The news Thursday that state investigators found Pacific Gas & Electric Co. is not responsible for the 2017 Tubbs Fire in Santa Rosa shows why the beleaguered utility shouldn’t rush into bankruptcy protection, says Steven Weissman, a lecturer at UC Berkeley’s Goldman School of Public Policy.
Weissman, who served for 15 years as an administrative law judge for California’s top utility regulator and also was an adviser to both the regulators and the state legislature, said it was too soon to say that PG&E is truly insolvent.
Earlier coverageGreen energy could be a casualty as PG&E enters bankruptcy
"PG&E needs to take a step back, take a deep breath and put off its efforts to file in bankruptcy court," he said, referring to PG&E’s announcement last week that it intended to seek bankruptcy protection by the end of January. "The concern comes from the threat of wildfire and potential future wildfire liabilities. But why not let that process play out?"
A bankrupt PG&E would leave regulators distracted and company executives focused on financial and legal maneuvers when they should instead be focused on preparing the company --and California - for the threat of wildfires made more destructive by a warming climate.
"PG&E is maybe one of the most dramatic examples of a company that has not adapted adequately to the new realities that are brought on by climate change," he said.
Berkeley News spoke with Weissman about his experience with the state’s Public Utilities Commission, the threat of wildfire and what he’d do if he were in Gov. Gavin Newsom’s shoes.
Berkeley News: CalFire said Thursday that PG&E wasn’t responsible for the Tubbs Fire. I think many thought they were and that, as a result, they’d have to pay out millions of dollars in penalties. Are they still going to declare bankruptcy?
Steven Weissman: This doesn’t let PG&E off the hook for Tubbs. Undoubtedly, some litigators will offer private investigations that might reach different conclusions. And even if it cannot be proven with clarity that PG&E triggered the fire, plaintiffs could try to make a case that negligence on PG&E’s part contributed to the initial blaze or contributed to the intensity of the fire. But this does put in doubt PG&E’s liability for the biggest 2017 fire, and there has been no finding yet related to the Camp Fire in 2018.
So they might continue with the bankruptcy process. What does that mean for the state of California?
There are a number of issues. One is, will the lights go out? The short answer is no. It won’t change the rates in the short run, and it won’t make the service less reliable.
But you asked about the state. One thing that it’s going to do, unfortunately, is capture a tremendous amount of the attention of the state legislature and the governor’s office. They are going to be very concerned about the implications of having the biggest utility in the state in bankruptcy. They’re going to do everything in their power to soften the blow or convince PG&E to avoid bankruptcy.
Why does the state want to do that?
One of the benefits of having strong, large, centralized energy utilities in the state is that they’re available to implement a number of environmental and social programs that we seem to care about.
For instance, there is a requirement that 60 percent of all electricity provided by the utility has to come from renewable sources by 2030, and then by 2045 it can only provide a combination of renewables or other sources that would qualify as ’clean energy.’ They also run very ambitious programs to encourage people to use energy more efficiently.
If the utility is not able to focus its attention on implementing those programs, then the programs and the ability to meet California’s climate goals will suffer. This is a matter of great concern for the state. It might prompt the state to take over PG&E’s operations.
So, could it be harder to reach our goals when it comes to climate change or clean energy - the things that will make fires less present in the future?
PG&E has been a national leader in terms of its energy efficiency and renewable energy programs. We don’t want to lose that enthusiasm.
Remember, too, that this concern is being triggered by the catastrophic fires that we now seem to be having on an annual basis. The concern is that PG&E’s equipment may have sparked some or most of the fires.
If all the attention goes to making sure PG&E is financially viable, that distracts attention from the more fundamental question about how we go about reducing the intensity of these wildfires.
Some people have said that if PG&E goes bankrupt, it could be the first major company to fall victim to climate change. Do you think that’s the case? Is this a sign of what’s to come, in terms of economic instability in the energy sector?
I don’t know if you can say that it’s the first company to be a victim of climate change, but PG&E provides one of the most dramatic examples of a company that has not adapted adequately to the new realities that are brought on by climate change.
Based on your experience at the Public Utilities Commission, and watching PG&E’s 2001 bankruptcy, what’s the ideal outcome here?
PG&E needs to take a step back, take a deep breath and put off its efforts to file in bankruptcy court. I’m actually surprised that the company wants to go down that path. It seems premature. Bankruptcy usually is something that is used as a remedy when a company cannot pay its bills. PG&E is not in that position right now. It has plenty of cash and can plan to pay all its bills.
The concern comes from the threat of wildfire and potential future wildfire liabilities. But why not let that process play out? We can see with the results of the Tubbs Fire investigation that it might not turn out the way we expect.
What would you do if you were the governor?
I would want to do everything I could to focus the conversation on how we deal with the more fundamental challenge: reducing the intensity of fires. We’ve had devastating fires two years in a row, and there’s no reason to think they’re not going to happen again. Wildfires are inevitable. It is going to take an extraordinary effort to reduce the fuel load in areas of high fire risk to keep those fires from becoming catastrophic.
Reporters interested in contacting Weissman should contact Will Kane at willkane [at] berkeley (p) edu.