California Public Utilities Commission Fines PG&E $2.1B over Wildfires

The California Public Utilities Commission issued an administrative law judge decision imposing $2.137 billion in penalties against Pacific Gas and Electric Company for the utility’s role in the catastrophic 2017 and 2018 wildfires.

If PG&E agrees to the modified settlement, and no party appeals and no commissioner requests review, it becomes the decision of the CPUC.

The decision approves with modifications 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 decision increases the penalty amount in the settlement by $462 million and provides additional benefits to PG&E customers, including the return of any future tax savings when they are realized by PG&E to the benefit of ratepayers.

PG&E shareholders would be liable for the $2.137 billion in penalties consisting of:

• $1.823 billion in disallowances for wildfire-related expenditures (an increase of $198 million from the settlement agreement), meaning that PG&E shareholders will pay the cost of expenditures that it would otherwise seek to recover from customers
• A $200 million fine payable to California’s General Fund (the settlement agreement did not include a fine)
• $114 million in System Enhancement Initiatives and corrective actions (an increase of $64 million from the settlement agreement), including: Root cause analysis for wildfires where ignition involved PG&E facilities, and the implementation of recommended actions to prevent similar events; funding local Fire Safe Councils that focus on community-based wildfire prevention and mitigation efforts; 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

In addition, the modified settlement requires any tax savings associated with the shareholder payments to be applied to the benefit of PG&E’s customers. These benefits which PG&E shareholders would otherwise be expected to realize are likely to be in excess of $500 million.

The wildfires that occurred in Northern California in October 2017 and November 2018 were unprecedented in size, scope, destruction, and loss of life.

Following a CPUC staff investigation, the CPUC opened a formal investigation into the maintenance, operations, and practices of PG&E with respect to its electric facilities that were involved in igniting these fires, and to determine the appropriate penalties for violation of CPUC rules and regulations.