Pacific Gas and Electric: Wildfires, Bankruptcy, and the Future of California’s Energy

Pacific Gas and Electric (PG&E), one of the largest combined natural gas and electric energy companies in the United States, provides gas and electricity to more than 16 million people throughout California, has been under fire as evidence points to them for being at fault for the latest two large wildfires in Northern California. The record-breaking wildfires of 2017 and 2018 have lead PG&E to declare bankruptcy and brought forth the question of the future of California’s energy. (1)

Throughout October 2017 numerous wildfires burned its way across California, including the Tubbs fire that killed 22 people and burned 149 km2 in Sonoma County. Originally California Department of Forestry and Fire Protection (Cal Fire) blamed the electric utility’s equipment and poor maintenance for 17 of the wildfires and 13 of the casualties. In early 2019 the company was cleared of criminal charges that were connected to the Tubbs Fire in Sonoma County as there was insufficient evidence to prove beyond any reasonable doubt that PG&E operated with a reckless disregard for human life that caused the fires. (2)

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Just over a year later in November 2018, California faced its deadliest and most destructive wildfire in history, Camp Fire. As a result of the fire, there were 85 casualties, nearly 20,000 buildings burnt along with almost 620 km2. At the company’s own admission, they believe it’s “probable” that their equipment was the cause of the fire; currently the PG&E is still under investigation and faces criminal prosecution in connection to the Camp Fire in Butte County. (3)

Following the wildfires, thousands of individuals and insurance companies have sued the utility company on the suspicion that their equipment caused the fires, thus leading PG&E to file bankruptcy at the end of January 2019. Between the fires in 2017 and 2018, it is estimated that PG&E is responsible for $30 billion in fire liability; so during the process of bankruptcy, it is possible that the price of electricity might increase as that PG&E might try to regain some of their losses. (7) In response to the bankruptcy, the new Governor of California, Gavin Newsom, stated in his report that California “should change a legal provision that holds utilities liable for damages if their equipment causes a wildfire even if the companies did not act negligently. The plan says utilities should be held liable only if they have acted improperly, like not trimming trees or replacing aging equipment.”

Many of the fire victims and the representative of PG&E customers believe that this will lead to letting utilities off the hook for not maintaining their transmission lines and other equipment. (6)

With this bankruptcy, it brings into question the future of California’s energy. There have been debates across the state for how to deal with PG&E, one option is to remove the company from buying and selling electricity, allowing the utility direct its attention to the safety of its poles and wires and reduce the risk of deadly fires. (5) Another option includes breaking up the company and turning segments into municipal utilities owned and operated by local governments. Officials in San Francisco have already considered taking over PG&E’s operations within their city. (6) However, the decisions that PG&E and the State of California will have to decide will most likely impact California’s renewable energy goals. Recently, California signed The 100 Percent Clean Energy Act of 2018 that plans for 100% of electricity sales to come from renewable energy resources and zero-carbon resources by 2045; PG&E wants to continue its clean energy programs but the bankruptcy could hinder the progression to clean energy. (7)

Grace Slembrouck

Sources

  1. https://www.pge.com/en_US/about-pge/company-information/profile/profile.page
  2. https://www.cnbc.com/2019/03/13/no-criminal-charges-for-pge-in-2017-wine-country-wildfires-in-calif.html  
  3. .https://www.cnbc.com/2019/02/28/pge-says-its-probable-it-caused-the-2018-camp-fire.html
  4. https://www.sfchronicle.com/california-wildfires/article/Still-no-cause-released-for-Camp-Fire-13559295.php
  5. https://www.latimes.com/business/la-fi-pge-bankruptcy-energy-cca-20190214-story.html
  6. https://www.nytimes.com/2019/04/12/business/energy-environment/gavin-newsom-wildfire-pge-california.html
  7. https://www.nytimes.com/2019/01/29/business/pge-bankruptcy.html

Photo by Jeremy Perkins on Unsplash

 

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