In 2018 and 2019, the company received widespread media notoriety when investigations by the California Department of Forestry and Fire Protection (Cal Fire) found the company's infrastructure primarily responsible for causing two separate devastating wildfires in California, including the 2018 Camp Fire,[8][9] the deadliest wildfire in California history. The formal finding of liability led to losses in federal bankruptcy court.[10] On January 14, 2019, PG&E announced its filing for Chapter 11 bankruptcy in response to its liability for the catastrophic 2017 and 2018 wildfires in Northern California.[11][12] The company hoped to come out of bankruptcy by June 30, 2020,[13][14] and was successful on Saturday, June 20, 2020, when U.S. Bankruptcy Judge Dennis Montali issued the final approval of the plan for PG&E to exit bankruptcy.[15][16][17]
History
Early history
San Francisco Gas
In the 1850s, manufactured gas was introduced to the United States for lighting. Larger American cities in the east built gasworks, but the west had no gas industry. San Francisco had street lights only on Merchant Street, in the form of oil lamps.[18]:11[19]
Three brothers—Peter, James, and Michael Donahue—ran the foundry that became the Union Iron Works, the largest shipbuilding operation on the West Coast, and became interested in manufacturing gas[18]:11[20] Joseph G. Eastland, an engineer and clerk at the foundry, joined them in gathering information. In July 1852, James applied for and received from the Common Council of the City of San Francisco a franchise to erect a gasworks, lay pipes in the streets and install street lamps to light the city with "brilliant gas". The council specified that gas should be supplied to households "at such rates as will make it to their interest to use it in preference to any other material".[18]:11–12 Eastland and the Donahue brothers incorporated the San Francisco Gas Company on August 31, 1852, with $150,000 of authorized capital. It became the first gas utility in the West. Its official seal bore the inscription "Fiat Lux"—let there be light—the same slogan later adopted by the University of California. There were 11 original stockholders, and the three Donahue brothers subscribed for 610 of the 1,500 shares.[18]:12
The original location for the gas works was bounded by First, Fremont, Howard and Natoma streets south of Market, on what was then the shore of the San Francisco Bay. Work on the plant started in November 1852, and finished a few months later. On the night of February 11, 1854, the streets of San Francisco were for the first time lighted by gas. To celebrate the event, the company held a gala banquet at the Oriental Hotel.[18]:13 Gas lighting quickly gained public favor. In the first year of operation, the company had 237 customers. That number more than doubled the next year, to 563. By the end of 1855, the company had laid more than 6 ½ miles of pipe and 154 street lamps were in operation.[18]:15
The growing popularity of gas light led to competing gas companies, including the Aubin Patent Gas Company and Citizens Gas Company. The San Francisco Gas Company quickly acquired these smaller rivals. However, one rival did provide serious competition.[18]:26–30 The Bank of California founded the City Gas Company in April 1870 to compete with the gas monopoly held by the Donahue brothers' operation.[21] City Gas began operation in 1872 and initiated a price war with the San Francisco Gas Company.[18]:26–30 In 1873, the two companies negotiated a consolidation as a compromise and the Bank of California gained part ownership of "the most lucrative gas monopoly in the West".[21] On April 1, 1873, the San Francisco Gas Light Company was formed, representing a merger of the San Francisco Gas Company, the City Gas Company, and the Metropolitan Gas Company.[18]:26–30[22]
San Francisco Gas and Electric
Gas utilities, including San Francisco Gas Light, faced new competition with the introduction of electric lighting to California.[18]:80–82 According to a 2012 PG&E publication and their 1952 commissioned history, in 1879, San Francisco was the first city in the U.S. to have a central generating station for electric customers.[18]:59[23] To stay competitive, the San Francisco Gas Light Company introduced the Argand lamp that same year. The lamp increased the light capacity of gas street lamps, but proved to be an expensive improvement and was not generally adopted.[18]:80–82 Meanwhile, the demand for electric light in the stores and factories of downtown San Francisco continued to grow. The first electric street light was erected in 1888 in front of City Hall, and the electrical grid supporting it was gradually extended. A second generating station was constructed in 1888 by the California Electric Light Company to increase production capacity.[18]:57–63
New competition also emerged in the 1880s in the form of water gas, an improved illuminant patented by Thaddeus Lowe. The United Gas Improvement Company, a water gas manufacturer organized after purchasing the Lowe gas patents, acquired a lease and then an interest in San Francisco's Central Gas Light Company on November 1, 1883.[18]:46–48[24] United was acquired by the Pacific Gas Improvement Company in 1884. Under the management of president Albert Miller, Pacific Gas Improvement developed into a formidable competitor to San Francisco Gas Light.[18]:46–48 His sons, Horace A. Miller and C. O. G. Miller (Christian Otto Gerberding Miller), acting as Secretary and President, respectively, eventually owned and controlled not only the Pacific Gas Improvement Company but also the Pacific Gas Lighting Company (Pacific Lighting Company).
In 1888, San Francisco Gas Light built its own water gas plant at the Potrero gas works. The manufacturing of water gas proved successful due to the increased availability of inexpensive petroleum. The company decided to construct a modern gas works with both updated water gas manufacturing technology and a modern coal-gas plant as a hedge against shortages in the supply of oil.[25] In 1891, the North Beach Gas Works was completed under the direction of San Francisco Gas Light president and engineer Joseph B. Crockett. The facility was the largest gas holder in the U.S. west of Chicago.[18]:84[25]
In 1896, the Edison Light and Power Company merged with the San Francisco Gas Light Company to form the new San Francisco Gas and Electric Company.[18]:71Consolidation of gas and electric companies solved problems for both utilities by eliminating competition and producing economic savings through joint operation.[18]:80–82 Other companies that began operation as active competitors but eventually merged into the San Francisco Gas and Electric Company included the Equitable Gas Light Company, the Independent Electric Light and Power Company, and the Independent Gas and Power Company.[18]:90 In 1903, the company purchased its main competitor for gas lighting, the Pacific Gas Improvement Company.[18]:46–48
Pacific Gas and Electric Company
Pacific Gas and Electric Company plant in Sacramento, 1912
John Martin and Eugene J. de Sabla, started out as gold miners along the Yuba River,[26][27] harnessing hydroelectric power, building hydro plants in Nevada City (1895),[28] and Northern California.
In the early 1890s, Martin, de Sabla, Alfonso Tregidgo, and later, Romulus Riggs Colgate, began developing a hydroelectric powerhouse on the South Fork of the Yuba River.[29]
In 1899, Martin and de Sabla formed Yuba Power Company.[28] In 1900, Martin and de Sabla created the Bay Counties Power Company, constructing a 140-mile transmission line for an electric railway in Oakland.[26] In 1903, John Martin and Eugene de Sabla started the California Gas & Electric Company to acquire and merge gas and electric power businesses, and bought many utilities like Oakland Gas Light & Heat Company, United Gas & Electric Company, and, in 1905, San Francisco Gas & Electric Company.[26]
According to PG&E's 2012 history timeline on their webpage, the San Francisco Gas and Electric Company and the California Gas and Electric Corporation merged to form the Pacific Gas and Electric Company (PG&E) on October 10, 1905.[23] The consolidation gave the California Gas and Electric Corporation access to the large San Francisco market and a base for further financing. The San Francisco Gas and Electric Company, in turn, was able to reinforce its electric system, which until then had been powered entirely by steam-operated generating plants, which could not compete with lower cost hydroelectric power.[18]:227–233 After the merger, engineers and management from each organization made plans to coordinate and unify the two systems.[18]:227–233 However, the two firms maintained separate corporate identities until 1911.[18]:227–233
PG&E began delivering natural gas to San Francisco and northern California in 1930. The longest pipeline in the world connected the Texas gas fields to northern California, with compressor stations that included cooling towers every 300 miles (480km), at Topock, Arizona, on the state line, and near the town of Hinkley, California. With the introduction of natural gas, the company began retiring its polluting gas manufacturing facilities, although it did keep some plants on standby. Today a network of eight compressor stations linked by "40,000 miles of distribution pipelines and over 6,000 miles of transportation pipelines" serves "4.2 million customers from Bakersfield to the Oregon border".[4]
In the 1950s and 1960s, at both the Topock and Hinkley compressor stations, a hexavalent chromium additive was used to prevent rust in the cooling towers, which later was the cause of the Hinkley groundwater contamination.[4] It disposed of the water from the cooling towers "adjacent to the compressor stations".[4][36]
The 1906 San Francisco earthquake
PG&E was significantly affected by the 1906 San Francisco earthquake.[23] The company's assorted central offices were damaged by the quake and destroyed by the subsequent fire. Its San Francisco Gas and Electric Company subsidiary in particular suffered significant infrastructure loss, as its distribution systems—miles of gas mains and electric wires—were dissevered. Only two gas and two electric plants, all located far from the city, survived the destruction.[18]:235–236[37] These functioning facilities—including the new 4,000,000-foot crude oil gas works at Potrero Generating Station—played critical roles in San Francisco's rebuilding efforts.[38][39] Many of PG&E's utility competitors ceased operation following the Great Earthquake. The company's substantial capital allowed it to survive, rebuild, and expand.[40]
Sacramento Electric, Gas and Railway Company
Map of Central California showing power plants and transmission lines of the Pacific Gas and Electric Company c.1912
In 1906, PG&E purchased the Sacramento Electric, Gas and Railway Company and took control of its railway operations in and around Sacramento.[41] The Sacramento City Street Railway began operating under the Pacific Gas & Electric name in 1915, and its track and services subsequently expanded.[41][42] By 1931 the Sacramento Street Railway Division operated 75 streetcars on 47 miles (76km) of track.[43] PG&E's streetcars were powered by the company's hydroelectric plant in Folsom.[44] In 1943, PG&E sold the rail service to Pacific City Lines, which was later acquired by National City Lines. Several streetcar lines were soon converted to bus service, and the track was abandoned entirely in 1947.[41][42]
Within a few years of its incorporation, PG&E made significant inroads into Northern California's hydroelectric industry through purchase of existing water storage and conveyance facilities. These included many reservoirs, dams, ditches and flumes built by mining interests in the Sierras that were no longer commercially viable.[46] By 1914, PG&E was the largest integrated utility system on the Pacific Coast. The company handled 26 percent of the electric and gas business in California. Its operations spanned 37,000 square miles across 30 counties.[47]
The company expanded in the 1920s through strategic consolidation. Important acquisitions during this period included the California Telephone and Light Company, the Western States Gas and Electric Company and the Sierra and San Francisco Power Company, which provided hydropower to San Francisco's streetcars.[18]:277–283[48] These three companies added valuable properties and power and water sources. By the end of 1927, PG&E had nearly one million customers and provided electricity to 300 Northern Californian communities.[18]:277–283
In 1930, PG&E purchased majority stock holdings in two major Californian utility systems—Great Western Power and San Joaquin Light and Power—from The North American Company, a New York investment firm. In return, North American received shares of PG&E's common stock worth $114 million. PG&E also gained control of two smaller utilities, Midland Counties Public Service and the Fresno Water Company, which was later sold.[49] The acquisition of these utilities did not result in an immediate merger of property and personnel. The Great Western Power Company and the San Joaquin Company remained separate corporate entities for several more years. But through this final major consolidation, PG&E soon served nearly all of Northern and Central California through one integrated system.[18]:291–298
Natural gas
The gas industry market structure was dramatically altered by the discovery of massive natural gas fields throughout the American Southwest beginning in 1918.[50] The fuel was cleaner than manufactured gas and less expensive to produce.[18]:299 While natural gas sources were abundant in Southern California, no economical sources were available in Northern California. In 1929, PG&E constructed a 300-mile pipeline from the Kettleman oil field to bring natural gas to San Francisco.[18]:300[51] The city became the first major urban area to switch from manufactured gas to natural gas.[50] The transition required the adjustment of burners and airflow valves on 1.75 million appliances.[50] In 1936, PG&E expanded distribution with an additional 45-mile pipeline from Milpitas.[18]:306 PG&E gradually retired its gas manufacturing facilities, although some plants were kept on standby.[18]:304
Defense activities boosted natural gas sales in California during World War II, but cut deeply into the state's natural reserves.[18]:306–307[49] In 1947, PG&E entered into a contract with the Southern California Gas Company and the Southern Counties Gas Company to purchase natural gas through a new 1,000-mile pipeline running from Texas and New Mexico to Los Angeles.[18]:306–307 Another agreement was reached with the El Paso Natural Gas Company of Texas for gas delivery to the California-Arizona border. In 1951, PG&E completed a 502-mile main that connected with the El Paso network at the state line.[18]:306–307
During this period of expansion PG&E was involved in legal proceedings with the Securities and Exchange Commission regarding the company's status as a subsidiary of the North American Company. As outlined by the Public Utility Holding Company Act of 1935, a utility subsidiary was defined as a utility company with more than 10% of their stock held by a public utility holding company. Though 17% of PG&E stock was held by the North American Company at this time, PG&E filed with the SEC to be exempted from subsidiary status on the grounds that 17% ownership did not give the North American Company control and because the North American Company occupied only two board member spots.[18]:314–316[52] The North American Company backed PG&E's request by stating that they were involved in business operations in a limited capacity.[53] The request remained unresolved until 1945 when the North American Company sold off stocks that brought its ownership to below 10%. The SEC then ruled that PG&E was not a subsidiary of the North American Company.[54] In 1948, the North American Company sold its remaining stock in PG&E.[18]:314–316
In addition to nuclear power, PG&E continued to develop natural gas supplies as well. In 1959, the company began working to obtain approval for the import of a large quantity of natural gas from Alberta, Canada to California, via a pipeline constructed by Westcoast Transmission Co. and the Alberta and Southern Gas Company on the Canadian side, and by Pacific Gas Transmission Company, a subsidiary of PG&E, on the U.S.side.[57][58] Construction of the pipeline lasted 14 months.[59] Testing began in 1961,[60] and the completed 1,400-mile pipeline was dedicated in early 1962.[59][61]
PG&E began construction on another nuclear facility, the Diablo Canyon Power Plant, in 1968.[62] Originally slated to come online in 1979,[62] the plant's opening was delayed for several years due to environmental protests[62][63] and concerns over the safety of the plant's construction.[64][65][66] Testing of the plant began in 1984,[67][68] and energy production was brought up to full power in 1985.[69]
During the construction of the Diablo Canyon plant, PG&E continued its efforts to bring natural gas supplies from the North to their service area in California. In 1972, the company began exploring possibilities for a 3,000-mile pipeline from Alaska, which would travel through the Mackenzie River Valley and on to join with the previously constructed pipeline originating in Alberta.[70]
In 1977 the Mackenzie Valley Pipeline project received approval from the U.S.Federal Power Commission[71] and support from the Carter Administration.[72] The pipeline still required approval from Canada. Plans for the pipeline were placed on hold in 1977 by a Canadian judge.[73] Justice Thomas R. Berger of British Columbia shelved the project for at least 10 years, citing concerns from First Nations groups, whose land the pipeline would have traversed, as well as potential environmental impacts.[73]
In 1984 the great-grandson of PG&E's founder George H. Roe—David Roe published his book entitled Dynamos and Virgins during the time when there was a growing antinuclear-power movement.[74][6] David Roe, who was an environmentalist and the Environmental Defense Fund's West Coast general counsel, "mounted an assault on the longstanding assumption that steady growth in coal- and nuclear-generating capacity was the only solution to the nation's energy needs". He based his arguments on an economic analysis "aimed at showing that a shift to energy conservation and alternative energy sources alone could slake the thirst for electricity".[74][6]
1990s and deregulation
As of December 1992, PG&E operated 173 electric generating units and 85 generating stations, 18,450 miles (29,690km) of transmission lines and 101,400 miles (163,200km) of distribution system.
In 1997, PG&E reorganized as a holding company, PG&E Corporation. It consisted of two subsidiaries—PG&E, the regulated utility, and a non-regulated energy business.
In the later 1990s, under electricity marketderegulation this utility sold off most of its natural gaspower plants. The utility retained all of its hydroelectric plants, the Diablo Canyon Power Plant and a few natural gas plants, but the large natural gas plants it sold made up a large portion of its generating capacity. This had the effect of requiring the utility to buy power from the energy generators at fluctuating prices, while being forced to sell the power to consumers at a fixed cost. The market for electricity was dominated by the Enron Corporation, which, with help from other corporations, artificially pushed prices for electricity ever higher. This led to the California electricity crisis that began in 2000 on Path 15, a transmission corridor PG&E built.
With a critical power shortage, rolling blackouts began on January 17, 2001.
1990s fires
In 1994, PG&E caused the Trauner Fire in Nevada County, California through criminal negligence. The fire burned many acres of land and destroyed a schoolhouse and twelve homes near the town of Rough and Ready, California. PG&E was found guilty of causing the fire and of 739 counts of criminal negligence.[75]
In 1996, one of PG&E's substations in the Mission District of San Francisco caught fire. PG&E was eventually found legally culpable for the fire due to criminal negligence, according to an investigation in 2003.[76]
In 1998, a change in the regulation of California's public utilities, including PG&E, began. The California Public Utility Commission (CPUC) set the rates that PG&E could charge customers and required them to provide as much power as the customers wanted at rates set by the CPUC.
In the summer of 2001 a drought in the northwest states and in California reduced the amount of hydroelectric power available. Usually PG&E could buy "cheap" hydroelectric power under long-term contracts with the Bonneville Dam and other sources. Drought and delays in approval of new power plants and market manipulation decreased available electric power generation capacity that could be generated in state or bought under long-term contracts out of state. Hot weather brought on higher usage, rolling blackouts, and other problems.
With little excess generating capacity of its own, PG&E was forced to buy electricity out of state from suppliers without long-term contracts. Because PG&E had to buy additional electricity to meet demand, some suppliers took advantage of this requirement and manipulated the market by creating artificial shortages and charged very high electrical rates, as exemplified by the Enron scandal. The CPUC refused to adjust the allowable electric rates. Unable to change rates and sell electricity to consumers for what it cost them on the open market PG&E started hemorrhaging cash.
PG&E Company (the utility, not the holding company) entered bankruptcy under Chapter 11 on April 6, 2001. The state of California tried to bail out the utility and provide power to PG&E's 5.1 million customers under the same rules that required the state to buy electricity at market rate high cost to meet demand and sell it at a lower fixed price, and as a result, the state also lost significant amounts of money. The crisis cost PG&E and the state somewhere between $40 and $45 billion.[78]
PG&E Company, the utility, emerged from bankruptcy in April 2004, after paying $10.2 billion to its hundreds of creditors. As part of the reorganization, PG&E's 5.1 million electricity customers will have to pay above-market prices for several years to cancel the debt.[citation needed][when?]
2019 bankruptcy
Chronology
Facing potential liabilities of $30 billion from multiple wildfires in the years 2015–2018, Pacific Gas and Electric Company (PG&E), on January 14, 2019, began the process of filing for bankruptcy with a 15-day notice of intention to file for bankruptcy protection.[79][11][80] On January 29, 2019 PG&E Corporation, the parent corporation of PG&E, filed for bankruptcy protection.[81][82] Because fire survivors are unsecured creditors with the same priority as bondholders, they would only be paid in proportion to their claim size if anything is left after secured and priority claims are paid; this nearly ensured that they will not get paid in full.[83][when?] PG&E had a deadline of June 30, 2020 to exit bankruptcy in order to participate in the California state wildfire insurance fund established by AB1054 that helps utilities pay for future wildfire claims.[84][85][86][87]
On August 16, 2019, liability for the Tubbs Fire was potentially added when U.S. Bankruptcy Judge Dennis Montali ruled that a fast-track state jury trial could proceed to resolve who is at fault for the Tubbs Fire. Cal Fire determined that customer equipment was at fault, but lawyers representing wildfire victims claimed that PG&E equipment was at fault.[88][89][90] This trial was scheduled to begin January 7, 2020 in San Francisco.[91] The court case was superseded by the Restructuring Support Agreement (RSA) of December 9, 2019[92] and by the approved bankruptcy reorganization plan,[17] wherein PG&E accepted liability for the Tubbs Fire.
Liability for the Kincade Fire that started October 23, 2019 was potentially added, because initially it was unknown whether or not PG&E was at fault for the fire.[93] On July 16, 2020, which was after PG&E exited bankruptcy, Cal Fire reported that the fire was caused by PG&E transmission lines.[94] Damages would not be covered by the settlement for wildfire victims that was part of the PG&E bankruptcy.[95]
PG&E settled for $1 billion with state and local governments in June, 2019,[96][97] and settled for $11 billion with insurance carriers and hedge funds in September, 2019.[98][99] Representatives for wildfire victims say PG&E owes $54 billion or more, and PG&E was offering $8.4 billion for fire damages, Cal Fire, and FEMA.[100] If more than 500 homes were completely destroyed by the Kincade Fire, and PG&E was found to be at fault, then the parties agreeing to the settlements may have the option to back out of the agreements.[93][101] Later PG&E offered a $13.5 billion fund to cover claims of the wildfire victims.[102][103][104]FEMA originally requested PG&E for $3.9 billion from the wildfire victims fund, threatening to take the money from individual wildfire victims if PG&E did not pay,[105][106] and Cal OES had an overlapping $2.3 billion request,[107] but they later settled for $1 billion after all wildfire victims are paid.[108][109][110][111]
Claims for wildfire victims consist of wrongful death, personal injuries, property loss, business losses, and other legal damages.[112] U.S. District Judge James Donato was assigned to the estimation process for the claims of wildfire victims, including whether or not personal injury and wrongful death claims can include damages due to emotional distress.[113][114] Judge Donato was scheduled to begin hearings February 18, 2020 to determine how to do the estimation and how much PG&E needs to put in a trust fund for wildfire victims.[115][91] Bankruptcy judge Montali said that the costs to government agencies will not be subject to the estimation process because those costs can be calculated "down to the penny."[113] The court case was superseded by the Restructuring Support Agreement (RSA) of December 9, 2019[92] and by the approved bankruptcy reorganization plan.[17]
On October 9, 2019, Judge Montali allowed the proposed reorganization plan of the senior bondholders to be considered along with PG&E's proposed plan. The proposal of the senior bondholders had the support of the committee of wildfire victims, who said their claims may be worth $13.5 billion.[116][117][118] The proposal of the senior bondholders would give them control of the company with PG&E shareholders losing out, and PG&E called the proposal an "unjustified windfall".[116][119] Later PG&E reached an agreement with the bondholders and the committee of wildfire victims so that PG&E's proposed plan would be the only plan under consideration and the bondholders would not take control of the company.[120]
"It's decisions that were not made that have led to this moment in PG&E's history," says Governor Gavin Newsom in November 2019.
On November 12, 2019, PG&E in its proposed reorganization plan provided an additional $6.6 billion for the claims of wildfire victims and other claimants, increasing the amount to $13.5billion, similar to the amount in the rival reorganization proposal of the senior bondholders.[102][121][122][123][103][104] In a filing with the Securities and Exchange Commission (SEC), this puts the total amount for fire claims at $25.5 billion.[124] This consists of $11 billion to insurance companies and investment funds, $1 billion to state and local governments, and $13.5 billion for other claims.[98][97][103] The $11 billion settlement to insurance companies and investment funds was opposed by the state of California Governor Gavin Newsom and by the committee of wildfire victims.[125][126][127] Later Governor Newsom[128] and the wildfire victims[87] approved the bankruptcy reorganization plan.[17]
On December 6, 2019, PG&E proposed to settle the wildfire victim claims for a total of $13.5billion, which would cover liability for its responsibility originating from the Camp Fire, Tubbs Fire, Butte Fire, Ghost Ship warehouse fire, and also a series of wildfires beginning on October 8, 2017, collectively called the 2017 North Bay Fires.[129] The offer was tendered as part of PG&E's plan to exit bankruptcy.[130][131] Wildfire victims will get half of their $13.5 billion settlement as stock shares in the reorganized company,[132][133] adding to the uncertainty as to when and how much they will be paid.[134][135] On June 12, 2020, because of uncertainties in the value of the liquidated stock, in part because of the financial market impact of the COVID-19 pandemic, PG&E agreed to increase the amount of stock.[136][137] Wildfire victims will be paid in cash, funded partly from the cash portion of the settlement, and partly from stock that will be liquidated into cash on a schedule and at a price that is not yet determined.[137][138]
On December 17, 2019, regarding the Ghost Ship warehouse fire, which was not a wildfire, Judge Dennis Montali allowed the plaintiffs' case claiming that the fire was caused by an electrical malfunction to continue against PG&E. This case, if successful, would receive money from PG&E's $900 million insurance money, but would not be eligible to be part of the $13.5 billion allotted for the claims arising from the wildfires.[139][138] On August 18, 2020, PG&E settled the civil lawsuit for 32 of the victims, out of the 36 who perished in the fire.[140] The amount of the settlement was undisclosed, but it was limited to the amount available under PG&E's insurance coverage for the year 2016.
On June 16, 2020, PG&E pleaded guilty to 84 counts of involuntary manslaughter for those that died in the Camp Fire, for which it will pay the maximum fine of $3.5 million and end all further criminal charges against PG&E. This action does not alleviate PG&E of any future civil claims by victims of the Camp Fire which would fall outside the bankruptcy proceedings, as well as how existing litigation against PG&E may be handled.[141][142]
On Saturday, June 20, 2020, U.S. Bankruptcy Judge Dennis Montali issued the final approval of the plan for the reorganized PG&E to exit bankruptcy,[15][16][17] meeting the June 30, 2020 deadline for PG&E to qualify for the California state wildfire insurance fund for utilities.[84][85][86] On July 1, PG&E funded the Fire Victim Trust (FVT) with $5.4 billion cash and 22.19% of stock in the reorganized PG&E, which covers most of the obligations of its settlement for the wildfire victims.[143][133][144] PG&E has two more payments totaling $1.35 billion cash, scheduled to be paid in January 2021 and January 2022, to complete its obligations to the wildfire victims.[137]
Other information
On January 14, 2019, following the departure of CEO Geisha Williams, who had led the corporation since 2017;[145] PG&E corporation announced that it was filing for Chapter 11 bankruptcy in response to the financial challenges associated with catastrophic wildfires that had occurred in Northern California, in 2017 and 2018.[11]
On January 15, 2019 PG&E stated it did not intend to make the semiannual interest payment of $21.6 million on its outstanding 5.40 percent Senior Notes, due January 15, 2040, which has a total capital value of $800 million. Under the indenture, the company had a 30-day grace period (expired on February 14, 2019) to make the interest payment, before triggering a default event.[146]
PG&E Corporation filed for bankruptcy on January 29, 2019. The company's disclosure statement was approved on March 17, 2020.[147][148]
According to Cbonds, the company has 32 bond issues, and their outstanding amount is approximately equal to $17.5 billion.[149] PG&E expects procedures to take two years.[150] In April, as the bondholders crafted a plan to bring the company out of bankruptcy, Governor Gavin Newsom expressed his concern that new board members would have little knowledge of California and lack expertise in how to run a utility safely.[151]
On November 1, 2019, Governor Newsom issued a statement calling upon PG&E to reach a "consensual resolution" to the bankruptcy case, intending to convene a meeting of PG&E Corporation's executives and stockholders, as well as wildfire victims. If an agreement could not be reached, the State of California "will not hesitate to step in and restructure the utility".[153][154] A week prior, Newsom had declared PG&E's "greed and mismanagement", along with the utility's lack of focus on hardening its grid and under-grounding its transmission lines in vulnerable areas, as reasons for its inability to deliver electricity and the shutdowns. "They simply did not do their job," said Newsom.[155][156]
A proposal to turn PG&E into a customer owned cooperative, initiated by San Jose Mayor Sam Liccardo, has received backing from more than 110 elected officials that represent majority of PG&E customers[157] and include 21 other mayors.[158] The City of San Francisco offered to buy PG&E's electrical infrastructure within the city for $2.5 billion in September 2019 (while PG&E was in bankruptcy), but the offer was rejected by PG&E.[159]
In March 2020, PG&E asked a federal court to approve $454 million in bonuses just days after asking another federal judge (William Alsup, who was overseeing PG&E's criminal probation related to the 2010 San Bruno pipeline explosion) not to force the utility to hire more tree trimmers.[160]
As part of its emergence from bankruptcy, it will pay wildfire victims $13.5 billion; half of that amount will be paid in company stock, resulting in 70,000 fire victims owning 22% of the company.[161]
This bankruptcy of PG&E Company was the largest utility bankruptcy in U.S. history,[162] and was one of the most complex bankruptcies in U.S. history.[163]
In November 2020, it was announced that Patti Poppe would be leaving CMS Energy on December 1, 2020 to become CEO of PG&E Corporation on January 4, 2021.[164][165] In April 2022, it was reported that PG&E Corporation CEO Patti Poppe received over $50 million in total direct compensation for her work in 2021, with $40 million of that being in company stock.[166]
In June 2020, PG&E announced that it planned to move its headquarters to 300 Lakeside Drive in Oakland.[167] The move will happen in phases, starting in 2022 and completing by 2026.[168]
PG&E's utility-owned generation portfolio consists of an extensive hydroelectric system, one operating nuclear power plant, one operating natural gas-fired power plant, and another gas-fired plant under construction.[169] Two other plants owned by the company have been permanently removed from commercial operation: Humboldt Bay Unit 3 (nuclear) and Hunters Point (natural gas).[170][171]
Hydroelectric
PG&E is the largest private owner of hydroelectric facilities in the United States including 174 dams. According to the company's Form 10-K filing for 2011, "The Utility's hydroelectric system consists of 110 generating units at 68 powerhouses, including the Helms pumped storage facility, with a total generating capacity of 3,896 MW... The system includes 99 reservoirs, 56 diversions, 174 dams, 172 miles of canals, 43 miles of flumes, 130 miles of tunnels, 54 miles of pipe (penstocks, siphons and low head pipes), and 5 miles of natural waterways."[172]
The Diablo Canyon Power Plant, located in Avila Beach, California, is the only operating nuclear asset owned by PG&E. The maximum output of this power plant is 2,240MWe, provided by two equally sized units. As designed and licensed, it could be expanded to four units, at least doubling its generating capacity.[174] Over a two-week period in 1981, 1,900 activists were arrested at Diablo Canyon Power Plant. It was the largest arrest in the history of the U.S. anti-nuclear movement.[175]
In June 2016, PG&E announced plans to close Diablo Canyon in 2025. This would make California free of operating commercial nuclear power plants, but will mean the loss of 2256 MW of generation that produced over 18,000 GWh of electricity per year.
The company operated the Humboldt Bay Power Plant, Unit 3 in Eureka, California. It is the oldest commercial nuclear plant in California and its maximum output was 65MWe. The plant operated for 13 years, until 1976 when it was shut down for seismic retrofitting. New regulations enacted after the Three Mile Island accident rendered the plant unprofitable and it was never restarted. Unit 3 is currently in decommissioning phase. Based on PG&E's schedule of planned decommissioning activities, which incorporates various assumptions, including approval of its proposed new scope, decommissioning of the Unit 3 site is expected to conclude in 2019.[176]
Pacific Gas & Electric planned to build the first commercially viable nuclear power plant in the United States at Bodega Bay, a fishing village fifty miles north of San Francisco. The proposal was controversial and conflict with local citizens began in 1958.[177] In 1963, there was a large demonstration at the site of the proposed Bodega Bay Nuclear Power Plant.[178] The conflict ended in 1964, with the forced abandonment of plans for the power plant.[177]
Built in 1956, two natural gas/fuel oil units at Humboldt Bay Power Plant produced 105 MWe of combined output. These units, along with two 15 MWe Mobile Emergency Power Plants (MEPPs), were retired in the summer of 2010, and replaced by the Humboldt Bay Generating Station, built on the same site.[179] It produces 163 MWe using natural gas for fuel and fuel oil for backup on Wärtsilä Diesel engines. The new facility is 33% more efficient and produces 85% fewer ozone-forming compounds, and produces 34% fewer greenhouse gas emissions. It has a closed-loop cooling system, eliminating use of water from Humboldt Bay for cooling.[179]
As part of a settlement with Mirant Services LLC for alleged market manipulations during the 2001 California energy crisis, PG&E took ownership of a partially constructed natural gas unit in Antioch, California. The 530MW unit, known as the Gateway Generating Station, was completed by PG&E and placed into operation in 2009.
PG&E broke ground in 2008 on a 660MW natural gas power plant located in Colusa County. It began operation in December 2010, and serves nearly half a million residences using the latest technology and environmental design.[needs update] The plant will use dry cooling technology to dramatically reduce water usage, and cleaner-burning turbines to reduce CO2 emissions by 35 percent relative to older plants.[181]
Solar
On April 1, 2008, PG&E announced contracts to buy three new solar power plants in the Mojave Desert. With an output of 500MW and options for another 400MW, the three installations will initially generate enough electricity to power more than 375,000 residences.[182]
In April 2009, PG&E's Next100 blog reported that PG&E was asking the California Public Utilities Commission to approve a project by the company Solaren to deliver 200 megawatts of power to California from space. This method of obtaining electricity from the sun eliminates (mostly) the darkness of night experienced from solar sites on the surface of the earth. According to PG&E spokesman Jonathan Marshall, energy purchase costs are expected to be similar to other renewable energy contracts.[183]
Beginning in the mid-1970s, regulatory and political developments began to push utilities in California away from a traditional business model. In 1976, the California State Legislature amended the 1974 Warren–Alquist Act,[184] which created and gives legal authority to the California Energy Commission, to effectively prohibit the construction of new nuclear power plants. The Environmental Defense Fund (EDF) filed as an intervenor in PG&E's 1978 General Rate Case (GRC), claiming that the company's requests for rate increases were based on unrealistically high projections of load growth. Furthermore, EDF claimed that PG&E could more cost-effectively encourage industrial co-generation and energy efficiency than build more power plants. As a result of EDF's involvement in PG&E's rate cases, the company was eventually fined $50 million by the California Public Utilities Commission for failing to adequately implement energy efficiency programs.
In the early first decade of the 21st century, the CEO of PG&E Corporation, Peter Darbee, and then-CEO of Pacific Gas & Electric Company, Tom King, publicly announced their support for California Assembly Bill 32, a measure to cap statewide greenhouse gas emissions and a 25% reduction of emissions by 2020. The bill was signed into law by Governor Arnold Schwarzenegger on September 27, 2006.
In 2014, PG&E had a renewables mix of 28%.[185] By 2016, 32.9% of PG&E's power sources were renewable.[186]
During 2017, PG&E announced that 80% of the company's delivered electricity comes from GHG-free sources, including renewables, nuclear, and hydropower. Around 33% comes from renewable sources, thus meeting California's goal of 33% of electricity coming from renewables by 2020, nearly three years in advance.[187]
In June 2020, PG&E announced a 12-month R&D effort along with Socalgas and Twelve to convert raw biogas into carbon neutral methane. This technology would enable energy from renewable resources (such as wind and solar) to generate fuel from landfills, sewage, and dairy farms.[188]
Carbon footprint
Pacific Gas and Electric Company reported Total CO2e emissions (Direct + Indirect) for the twelve months ending 31 December 2019 at 4,510 Kt (-60 /-1.3% y-o-y).[189]
Pacific Gas and Electric Company's annual Total CO2e Emissions - Location-Based Scope 1 + Scope 2 (in kilotonnes)
In 1970, the Pit River Tribe began a boycott of PG&E. The tribe claimed that the land being used by PG&E was rightfully theirs and that they should receive the profits from it. People subsequently sent boycott checks to the tribe, including musician Buffy Sainte-Marie who sent a $150 check.[193]
From 1952 to 1966, PG&E dumped "roughly 370 million gallons" of chromium 6-tainted wastewater into unlined wastewater spreading ponds around the town of Hinkley, California.[194]:228[195] PG&E used chromium 6—"one of the cheapest and most efficient commercially available corrosion inhibitors"—at their compressor station plants in their cooling towers along the natural gas transmission pipelines.[194][196]
PG&E did not inform the local water board of the contamination until December 7, 1987, stalling action on a response to the contamination.[197] The residents of Hinkley filed a successful lawsuit against PG&E in which the company paid $333 million—[196] the largest settlement ever paid in a direct-action lawsuit in U.S. history.[198] The legal case, dramatized in the 2000 film Erin Brockovich, became an international cause célèbre.[194][195][196][199][200][201][202][203][204] In response, in 2001, at the request of the CalEPA, the Chromate Toxicity Review Committee was formed to investigate the toxicity of chromium-6 when ingested. In 2003, a Senate hearing revealed that the committee's members included expert witnesses from PG&E, who had influenced the final August 2001 report which found in PG&E's favor concluding that other reports were alarmist with "spuriously high" statistics and that further evaluation should be handled by academics in laboratory settings not by regulators.[200][201]:29 In July 2014, California became the first state to acknowledge that ingested chromium-6 is linked to cancer and as a result has established a chromium-6 maximum contaminant level (MCL) of 10 parts per billion (ppb).[205][206] In setting the regulations, it was acknowledged that in "recent scientific studies in laboratory animals, Hexavalent Chromium has also been linked to cancer when ingested". Previously, when older chromium MCLs were set, "at the time Total Chromium MCLs were established, ingested Hexavalent Chromium associated with consumption of drinking water was not considered to pose a cancer risk, as is now the case."[206]
By 2013, PG&E had cleaned up 54 acres, but it is estimated the remediation process will take another 40 years. PG&E built a concrete wall barrier that is about a half-mile-long to contain the plume, pump ethanol into the ground to convert chromium-6 into chromium-3, and have planted acres of alfalfa.[207] They created a chicken farm to use the alfalfa. PG&E uses irrigation to maintain these large circles of green in the otherwise desert area, and was asked to stop because of the ongoing danger of residents inhaling chromium 6.[207]
In 2015, the California Regional Water Quality Control Board, Lahontan Region served PG&E with a new order "to cleanup [sic] and abate the effects of the discharge of chromium waste or threatened pollution or nuisance".[208] By the time of the report, the plume had expanded to "8 miles in length and approximately 2 miles in width, throughout the Hinkley Valley and into Harper Dry Lake Valley", polluting new areas.[207][208]:2 In early 2016, the New York Times described Hinkley as having been slowly turned into a ghost town due to the contamination of the area with owners unable to sell their properties.[209]
Epidemiologist John Morgan[210] produced a 2010 report for the California Cancer Registry in which he argued that there was no cancer cluster in Hinkley related to chromium 6.[211] In one study, Morgan had claimed that cancer rates in Hinkley "remained unremarkable from 1988 to 2008" saying that "the 196 cases of cancer reported during the most recent survey of 1996 through 2008 were less than what he would expect based on demographics and the regional rate of cancer."[212] In 2013, the Center for Public Integrity found glaring weaknesses in Morgan's 2010 analysis that challenged the validity of his findings. "In his first study, he dismisses what others see as a genuine cancer cluster in Hinkley. In his latest analysis, he excludes people who were exposed to the worst contamination."[195]
On April 16, 2013, a team of gunmen opened fire on the Metcalf transmission substation in Coyote, California. The attack damaged 17 high-voltage transformers, causing more than $15 million in damage. The team also cut a fiber-optic telecommunications cable owned by AT&T. PG&E and AT&T offered a $250,000 reward for anyone who had information leading to the arrest of the culprits,[213][214] however, they were never found. The Federal Bureau of Investigation found that it was not domestic terrorism,[215] and The Department of Homeland Security claimed they had evidence that it may have been an 'inside job'.[216]
Wildfires
PG&E equipment has often been the cause of wildfires in California.[217] PG&E has been found guilty of criminal negligence in many cases involving fires. These include the 1994 Trauner Fire,[218] a substation fire in San Francisco in 1996, the 1999 Pendola Fire,[219] a San Francisco substation fire in 2003, the Sims Fire and Fred's Fire in 2004,[220] an explosion and electrical fire in San Francisco in 2005, the 2008 Rancho Cordova Gas Explosion,[221] the 2010 San Bruno pipeline explosion,[222] 2014 Carmel Gas Explosion,[223] 2015 Butte Fire, 2018 Camp Fire, among others.[224]
Approximately forty of the 315 wildfires in PG&E's service area in 2017 and 2018 were allegedly caused by PG&E equipment.[225]
PG&E was on probation after being found criminally liable in the 2010 San Bruno fire.[226] Following that fire, a federally appointed monitor initially focused on gas operations, but his scope expanded to include electricity distribution equipment following the fires in October 2017. A separate case involved allegations the utility falsified gas pipeline records between 2012 and 2017, and as of January 2019 was still being considered.[226]
PG&E, like two large Southern California utilities, is now required to submit an annual wildfire prevention plan. The California law judges who reviewed the plan submitted in February 2019 suggested more metrics and maintenance partnerships with local governments, but recommended approving the plan. They also recommended investigating whether disabling equipment that restarts power transmission could reduce the need for power shutoffs. PG&E has filed a motion which in May 2019 had not yet been ruled upon, to amend this plan to move some of the deadlines further out.[227]
Liability
State law follows a principle of "inverse condemnation" for wildfire liability, which means that utilities are held responsible for damages resulting from any fire caused by their equipment, even if their maintenance on equipment and surrounding vegetation was done to standards.[228]:1 This policy resulted in $30B of liability for PG&E from the 2017 & 2018 fires and drove it to bankruptcy proceedings.[228]:1[229]:1 In July 2019, a new $21 billion wildfire trust fund was created to pay for damages from future wildfires, started with a 50-50 balance of utility and customer monies and also reduced the liability threshold for utilities to where customers must prove negligence before companies are held liable.[229]:1
Undergrounding
As of 2019, Public utilities in the state of California have a total of 26,000 miles of high voltage transmission lines, and 240,000 miles of distribution lines. Distribution lines bring electricity directly to consumers; two-thirds statewide are above ground.[230]:1 For transmission lines, the cost of undergrounding is about $80 million per mile[231]:1 while for distribution lines, the cost of underground lines is about $3 million per mile, compared to overhead lines at about $800,000 per mile.[230]:1
The state's largest utility, PG&E, has 107,000 miles of distribution lines, 81,000 miles of which are overhead. The cost in 2019 to convert all of PG&E's overhead distribution lines to underground lines would cost a total of $240 billion, or $15,000 per PG&E customer. (This cost estimate is only for distribution lines, not the higher voltage transmission lines.)[230]:1
In July 2021, PG&E announced that it plans to bury an additional 10,000 miles of its distribution lines over the next 10 years, (about 9% more; 25% are already underground) to reduce the risk of wildland fires.[232] It already has 27,000 miles of distribution lines underground, but these are generally not in high fire risk areas.[232] (Nationwide, 18% of distribution lines are underground, partly because all new commercial and residential developments are built this way.)[232] This project has been estimated to cost about $4 million per mile, or $40 billion in total, though PG&E's CEO stated that she hopes that they can get costs down to a total of $15–20 billion.[232] The costs are likely to be passed on to the utility's 5.5 million customers, who already have some of the highest electricity rates in the nation.[233]
Sierra blaze
On June 19, 1997, a Nevada County jury in Nevada City found PG&E guilty of "a pattern of tree-trimming violations that sparked a devastating 1994 wildfire in the Sierra".[234] "PG&E was convicted of 739 counts of criminal negligence for failing to trim trees near its power lines—the biggest criminal conviction ever against the state's largest utility."[234]
San Bruno, California explosion
View of the San Bruno fire on September 9, 2010 at 11:31pm PDT
On the evening of September 9, 2010, a suburb of San Francisco, San Bruno, California, was damaged when one of PG&E's natural-gas pipelines that was "at least 54 years old, 30 inches (76.2 centimeters) in diameter and located under a street intersection in a residential area "...exploded sending a "28-foot section of pipe weighing 3,000 pounds flying through the air, fueled by blowing natural gas".[235] The blast created a crater at the epicenter and "killed eight people and injured nearly five dozen more while destroying about 100 homes".[236] The USGS reported that the shock wave was similar to a 1.1 magnitude earthquake. Following the event, the company was heavily criticized for ignoring the warnings of a state inspector in 2009 and for failing to provide adequate safety procedures.[237] The incident then came under investigation by the National Transportation Safety Board (NTSB). On August 30, 2011, the NTSB released its findings, which placed fault for the blast on PG&E. The report stated that the pipeline that exploded, installed in 1956, did not even meet standards of that time.[238]
PG&E was charged with "twelve criminal felony counts alleging violations of the Natural Gas Pipeline Safety Act.[239] PG&E pleaded not guilty to the "criminal counts in both the initial and superseding indictments, opting to put the prosecutors to their proof".[239][240]:517[241] On April 1, 2014, a United States grand jury in San Francisco charged PG&E with "knowingly and willfully" violating the Natural Gas Pipeline Safety Act.[235][242]
In August 2015, the California Public Utilities Commission levied a $300 million fine against PG&E which they paid. PG&E also "refunded $400 million to gas customers and agreed to pay $850 million for gas-system safety improvements. It also settled more than $500 million in claims involving victims of the disaster and their relatives."[236]
Even in the years following the disaster, PG&E failed to implement legally mandated safety procedures aimed at preventing similar disasters. A CPUC report was issued in December 2018[243] that concluded that between 2012 and 2017, PG&E failed to locate and mark gas pipelines in a timely manner because of staff shortages, and management counted, possibly, "tens of thousands" of late tickets as completed on time. Contractors rely on this process to know where they can safely dig.[244] PG&E was fined $110 million for these legal violations.[245]
In September 2015, the deadly and destructive Butte Fire ignited in Amador and Calaveras counties. It killed two people and destroyed hundreds of structures. An investigation found PG&E responsible for the fire after a gray pine tree came in contact with one of their powerlines.[246]
In October 2017, PG&E was responsible for their own lines and poles starting thirteen separate fires of the 250 that devastated Northern California. These fires were caused by "electric power and distribution lines, conductors and the failure of power poles".[247] Pending further investigation, the following fires have been confirmed by CAL FIRE investigators to have been started by PG&E equipment:
On December 2, 2016, in Fruitvale, Oakland, California a fire broke out in a former warehouse that had been illegally converted into an artist collective with living spaces known as Ghost Ship. 80-100 people were at an event in the space and 36 were killed. The plaintiffs claim that the fire was caused by an electrical malfunction. A civil case was put forward against PG&E, alleging blame.[249]
In August 2020, PG&E settled a civil lawsuit for 32 of the victims, out of the 36 who perished in the fire.[140] The amount of the settlement was undisclosed, but it was limited to the amount available under PG&E's insurance coverage for the year 2016.
The Tubbs Fire was a wildfire in Northern California during October 2017. At the time, the Tubbs Fire was the most destructive wildfire in California history,[250][251] burning parts of Napa, Sonoma, and Lake counties, inflicting its greatest losses in the city of Santa Rosa. Suspicion for the cause of the fire fell on PG&E, but the company seemed to be cleared of responsibility in this incident after Cal Fire released the results of its investigation on January 24, 2019, upon which news the company's stock price jumped dramatically.[252][253]
On August 14, 2019, U.S. Bankruptcy Judge Dennis Montali, the federal judge for the 2019 PG&E bankruptcy proceedings, presided over a hearing for victims of the Tubbs Fire, and they presented their case for a fast-track state civil trial by jury to resolve if PG&E is at fault for the Tubbs Fire, rather than customer equipment causing the fire as determined by Cal Fire. On August 16, 2019, the judge ruled that the trial can proceed "on a parallel track" because "it advances the goals of this bankruptcy." After the judge's ruling, the company's stock price sank by 25%.[254]
On December 6, 2019, PG&E proposed to settle the wildfire victim claims for a total of $13.5billion, which would cover liability for its responsibility originating from the Tubbs Fire, Camp Fire, Butte Fire, and also a series of wildfires beginning on October 8, 2017, collectively called the 2017 North Bay Wildfires.[129] The offer was tendered as part of PG&E's plan to exit bankruptcy.[130][131] The court case for the Tubbs Fire was superseded by the Restructuring Support Agreement (RSA) of December 9, 2019[92] and by the approved bankruptcy reorganization plan,[17] wherein PG&E accepted liability for the Tubbs Fire.
In November 2018, PG&E and its parent company were sued in the San Francisco County Superior Court by multiple victims of the Camp Fire – the deadliest and most destructive wildfire in California history.[255] The Camp Fire destroyed more than 18,000 buildings, including 14,000 homes, being particularly devastating to poorer residents. Approximately 90% of the population of the town of Paradise, California as of June 2020 remains dispersed in other parts of the state and the country.[256] The lawsuit accused PG&E of failure to properly maintain its infrastructure and equipment.[257]
The cause of the fire, as indicated by PG&E's "electric incident report" submitted to the California Public Utilities Commission, was a power failure on a transmission line on November 8, just 15 minutes before the fire was first reported near the same location. Later investigation revealed that a "broken hook may have allowed a piece of electrically charged equipment to swing free and come close enough to the tower to arc, providing the spark that ignited the blaze."[258]
As a result, both Pacific Gas and Electric Company and parent company PG&E Corporation together[261] filed for Chapter 11 bankruptcy on January 29 following the California required 15-day bankruptcy waiting period.[262][263] PG&E settled criminal proceedings with a fine, pleaded guilty to one felony count of illegally starting a fire, and 84 felony counts of involuntary manslaughter.[256][264]
Civil lawsuit proceedings continued,[141] and were resolved by settlement.[129][130][131] On July 1, 2020, PG&E funded the Fire Victim Trust (FVT) with $5.4 billion in cash and 22.19% of stock in the reorganized PG&E, which covers most of the obligations of its settlement for the wildfire victims.[143][133][144] PG&E has two more payments totaling $1.35 billion in cash, scheduled to be paid in January 2021 and January 2022, to complete its obligations to the wildfire victims.[137]
The Kincade Fire was a wildfire that burned in Sonoma County, California. The fire started northeast of Geyserville in The Geysers on 9:24p.m. on October 23, 2019 and subsequently burned 77,758 acres (31,468ha) until the fire was fully contained on November 6, 2019. The fire threatened over 90,000 structures and caused widespread evacuations throughout Sonoma County, including the communities of Geyserville, Healdsburg, and Windsor. The majority of Sonoma County and parts of Lake County were under evacuation warnings.[265] The fire was the largest of the 2019 California wildfire season.
Initially, it was unknown whether or not PG&E was at fault for the fire.[93] On July 16, 2020, which was after PG&E exited bankruptcy, Cal Fire reported that the fire was caused by PG&E transmission lines.[94] Damages would not be covered by the settlement for wildfire victims that was part of the PG&E bankruptcy.[95]
Recognizing that the "2017 California wildfire season was the most destructive wildfire season on record," the CPUC issued Resolution ESRB-8 in July 2018. The resolution supported the use of de-energization as a means to mitigate wildfire risks and established notification, mitigation, and reporting requirements.[266] The first of those Public Safety Power Shutoffs (PSPS) undertaken by PG&E occurred on October 14, 2018 and lasted until October 16th for the majority of customers. Since then there have been PSPS outages on June 8 and 9, 2019, and throughout the rest of the summer. In October 2019, PG&E began to shut off power to many regions, as a preemptive measure to help avoid wildfires caused by electric lines.[267]
The shutdown of nearly 25,000 miles (40,000km) of electric lines was expected to affect more than 2 million people, of PG&E's 16 million total served. Power was projected to remain off for up to several days after the high winds subside as all of the shutdown lines must be inspected for wind damage.[268] By two days into the preemptive blackout, winds began to subside, and PG&E restored power to some 500,000 customers of a total of approximately 800,000 who lost power.[269]
Since 2018, PG&E has increased its efforts to prevent and mitigate wildfires including a 24/7 threat-monitoring center, multiplying its vegetation regulations around utility poles from four to 15 feet and adding 100 weather stations in high-risk areas. The company’s strategy also includes augmenting public service power shutdowns when needed.[270]
Power shutoffs in California continued in 2020 and 2021.[271] In 2021, the company announced it had included a new technological strategy that uses machine learning models with more predictive capabilities. They can inject these predictions of fire spread directly into the PSPS decision-making process, so they can make more accurate PSPS implementations.[272]
In 2021, California fined PG&E $106 million (US) for violating guidelines in 2019 PSPS executions by insufficient communication with the public.[273]
Dixie Fire
On January 4, 2022, CalFire determined that "the Dixie Fire was caused by a tree contacting electrical distribution lines owned and operated by Pacific Gas and Electric (PG&E) located west of Cresta Dam." CalFire forwarded the investigative report to the Butte County District Attorney's office, the same federal office that prosecuted PG&E in 2018 following the Camp Fire.[274]
The Zogg Fire (named that because it started at Zogg Mine Road and Jenny Bird Lane) was a wildfire that burned 56,338 acres (22,799 ha) in southwestern Shasta County and northwestern Tehama County, which are both in California, in the United States, as part of the severe 2020 California wildfire season. The fire was first reported on September 27, 2020 and was not fully contained until October 13, 2020, by which time it had destroyed much of the communities of Igo and Ono, killing four people and destroying 204 buildings
In March 2021, investigations concluded the fire began when a grey pine tree fell on power lines belonging to the Pacific Gas and Electric Company (PG&E).The tree reportedly had been potentially identified for removal, but had not been removed after the Carr Fire in 2018.
Controversies
Community Pipeline Safety Initiative (CPSI)
In 2014, PG&E rolled out the "Pipeline Pathways" project, later rebranded "Community Pipeline Safety Initiative", a $500 million four-year effort to clear trees along the almost 7,000 miles of high pressure gas transmission pipeline in California. PG&E said that removing trees was necessary to 1) provide emergency access should an incident occur under a tree and 2) protect pipelines from tree roots. Many communities have protested the removal of private and public trees.[275] According to local opposition groups, PG&E's safety claims for tree removal are incorrect and tree removal makes aerial monitoring of pipeline faster and cheaper.[276] In 2017, several lawsuits have been filed in Contra Costa County Court by the non-profit organization Save Lafayette Trees stating that PG&E did not conduct the proper CEQA reviews or provide ample public notice before signing agreements for tree removal.[277]
PG&E's California-wide tree removal may have in fact caused widespread, increased stress corrosion cracking (SCC), according to PG&E's own dead tree root studies: "Given the fact that the tree roots were shown to cause coating damage, one must conclude that they also will increase the likelihood of SCC. It also is possible that decaying tree roots could create or increase the potency of an SCC environment at the pipe surface by increasing the amount of CO2 in the soil." (Source: from "Effects of Tree Roots on External Corrosion Control", 3/25/15, Det Norske Veritas, section 3.3 Stress Corrosion Cracking, p.165 of final TRIA report)[278]
Smart meters
In the middle of 2010, PG&E rolled out new electronic meters that replaced traditional mechanical electric meters. Customers whose meters were replaced with smart meters reported seeing their energy bills increase and accused the company of deliberately inflating their bills and questioned the accuracy of the meters. Subsequently, the California Public Utilities Commission commissioned an investigation. Based on the assumption that "the information received was accurate and complete information and documentation", the research company reported that of the 613 Smart Meter field tests, 611 meters were successfully tested and 100% passed Average Registration Accuracy. One meter was found to have serious errors and was malfunctioning on arrival, while another was found to have serious event errors upon installation. These meters were, therefore, excluded from testing.[279] There were also complaints that the company did not honor customers' request not to have their mechanical meters replaced. Although the contractor that installed the meters would honor these requests, PG&E would eventually replace them anyway.
Proposition 16
In 2010, PG&E was accused of attempting to stifle competition with Proposition 16, which mandated approval from two-thirds of voters to start or expand a local utility. Critics argued that this would make it harder for local governments to create their own power utilities, effectively giving PG&E a monopoly. The company was also rebuked for supplying $46 million to support the ballot measure when opponents raised $100,000 in the campaign. The proposition was voted down with 52.5% in opposition and 47.5% in favor.[280]
Tax dodging and lobbying
In December 2011, the non-partisan organization Public Campaign criticized PG&E for spending $79 million on lobbying and not paying any taxes during 2008–2010, instead getting $1 billion in tax rebates, despite making a profit of $4.8 billion and increasing executive pay by 94% to $8.5 million in 2010 for its top five executives.[281]
Restatements
On February 28, 2002, after the collapse of Enron, which used dubious accounting and partnerships to hide its debt, PG&E announced to restate results dating back to 1999, to show leases related to power plant construction that had been previously kept off its balance sheet.[282]
On June 27, 2003, PG&E National Energy Group, a unit of PG&E Corporation, revised its 2002 Form 10-K/A to reclassify certain offsetting revenues and expenses, which net to zero. PG&E revised its 2002 Form 10-K/A accordingly to reflect the change.
Collusion with regulatory agencies
In 2014, a California state government investigation revealed that some top executives of PG&E had been in regular communications with high-ranking officials at the state regulatory body California Public Utilities Commission for years.[283] PG&E and also been allegedly "judge shopping" during this time. PG&E Vice President of Regulatory Affairs Brian Cherry, Senior Vice President of Regulatory Affairs Tom Bottorff, and Vice President of Regulatory Proceedings Trina Horner were all fired after the email scandal was revealed.[284]
Rates
The PG&E and other investor owned utilities that are essentially granted monopoly status in California are guaranteed a negotiated fair rate of return on equity (ROE). PG&E's ROE rate was set at 10.4% and a return on rate base (ROR) was set at 8.06% by the CPUC in December 2012.[3][285] PG&E electricity rates are among the highest in the United States. In his 2013 paper Jonathan Cook of the UC Davis Energy Efficiency Center, described the 'unique factors' that explain why PG&E's rates are higher than other utilities in California.[3]:27–8 According to Cook, PG&E procures 60% of its electricity supply from third party generators and 40% from nuclear, fossil fuel and hydroelectric power plants.[3]:27–8 Many of the dams that produce PG&E's hydroelectric power were built in the early 1900s and require high maintenance. The cost of hydroelectric power maintenance is estimated to rise from $28 million in 2012 to $48 million.[3]:28 PG&E "current and near-term capital expenditures are dominated by Diablo Canyon and its hydroelectric system".[3]:28 Operations and maintenance (O&M) expenses are expected to rise especially with new regulations in place after the Fukushima accident.[3]:28 PG&E uses less natural gas than its competitors and is expected "to experience slower price growth rates" particularly if there are high emission allowance prices.[3]:29
As of 2021[update], PG&E electricity rates are 80% above the national average, mostly because of high fixed costs, which consume between 66-77% of system-wide expenses and do not change based on how much electricity is consumed.[286] These fixed costs include maintenance, generation, transmission, distribution, and wildfire mitigation.[286] According to a study by the nonprofit think tank Next 10 with the energy institute at UC Berkeley's Haas Business School, net-metering causes higher electricity rates, because many households with solar are not paying their share of the system's fixed costs, even though they rely on the system for much of their electricity.[286]:1
"Locate and Mark" Investigation
The California Public Utilities Commission (CPUC) launched an investigation in December 2018 into PG&E's "locate and mark" practices.[243] CPUC had found that PG&E falsified tens of thousands of "Call Before You Dig" records.[287] Additionally, the company violated state laws, endangered its own employees, and endangered California residents through various illicit company practices every year between 2012 and 2016. The company was fined $110 million by the State of California.[288] This all occurred subsequent to the 2010 San Bruno pipeline explosion which PG&E caused due to similar malpractice.[289] PG&E responded by instituting a "Corrective Action Plan", issuing a statement about safety being important, and firing several employees. Nick Stavropoulos, its COO and president, announced a retirement at the time though the company did not say whether it was directly a result of CPUC's findings.[290]
South San Joaquin Irrigation District (SSJID)
In 2009 the California Public Utilities Commission (CPUC) unanimously approved a resolution that would allow the South San Joaquin Irrigation District to purchase PG&E's electric facilities in Manteca, Ripon and Escalon.[291][292][293] In March 2016, San Joaquin County Superior Court Judge Carter Holly has rejected PG&E claims that South San Joaquin Irrigation District lacks sufficient revenues to provide electrical retail service to the cities of Manteca, Ripon, and Escalon and surrounding farms."[294] The Municipal Service Review (MSR) found that SSJID's customer rates would be 15 percent lower than PG&E rates.[294]
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies at the time of the merger. Before its bankruptcy on December 2, 2001, Enron employed approximately 20,600 staff and was a major electricity, natural gas, communications, and pulp and paper company, with claimed revenues of nearly $101 billion during 2000. Fortune named Enron "America's Most Innovative Company" for six consecutive years.
The 2000–2001 California electricity crisis, also known as the Western U.S. energy crisis of 2000 and 2001, was a period of time during which the U.S. state of California had a shortage of electricity supply caused by market manipulations and capped retail electricity prices. The state suffered from multiple large-scale blackouts, one of the state's largest energy companies collapsed, and the economic fall-out greatly harmed Governor Gray Davis's standing.
Southern California Edison (SCE), the largest subsidiary of Edison International, is the primary electric utility company for much of Southern California. It provides 15 million people with electricity across a service territory of approximately 50,000 square miles.
The Diablo Canyon Power Plant is a nuclear power plant near Avila Beach in San Luis Obispo County, California. Following the permanent shutdown of the San Onofre Nuclear Generating Station in 2013, Diablo Canyon is now the only operational nuclear plant in California, as well as the state's largest single power station. It was the subject of controversy and protests during its construction, with nearly two thousand civil disobedience arrests in a two-week period in 1981.
GenOn Energy Holdings, formerly Mirant Corporation, was a subsidiary of GenOn Energy, and is now a part of NRG Energy.
Calpine Corporation is the largest generator of electricity from natural gas and geothermal resources in the United States, with operations in competitive power markets.
Sempra is a North American public utility holding company based in San Diego, California. The company is one of the largest utility holding companies in the United States with nearly 40 million consumers. Sempra's focus is on electric and natural gas infrastructure and its operating companies include: Southern California Gas Company (SoCalGas) and San Diego Gas & Electric (SDGE) in Southern California; Oncor Electric Delivery Company in Texas; and Sempra Infrastructure, with offices in California and Texas.
Hawaiian Electric Industries, Inc. (HEI) is the largest supplier of electricity in the U.S. state of Hawaii, supplying power to 95% of Hawaii's population through its electric utilities: Hawaiian Electric Company serving Oahu, Hawai'i Electric Light Company serving The Big Island, and Maui Electric Company serving Maui, Lanai and Molakai. In addition, HEI owns a financial institution serving Hawaii, American Savings Bank, and a clean energy and sustainability company, Pacific Current LLC.
The Rice Fire was a wildfire that burned from October 22, 2007 until November 1, 2007, in Fallbrook, California. While not one of the largest fires of the 2007 California wildfire season, only burning 9,472 acres (38 km2), it was one of the most destructive, with 248 structures being destroyed.
Topaz Solar Farm is a 550 megawatt (MWAC) photovoltaic power station in San Luis Obispo County, California, United States. Construction on the project began in November 2011 and ended in November 2014. It is one of the world's largest solar farms. The $2.5 billion project includes 9 million CdTe photovoltaic modules based on thin-film technology, manufactured by U.S. company First Solar. The company also built, operates and maintains the project for MidAmerican Renewables, a Berkshire Hathaway company. Pacific Gas and Electric will buy the electricity under a 25-year power purchase agreement. According to First Solar, it created about 400 construction jobs.
The San Bruno pipeline explosion occurred at 6:11 pm PDT on September 9, 2010, in San Bruno, California, when a 30-inch (76 cm) diameter steel natural gas pipeline owned by Pacific Gas & Electric exploded into flames in the Crestmoor residential neighborhood 2 miles (3.2 km) west of San Francisco International Airport near Skyline Boulevard and San Bruno Avenue. The loud roar and shaking led some residents of the area, first responders, and news media to initially believe that it was an earthquake or that a large airplane had crashed. It took crews nearly an hour to determine it was a gas pipeline explosion. As of September 29, 2010, the death toll was eight people. The United States Geological Survey registered the explosion and resulting shock wave as a magnitude 1.1 earthquake. Eyewitnesses reported the initial blast "shot a fireball more than 1,000 feet (300 m) in the air".
Energy is a major area of the economy of California. California is the state with the largest population and the largest economy in the United States. It is second in energy consumption after Texas. As of 2018, per capita consumption was the fourth-lowest in the United States partially because of the mild climate and energy efficiency programs.
The Butte Fire was a rapidly moving wildfire during the 2015 California wildfire season that started on September 9 in Amador County, California. The fire burned 70,868 acres (287 km2).
Geisha J. Williams is a Cuban American businesswoman. She was the president and CEO of the Pacific Gas and Electric Company (PG&E) from March 2017 to January 13, 2019.
The Tubbs Fire was a wildfire in Northern California during October 2017. At the time, the Tubbs Fire was the most destructive wildfire in California history, burning parts of Napa, Sonoma, and Lake counties, inflicting its greatest losses in the city of Santa Rosa. Its destructiveness was surpassed only a year later by the Camp Fire of 2018. The Tubbs Fire was one of more than a dozen large fires that broke out in early October 2017, which were simultaneously burning in eight Northern California counties, in what was called the "Northern California firestorm". By the time of its containment on October 31, the fire was estimated to have burned 36,810 acres (149 km2); at least 22 people were believed to have been killed in Sonoma County by the fire.
The October 2017 Northern California wildfires, also known as the Northern California firestorm, North Bay Fires, and the Wine Country Fires were a series of 250 wildfires that started burning across the state of California, United States, beginning in early October. Twenty-one became major fires that burned at least 245,000 acres (99,148 ha).
The 2018 Camp Fire in Northern California's Butte County was the deadliest and most destructive wildfire in California's history. The fire began on the morning of Thursday, November 8, 2018, when part of a poorly maintained Pacific Gas and Electric Company (PG&E) transmission line in the Feather River Canyon failed during strong katabatic winds. Those winds rapidly drove the Camp Fire through the communities of Concow, Magalia, Butte Creek Canyon, and Paradise, largely destroying them. The fire burned for another two weeks, and was contained on Sunday, November 25, after burning 153,336 acres (62,050 ha). The Camp Fire caused 85 fatalities, displaced more than 50,000 people, and destroyed more than 18,000 structures, causing an estimated $16.5 billion in damage. It was the most expensive natural disaster of 2018, and is a notable case of a utility-caused wildfire.
The 2019 California power shutoffs, known as public safety power shutoff (PSPS) events, were massive preemptive power shutoffs that occurred in approximately 30 counties in Northern California and several areas in Southern California from October 9 to November 1, 2019, and on November 20, 2019, by Pacific Gas and Electric Company (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E).
The Kincade Fire was a wildfire that burned in Sonoma County, California in the United States. The fire started northeast of Geyserville in The Geysers on 9:24 p.m. on October 23, 2019, and subsequently burned 77,758 acres (31,468 ha) until the fire was fully contained on November 6, 2019. The fire threatened over 90,000 structures and caused widespread evacuations throughout Sonoma County, including the communities of Geyserville, Healdsburg, Windsor, and Santa Rosa. The majority of Sonoma County and parts of Lake County were under evacuation warnings and orders. Lake county only had one evacuation order and that was the town of Middletown. The fire was the largest of the 2019 California wildfire season, and also the largest wildfire recorded in Sonoma County at the time before being surpassed by the LNU Lightning Complex fires in 2020.
Dennis Montali is an American attorney and jurist who served as a United States bankruptcy judge of the United States Bankruptcy Court for the Northern District of California.
↑ Hughes, Thomas Parke (March 1993). Networks of Power: Electrification in Western Society, 1880-1930. Johns Hopkins University Press. ISBN978-0-8018-4614-4.
↑ "Volume 85". Commercial and Financial Chronicle. William Buck Dana Company. 1907. p.725. Retrieved July 18, 2023. Pacific Gas & Electric Co., San Francisco . ... in by the shareholders of the preferred stock, of which John Martin and Eugene de Sabla are large owners .
↑ "Testing gas line". The Leader-Post. December 5, 1961. Archived from the original on January 22, 2016. Retrieved August 23, 2012– via Google News.
↑ "Historic pipeline dedication". The Leader-Post. February 17, 1962. Archived from the original on January 23, 2016. Retrieved August 23, 2012– via Google News.
↑ Weare, Christopher (2003); The California Electricity Crisis: Causes and Policy Options; p. 3–4; San Francisco: Public Policy Institute of California; ISBN1-58213-064-7.
↑ Morris, J.D.; Cassidy, Megan (December 17, 2019). "Judge allows Ghost Ship families to move forward with civil case against PG&E". San Francisco Chronicle. Archived from the original on December 18, 2019. Retrieved December 23, 2019. The judge's decision frees Ghost Ship plaintiffs to seek payout from what plaintiffs' attorneys say is a $900 million pot of insurance money, but disqualifies them from a cut of the $13.5 billion settlement that will be shared with wildfire victims.
↑ Penn, Ivan; Eavis, Peter (June 16, 2020). "PG&E Pleads Guilty to 84 Counts of Manslaughter in Camp Fire Case". The New York Times. Retrieved June 16, 2020. About half of the $13.5 billion in compensation PG&E is paying wildfire victims will be in the form of company stock, leaving roughly 70,000 of them owning a little more than 22 percent of PG&E once it leaves bankruptcy. The company also plans to pay off its bond debt in full and its existing shareholders will continue to own a big chunk of PG&E, an unusual outcome in Chapter 11 bankruptcy cases like this one.
↑ "PG&E's top boss harvests total exec pay that tops $50 million". The Mercury News. April 7, 2022. Retrieved October 30, 2022. Poppe's $51.2 million total pay package was enriched primarily by $41.2 million in awards of stock, the annual SEC filing shows. The PG&E CEO also was awarded a bonus of $6.6 million and a base salary of $1.3 million.
↑ Statement made repeatedly by Dr. Bill Wattenburg during his weekly radio show in 2007 and 2008, broadcast on radio station KGO out of San Francisco, California.
1 2 "Possible Interference in the Scientific Review of Chromium VI Toxicity", Senate Health and Human Services Committee, Senate Hearing, Los Angeles, California, February 28, 2003
↑ Borneff, J; Engelhardt, K; Griem, W; Kunte, H; Reichert, J. (1968). "Experiment with 3,4-benzopyrene and potassium chromate in mice drink". Arch Hyg Bakteriol. Carcinogens in water and soil. 152 (XXII): 45–53.
1 2 "Clean-up and abatement order"(PDF), The California Regional Water Quality Control Board, Lahontan Region (Water Board), no.R6V–2015–0068, San Bernardino County, 2015, archived(PDF) from the original on April 28, 2016, retrieved April 17, 2016
↑ Erin Allday; Roland Li (January 1, 2019). "PG&E faced new scrutiny: Role in wildfires: Many workers spotted Butte County blaze early". San Francisco Chronicle. p.A1.
1 2 J.D. Morris (January 1, 2019). "PG&E faces new scrutiny: Federal prosecutors: Utility may have violated San Bruno probation". San Francisco Chronicle. p.A1.
↑ J.D. Morris (May 1, 2019). "PG&E wildfire plan faces scrutiny". San Francisco Chronicle. p.D1.
↑ Morris, J.D.; Cassidy, Megan (December 17, 2019). "Judge allows Ghost Ship families to move forward with civil case against PG&E". San Francisco Chronicle. Archived from the original on December 18, 2019. Retrieved December 23, 2019. The Ghost Ship plaintiffs' civil case against PG&E contends that the blaze that killed 36 people in an Oakland warehouse on Dec. 2, 2016, was caused by an electrical malfunction. Officials never determined a cause for the inferno, but a lead investigator testified during criminal proceedings that she believed it was sparked by an electrical failure.
↑ Morris, J.D. (November 13, 2018). "PG&E sued by Camp Fire victims". San Francisco Chronicle. Archived from the original on November 14, 2018. Retrieved November 15, 2018.
↑ Nemec, Richard (June 2, 2021). "PG&E Fined $106M for 2019 Power Shutoff Events". naturalgasintel.com. The ALJ's decision cites the violations as a "failure of PG&E's website, which was unavailable or non-functional during the majority of the duration of a PSPS event, inaccuracy of its online outage maps, inaccessibility of its secure data transfer portals to its public safety partners, and PG&E's failure to provide advanced notification of [PSPS] events to approximately 50,000 customers and 1,100 medical baseline customers during the three PSPS events in Fall 2019.
1 2 3 DuSault, Laurence (March 12, 2021). "Here's why your electricity prices are high and soaring - PG&E customers pay 80% more than national average: report". San Jose Mercury News. So why are prices so high? One reason is that California's size and geography inflate the "fixed" costs of operating its electric system, which include maintenance, generation, transmission, and distribution as well as public programs like CARE and wildfire mitigation, according to the study. Those costs don't change based on how much electricity residents consume, yet between 66 and 77 percent of Californians' electricity bills are used to offset the costs of those programs, the study found.
This page is based on this Wikipedia article Text is available under the CC BY-SA 4.0 license; additional terms may apply. Images, videos and audio are available under their respective licenses.
US$24.43 billion (2023)
