PG&E would be replaced by a non-profit company called Golden State Energy if the disgraced utility operates unsafely and causes more catastrophes such as wildfires or explosions, under the provisions of a proposed state bill to be debated before a legislative panel Thursday.
The legislation, SB 350, is wending its way through the state Legislature as PG&E nears a successful emergence from a $51.69 billion bankruptcy that was filed amid mounting debts and liabilities after a string of lethal wildfire catastrophes that the utility caused.
“With the disastrous track record of PG&E, there needs to be a Plan B if PG&E again operates unsafely,” said state Sen. Jerry Hill, the author of SB 350. “No one knows what PG&E will bring in the future. We expect the best, but we have to prepare for the worst.”
The path to the resolution of a worst-case scenario involving PG&E — which could include causing catastrophic infernos or disasters such as the natural gas pipe explosion that killed eight in San Bruno a decade ago — was paved by state law AB 1054 and subsequent actions by the state Public Utilities Commission.
The PUC has established a six-step plan to hold PG&E accountable for operating as a safe and reliable utility through a series of monitoring steps that steadily escalate.
The final two steps: Step 5, a receiver would be appointed to take over PG&E’s utility operations; Step 6, the PUC would revoke PG&E’s license to operate in California.
“SB 350 provides for an orderly transfer of the company to a new operator, Golden State Energy, in the event PG&E’s certificate of public convenience and necessity is revoked,” according to a fact sheet distributed by Hill’s office.
Gov. Gavin Newsom supports the legislation and has been active in helping to craft the bill, according to Hill, whose district includes sections of Santa Clara County and San Mateo County, as well as San Bruno, the scene of the fatal gas explosion in 2010.
Since then, PG&E’s equipment has caused deadly wildfires in Amador and Calaveras counties in 2015, the North Bay Wine Country and nearby regions in 2017, and Butte County in 2018. The 2018 Camp Fire also essentially destroyed the town of Paradise.
San Francisco-based PG&E is seeking bankruptcy court approval to reorganize its finances. A court decision is due within days.
“PG&E has put forward a plan of reorganization to emerge from Chap. 11 that will position the company to make necessary safety and wildfire mitigation investments in the coming years, partner with the state in achieving its bold climate goals, and, importantly, provide prompt and fair payment to the victims of recent wildfires,” PG&E spokesman James Noonan said.
The disasters that PG&E caused have unleashed a laundry list of criminal proceedings and regulatory punishments.
In 2015, the PUC imposed a $1.6 billion penalty on PG&E for causing the San Bruno explosion — which at the time was the largest regulatory punishment ever levied on an American utility.
In 2016, PG&E became a convicted felon when a federal jury found it guilty for crimes it committed before and after the San Bruno explosion.
In March 2020, PG&E joined the grim pantheon of America’s deadliest companies when it agreed to plead guilty to 84 counts of involuntary manslaughter in connection with the 2018 Camp Fire in Butte County.
In May 2020, the PUC imposed a $1.97 billion penalty on PG&E for causing the 2017 and 2018 infernos, a levy that became the largest regulatory punishment ever imposed on an American utility.
“The governor has indicated for months that there has to be a Plan B,” Hill said. “The governor and his top people have been working with the Legislature and our office on this bill.”
SB 350 is slated to be debated by the state Assembly Utilities and Energy Committee on Thursday.
“We really learned the hard way that trust but verify is not enough when it comes to dealing with PG&E,” Sen. Hill said. “We have to have an escape plan from PG&E that will guarantee a safe, reliable utility. If PG&E can’t provide that, Golden State Energy can.”
