, the CPUC,
and non-party victims were filed on March 22, 2019. At a hearing on
April 2, 2019, the court indicated it would impose the new conditions of
probation proposed on March 5, 2019, on the Utility, and on April 3,
2019, the Court issued an order imposing the new terms though amended
the second condition to clarify that “[f]or purposes of this condition,
the operative wildfire mitigation plan will be the plan ultimately
approved by the CPUC.” Also, on April 2, 2019, the court directed the
parties to submit briefing by April 16, 2019, regarding whether the
court can extend the term of probation beyond 5 years in light of the
violation that has been adjudicated and whether the third-party Monitor
reports should be made public. The responses of the Utility, the USAO,
and the Monitor were filed on April 16, 2019. The Utility’s response
contended that the term of probation may not be extended beyond five
years and the USAO’s response contended that whether the term of
probation could be extended beyond five years was an open legal issue.
97
Order Instituting an Investigation into PG&E Corporation’s and the Utility’s Safety Culture
On
August 27, 2015, the CPUC began a formal investigation into whether the
organizational culture and governance of PG&E Corporation and the
Utility prioritize safety and adequately direct resources to promote
accountability and achieve safety goals and standards. The CPUC
directed the SED to evaluate the Utility’s and PG&E Corporation’s
organizational culture, governance, policies, practices, and
accountability metrics in relation to the Utility’s record of
operations, including its record of safety incidents. The SED engaged a
consultant to assist in the SED’s investigation and the preparation of a
report containing the SED’s assessment, and subsequently, to report on
the implementation by the Utility of the consultant’s recommendations.
On
May 8, 2017, the CPUC released the consultant’s report, accompanied by a
scoping memo and ruling. The scoping memo established a second phase
in the OII in which the CPUC evaluated the safety recommendations of the
consultant. Phase two of the proceeding also considered all necessary
measures, including, but not limited to, a potential reduction of the
Utility’s return on equity. On November 17, 2017, the CPUC issued a
phase two scoping memo and procedural schedule. The scoping memo
directed the Utility to file testimony addressing a number of issues
including: adoption of the safety recommendations from the consultant,
the Utility’s implementation process for the safety recommendations of
the consultant, the Utility’s Board of Director’s actions and
initiatives related to safety culture and the consultant’s
recommendations, the Utility’s corrective action program, and the
Utility’s response to certain specified safety incidents that occurred
in 2013 through 2015.
The
Utility’s testimony was submitted to the CPUC on January 8, 2018 and
stated that the Utility agrees with all the recommendations of the
consultant and supports their adoption by the CPUC. Other parties’
responsive testimony was submitted on February 16, 2018, followed by the
Utility’s rebuttal testimony on February 23, 2018.
On
November 29, 2018, the CPUC approved the PD in connection with this
proceeding. The decision directed the Utility to implement the
recommendations set forth in the May 2017 consultant report no later
than July 1, 2019, and to submit quarterly reports on the Utility’s
implementation status beginning in the fourth quarter of 2018.
On
December 21, 2018, the CPUC issued a Scoping Memo and Ruling (the
“Scoping Memo”) setting forth the scope to be addressed in the next
phase of its ongoing investigation into whether the organizational
culture and governance of PG&E Corporation and the Utility
prioritize safety and adequately direct resources to promote
accountability and achieve safety goals and standards (the “Safety
Culture OII”). The Scoping Memo provides that the CPUC “will examine
[PG&E’s] current corporate governance, structure, and operations to
determine if the utility is positioned to provide safe electrical and
gas service, and will review alternatives to the current management and
operational structures of providing electric and gas service in Northern
California.”
In
the Scoping Memo, the CPUC alleges that the Utility has had “serious
safety problems with both its gas and electric operations for many
years” and that despite penalties and other remedial measures in
connection with these problems, PG&E Corporation and the Utility
have failed to develop “a comprehensive enterprise-wide approach to
addressing safety.” The Scoping Memo outlines a number of proposals to
address the CPUC’s concerns regarding PG&E Corporation’s and the
Utility’s safety culture, including, but not limited to, (i) replacement
of all or part of PG&E Corporation’s and the Utility’s existing
boards of directors and corporate management, (ii) separating the
Utility’s gas and electric distribution and transmission businesses into
separate companies, (iii) reorganizing the Utility into regional
subsidiaries based on regional distinctions, (iv) reconstituting the
Utility as a publicly owned utility or utilities, (v) providing for
entities other than the Utility to provide generation services, and (vi)
conditioning the Utility’s return on equity on safety performance. The
Scoping Memo does not propose penalties and states that this phase “is
not a punitive phase.” The Utility submitted its background filing to
the CPUC on January 16, 2019 and opening comments were filed on February
13, 2019. The Utility and other parties filed reply comments on
February 28, 2019. Subsequently, the CPUC held workshops on some of the
topics raised in the Scoping Memo on April 15, 2019 and April 26, 2019.
The Utility is unable to predict the timing and outcome of this proceeding.
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