Report Detailing PG&E’s Failures Raises New Hurdles for Utility

A damning report about the cause of the deadliest wildfire in California history poses a huge setback to Pacific Gas & Electric as it tries to resolve a complex bankruptcy and prove to its customers and elected officials that it takes safety seriously.

PG&E repeatedly failed to properly maintain a power line built nearly a century ago even though it cuts through a heavily wooded and mountainous area that experiences strong winds, a 700-page report by the California Public Utilities Commission concluded. A live wire broke from the line, called the Caribou-Palermo, in November 2018 and ignited the Camp Fire, which killed 85 people and destroyed the town of Paradise.

The report, which the commission posted on its website over the Thanksgiving holiday with no announcement, could jeopardize PG&E’s future as an independent business. The company was already on probation after being convicted of six federal criminal charges for causing another disaster — a gas pipeline explosion that killed eight people in San Bruno, south of San Francisco, in 2010.

Critics of the company, including a group of California mayors and Gov. Gavin Newsom, have proposed selling PG&E to Warren E. Buffett’s holding company, breaking it up, having the state take it over or turning it into a cooperative owned by its customers.

“The new information that is most telling is that it was based on the neglect and improper inspections and overall failure of PG&E to manage their transmission line,” said State Senator Jerry Hill, a Bay Area Democrat. “That is exactly what we learned 10 years ago with the San Bruno gas pipeline explosion.”

The report has also raised fresh questions about why the utilities commission did not identify PG&E’s safety lapses in previous investigations and audits of the company. The report did not address that issue but implied that the problems could have been discovered years earlier. It said that “long-duration exposure to higher winds, age and historical inspection methodologies likely all contributed” to the equipment failures that caused the fire.

A commission spokeswoman, Terrie Prosper, said the agency would now determine fines and penalties and “ensure that it incorporates any broader lessons learned into future work, especially as we work to implement wildfire legislation.”

Michael Aguirre, a former assistant United States attorney who has sued the governor and various state officials, claiming they have improperly committed ratepayers to helping utilities like PG&E, said that the utility “has failed to obey basic safety rules because there’s been a breakdown in enforcement in California for at least the last decade.”

“Unless something fundamental is done,” he added, “the utility will cause more death and home destructions in 2020.”

The commission’s findings could jeopardize the probation the company was placed on after the 2010 gas pipeline explosion.

Judge William H. Alsup of Federal District Court ruled this year that PG&E had violated the probation, contending that the company had not adequately informed federal supervisors of a fire-related investigation by a state district attorney. Judge Alsup threatened to force PG&E to carry out a far-reaching and costly overhaul of its power lines, but ultimately scaled back his demands.

The judge could now revisit that decision in light of the new report. PG&E has acknowledged that it could be in violation of its probation if “reckless operation or maintenance” of its power lines was responsible for a wildfire and if the company was found to have violated federal, state or local laws.

A spokesman for PG&E said the company accepted the commission’s conclusion that its equipment had caused the Camp Fire. The utility said it had since stepped up safety efforts by, among other things, inspecting almost 730,000 transmission, distribution and substation structures and over 25 million electrical components.

“We remain deeply sorry about the role our equipment had in this tragedy, and we apologize to all those impacted by the devastating Camp Fire,” said Paul Doherty, the PG&E spokesman.

PG&E has been under increasing scrutiny since 2017, when its equipment was implicated in several devastating wildfires in Northern California.

The utility filed for bankruptcy protection in January after amassing tens of billions of dollars in liability for the damage caused by fires its equipment started in 2017 and 2018. This year, the utility angered customers after moving to cut off power to millions of Californians to prevent more wildfires.

Some customers lost power without notice. At one point, the utility’s computer systems repeatedly crashed as government officials and customers sought information about the blackouts, called public safety power shut-offs.

The commission report provides yet more evidence to the company’s many critics who have long complained about its safety record.

Investigators identified Caribou-Palermo line transmission tower 27/222 as the primary culprit in the Camp Fire. The tower was 25 years past its “useful life” by PG&E’s own standards.

The investigators cited PG&E for a dozen violations of a more than 100-year-old mandate that California’s utilities inspect, repair and maintain their equipment.

On Nov. 8, 2018, winds blew through the area around the Palermo substation near the Oroville Dam north of Sacramento. Winds topped 30 miles per hour, and equipment, known as a C-hook, that helps holds power lines on the transmission tower broke.

Had PG&E inspectors climbed tower 27/222, they might have seen and replaced the worn C-hook and “could have prevented ignition of the Camp Fire,” the report said. Inspectors had climbed other structures on the line in the months before the fire. But workers hadn’t climbed 27/222 since at least 2001, according to the commission’s review of PG&E’s records.

That lapse was particularly remarkable given that five other aging towers on the same stretch of the Caribou-Palermo line had collapsed in a December 2012 storm. The next summer, Brian Cherry, PG&E’s vice president for regulatory affairs at the time, notified state regulators that the company would replace the five fallen towers and one more, but not 27/222.

“PG&E failed to inspect the tower and the C-hook thoroughly to identify deterioration,” the commission’s report said.

Utility experts found it baffling that PG&E had not maintained its equipment sufficiently, because utilities can recoup the cost of repairs from customers through higher electricity rates.

“PG&E’s behavior was unforgivable and totally unnecessary,” said Robert McCullough, an energy consultant in Portland, Ore. “Moreover, following on the very similar San Bruno incident, management was willfully blind to risks to customers. And, strangely enough, also blind to the risk to stockholders.”

The report said that in addition to violating state regulations, PG&E had flouted its own procedures. The Camp Fire investigation has also been referred to the Butte County prosecutor for possible criminal charges.

After the Camp Fire, PG&E discovered numerous problems when it took a more rigorous approach. The new inspections found 5,000 hazardous conditions on transmission lines, “none of which had been identified previously by PG&E’s routine patrol and detailed inspections,” the report said.

Lawyers for the commission’s safety and enforcement division stated in a filing with the report that PG&E must address violations cited in the report before regulators give their approval to a reorganization plan in its bankruptcy case. The company must emerge from bankruptcy next year in order to tap a state wildfire fund that the California Legislature created this year to help shield large utilities from the costs of wildfires.

This year, California passed a sweeping law aimed at overhauling its response to the wildfire threat. But it is not clear whether the legislation will do enough to pressure large utilities to improve their safety cultures. The law, for example, requires PG&E and other utilities to obtain a safety certification from the utilities commission in order to draw money from the state wildfire fund.

This in theory set up a way for the state to force the companies to adopt tougher safety standards and practices. But the state’s three largest power utilities have already obtained the certification with little trouble. Among other things, they had to submit a plan aimed at preventing wildfires and establish a safety committee on their boards.