Tag Archives: utility regulation

Four California counties say “no criminal charges” for PG&E

by Steve Blum • , , , ,

Pacific Gas and Electric won’t face criminal charges for its role in starting several northern California fires in 2018. District attorneys in Sonoma, Napa, Humboldt and Lake counties announced that they can’t prove a case. According to a press release from Sonoma County district attorney Jill Ravitch, the necessary evidence burned up along with everything else…

The cases that were referred for prosecution all required proof that PG&E acted with criminal negligence in failing to remove dead and dying trees. Under California law, criminal negligence requires proof of actions that are reckless and incompatible with a proper regard for human life, and any charges must be proven unanimously to a jury beyond a reasonable doubt. Proving PG&E failed in their duty to remove trees was made particularly difficult in this context as the locations where the fires occurred, and where physical evidence could have been located, were decimated by the fires.

Last year, Cal Fire determined that some of the many fires that roared through California’s wine country began when trees or other vegetation came into contact with PG&E electric lines. The deadliest fire – the Tubbs fire – which killed 22 people and spread as far as city neighborhoods in Santa Rosa, was not linked to PG&E’s equipment according to Cal Fire. That one was apparently started by electric lines strung across private property by the landowners.

So far, prosecutors in other counties affected by fires linked to PG&E infrastructure have declined to charge PG&E with crimes. But that’s cold comfort. Ravitch was careful to point out that “PG&E remains on federal criminal probation and is a defendant in many private civil cases arising out of the wildfires”, including one that the County of Sonoma is pursuing. The combined liability PG&E faces from those fires as well as last year’s even deadlier Camp Fire is expected to top $30 billion. Who gets paid and how much is now in the hands of a federal bankruptcy court.

PG&E faces pole attachment shot clock, as CPUC arbitrator hands Crown Castle a win

by Steve Blum • , , ,

White road attachment

An administrative law judge gave Crown Castle a victory of sorts in a dispute over terms for attaching fiber optic cable to utility poles that Pacific Gas and Electric owns. Assuming the California Public Utilities Commission signs off on the finding, the arbitrated decision by ALJ Patricia Miles leaves PG&E’s leasing model and most of its standard terms in place. But, in effect, it also establishes a 45 day shot clock for responding to attachment requests and allows Crown Castle to do some work on poles without notifying PG&E and to be notified, in some circumstances, if work affecting its cables is planned.

Originally, Crown Castle wanted the CPUC to force PG&E to sell space on utility poles by the foot. Typically, PG&E either sells all the space available for telecoms cable attachments – the communications zone – to one company, such as AT&T, and then relies on that company to manage attachment requests by other carriers. Or it will lease out space by the foot to telecoms attachers, such as Crown Castle, and manage the communications zone itself.

The rent versus buy financial analysis aside, the main operational difference between owning and leasing space is that pole space owners can add cables and maintain them with less administrative overhead, and can expect a greater degree of coordination from PG&E. Crown Castle wanted those privileges, but didn’t want to – perhaps legally couldn’t – take on the responsibility of owning and managing the entire communications zone.

Using an expedited arbitration process established by the CPUC, Crown Castle challenged PG&E’s standard procedure, but Miles rejected its argument that state law and CPUC rules require by-the-foot sales of attachment space. She then told the two companies to negotiate an agreement on that basis.

That didn’t happen. In her draft decision, Miles said “the parties inexplicably failed to submit such an agreement”. Instead of coming back to her with a settlement, the companies each offered their preferred contract language: PG&E filed its standard contract; Crown Castle proposed changes to that contract giving it many of the privileges of ownership.

In a baseball-style arbitration decision, Miles chose Crown Castle’s version, saying “PG&E has not objected to Crown Castle’s revisions to its license agreement”.

Key elements of the changes to PG&E’s standard attachment contract include:

  • Crown Castle needs written permission to attach cables to PG&E owned pole space, “unless 45 days have run from the time of request of access and Company has provided no response”. Neither the ruling or the contract define what, exactly, constitutes a response, but silence certainly doesn’t qualify.
  • Crown Castle does not have to give PG&E 48 hour notice if it’s doing routine repair or maintenance that doesn’t require electricity to be shut off.
  • PG&E has to notify Crown Castle when another telecoms company wants to attach to a pole that Crown Castle is already occupying.
  • When that happens, PG&E needs Crown Castle’s permission to rearrange cable attachments or replace poles if needed.

Since this was a one-off arbitration of a particular dispute between two companies, the decision won’t affect any existing pole attachment contracts or necessarily serve as a template for future ones. But it might.

The CPUC is scheduled to vote on the draft decision at its 14 March 2019 meeting.

Collected documents from the Crown Castle/PG&E pole attachment arbitration at the CPUC are here.

PG&E admits responsibility for deadly Camp Fire, pegs liability at $10.5 billion and climbing

by Steve Blum • , , , ,

Carr fire 2018

Cal Fire’s official investigation isn’t over, but Pacific Gas and Electric has concluded that it was at least partly to blame for the Camp Fire in Butte County in November, which killed 86 people. In a financial filing yesterday, PG&E laid out the evidence from the transmission tower where the fire began, and the financial consequences…

The company believes it is probable that its equipment will be determined to be an ignition point of the 2018 Camp Fire…

On November 14, 2018, the company observed a broken C-hook attached to the separated suspension insulator that had connected the suspension insulator to a tower arm, along with wear at the connection point. In addition, a flash mark was observed on Tower :27/222 near where the transposition jumper was suspended and damage to the transposition jumper and suspension insulator was identified…

Based on these facts, the company is including a $10.5 billion pre-tax charge related to third-party claims in connection with the 2018 Camp Fire in its full-year and fourth-quarter 2018 financial results…

The company has taken a total of $14.0 billion in pre-tax charges related to the 2018 Camp Fire and the 2017 Northern California wildfires to date, which reflects the lower end of the range of estimated losses the company faces from such wildfires. The charges represent a portion of the previously announced estimate of potential wildfire liabilities, which could exceed more than $30 billion.

The bottom line: PG&E’s management and auditors believe there is “substantial doubt” about its and its parent corporation’s “ability to continue as going concerns”.

The disclosures come a day after a story appeared in the Wall Street Journal that reported PG&E knew about problems on that particular transmission line, but delayed fixing them for several years.

If indeed there is evidence that PG&E was negligent, or even simply made poor choices, the company faces a triple whammy. It’ll be blood in the water for the predatory bar, which no doubt expects to get the shark’s share of $30 billion plus, and it’s sure to test, if not break completely, the patience of the federal judge who is supervising PG&E probation, which stems from an earlier criminal conviction for deadly safety lapses.

And then there’s the ongoing bankruptcy proceeding, which PG&E hopes will keep it in the electric and gas business in northern California. The more money that goes toward civil damages and criminal penalties though, the less there will be to keep the lights and heat on. That’s not just a problem for PG&E – increasingly, it’s looking like a problem that the California legislature will have to solve.

Telecoms takes a backseat in Sacramento, but PG&E could end up a hood ornament

by Steve Blum • , , , ,

Skull hood ornament

Telecommunications in general, and broadband in particular, aren’t getting much attention at the California capitol this year. Friday was the deadline for introducing new bills for this year and, aside from privacy issues, nothing regarding telecoms that’s particularly substantive landed in the hopper.

Pacific Gas and Electric company and the California Public Utilities Commission, on the other hand, are in the gunsights of senator Jerry Hill (D- San Mateo). He floated a bill on Friday that would take much of the job of regulating PG&E away from the CPUC, and give it to the California legislature (h/t to Fred Pilot at the Eldo Telecom blog for the pointer). Senate bill 549 simply says…

The commission shall not approve any capital structure change or increase in rates for the Pacific Gas and Electric Company unless the Legislature, by statute, authorizes the capital structure change or increase in rates.

It’s a placeholder bill, introduced to meet the deadline, with details to be worked out later. That’s my read anyway. Micromanaging the rates and capital structure of privately owned utilities, as the CPUC does, is a detailed and time consuming job. Giving it to legislative committees guarantees chaos.

His objective, judging from his press release, is to give the legislature, or at least Hill, a seat at the table as a federal judge disposes with PG&E’s request for bankruptcy protection. The gambit might work. A credible threat to subject PG&E to direct and overt political control could create enough financial uncertainty to kill any reasonable bankruptcy settlement.

Hill introduced two other utility related bills on Friday. SB 548 would increase requirements for private electric companies to inspect high voltage transmission lines – such as those suspected as the cause of the deadly Camp Fire – and SB 550 would require that a merger involving a gas or electric company “improves the safety of the utility service provided”.

Crown Castle, PG&E punt fiber attachment dispute back to CPUC

by Steve Blum • , , ,

Crown Castle and PG&E failed to reach agreement on pole attachment terms, as directed by the California Public Utilities Commission administrative law judge (ALJ) arbitrating their ongoing dispute. Instead, PG&E submitted its standard pole space leasing agreement, and Crown Castle submitted the same, with several modifications that make it more to its liking.

The heart of their dispute is that Crown Castle wants to buy attachment space on poles, and PG&E just wants to lease it to them. Incumbent telecoms companies, like AT&T, can buy space, but they have to buy all of the communications zone, which is section of the pole, typically three or four vertical feet, that’s suitable for attaching telecoms cables. Once they buy the whole zone, they’re then responsible for leasing out attachment space by the foot to competitive telecoms companies like Crown Castle.

Crown Castle isn’t interested becoming the telecoms landlord on PG&E poles, and there’s some doubt as to whether CPUC rules allow them to do it in the first place. The ALJ heard both sides’ arguments, as well as comments from other interested parties, and decided that there’s nothing in the CPUC rules that says PG&E has to sell pole attachment space by the foot.

So now Crown Castle is telling the ALJ that 1. commissioners should disregard her ruling and give it what it wants anyway, and 2. if they don’t do that, they should change PG&E’s standard pole space leasing agreement to, among things, create a 45 day shot clock for PG&E to approve or reject a request to attach to a particular pole. If PG&E has “provided no response” within that time, Crown Castle could attach its fiber at will. It also wants to know when other companies ask to lease any remaining space, wants to be able to work on poles without notifying PG&E and doesn’t want PG&E to rearrange any of its cables without its permission. Which add up to many of the privileges that come with pole space ownership, without the responsibility of managing leases with other telecoms companies.

Collected documents from the Crown Castle/PG&E pole attachment arbitration at the CPUC are here.

CPUC judge wants complex pole attachment issues to be even more complicated

by Steve Blum • , , ,

Messy fiber attachments

Utility pole associations, which manage joint use of poles by electric utilities – privately and municipally owned – and telecoms companies of all sorts, should be regulated by the California Public Utilities Commission, according to a ruling by an administrative law judge (ALJ). The ruling focuses on a narrow dispute between two companies: big picture, it’s little more than advice to CPUC commissioners. But it’s bad advice.

The ruling concerns a dispute between Pacific Gas and Electric, which owns poles throughout northern California, and Crown Castle, which is an independent, competitive telecoms company that owns and leases fiber routes, and builds and operates cell sites. PG&E offered to lease space to Crown Castle on its poles, as it’s required to do by the CPUC. Crown Castle said it would prefer to buy outright a foot’s worth of space on PG&E’s poles, so it can get about its business of building fiber networks without worrying about keeping a landlord happy. AT&T, and other incumbent telephone companies, buy space on PG&E’s poles, but they buy the whole communications zone, which can be several feet of pole space. They are then responsible for leasing out attachment space by the foot to independent companies like Crown Castle, also as required by the CPUC.

Crown Castle didn’t want to pay for and be responsible for the entire communications zone on PG&E poles, and if they did, it’s not entirely clear that they would have the same obligation as AT&T and other incumbents to lease space to other telecoms companies. So Crown Castle and PG&E ended up in a stalemate. To resolve it, Crown Castle asked the CPUC to step in and arbitrate the dispute. The ruling issued yesterday by ALJ Patricia Miles says that PG&E is meeting its obligations by offering to lease attachment space on poles and Crown Castle has no particular right to buy it by the foot.

But the ruling goes one step further and says that procedures and contracts developed by joint pole associations – the Northern California Joint Pole Association (NCJPA) and the Southern California Joint Pole Committee – need to be approved in advance by the CPUC…

There can be no doubt that disputes such as the present one will arise again. For this reason, if NCJPA is going to continue to facilitate sale and purchase transactions pertaining to public utility poles among its member entities, the Commission should require NCJPA to submit (before implementation) for Commission review and approval…its agreements, forms, procedures and handbooks which concern the transfer, sale, lease, assignment, mortgage, or encumbrance of public utility poles. Such transactions, which are being handled by NCJPA on behalf of its members, are clearly within the Commission’s jurisdiction.

The ALJ’s report amounts to a suggestion for commissioners, who would have to issue a formal decision requiring joint pole associations to get advance approval for pole attachment deal terms. If commissioners go down that road, it will be a lengthy and contentious process. Not all utilities that own and/or attach to poles are under CPUC jurisdiction. An association of municipal electric utilities objected to a draft version of the ALJ’s ruling, pointing out that the CPUC has no authority over them and shouldn’t try to tell them how to manage their own poles.

In the meantime, the ALJ’s ruling will be widely read and could influence similar one-on-one disputes between independent telecoms companies and electric utilities.

Yesterday’s ruling affirmed PG&E’s current practice, and in that regard offered a bit of clarity to the already horribly complex problem of how utility pole routes are shared and managed in California. But by threatening to extend CPUC oversight to joint pole associations, the ruling adds an unneeded and unwelcome layer of uncertainty.

The CPUC has ongoing proceedings that involve a number of issues related to pole access and, because of PG&E’s bankruptcy filing and past criminal conviction, federal judges will have a lot to say about it. The California legislature and civil courts are also involved because of the dozens of deaths and billions of dollars worth of damaged caused by fires started by electric lines. Now is not the time to drag even more players into this mess.

More documents involving the PG&E – Crown Castle dispute are here.

Federal judge slams PG&E and CPUC for deadly wildfires

by Steve Blum • , , , ,

A federal judge lambasted Pacific Gas and Electric’s and the California Public Utilities Commission’s wildfire prevention efforts, and the California supreme court allowed a key wildfire cost sharing decision by the CPUC to stand yesterday. That follows PG&E’s bankruptcy filing on Tuesday.

Judge William Alsup is PG&E’s probation officer. The corporation was convicted of criminal misconduct following a deadly natural gas line explosion in San Bruno in 2010, and it is accountable to Alsup for how well it’s complying with the penalties handed down, which include good behavior requirements. Alsup thinks PG&E is a danger to the public, and he doesn’t have a high opinion of the CPUC’s efforts to rein it in. According to a story in the San Jose Mercury News by Matthias Gafni and John Woolfolk, representatives from both PG&E and the CPUC tried to convince Alsup that his proposal to require PG&E to inspect more than 100,000 miles of electric lines before this summer’s fire season begins is a bad idea. He wasn’t buying any of it…

“Does a judge turn a blind eye and let PG&E continue what you’re doing, let you keep killing people?” U.S. District Judge William Alsup said inside the San Francisco courtroom. “Can’t we have electricity that is delivered safely in this state?”…

The judge also questioned the California Public Utilities Commission, the state agency charged with regulating PG&E and other investor-owned utilities.

“How did it happen so many fires occurred under your regulations?” Alsup asked a representative of the state regulator. “It sounds harsh, but that’s what the people of California deserve to know, how did that happen?”

After three intense hours, Alsup told the parties he would rule later, but the state of California did not have time to waste with another fire season approaching.

Alsup hinted he might require PG&E to use the same, aggressive power cutting tactics that San Diego Gas and Electric uses when wildfire danger is high. SDG&E began proactively de-energising lines after wildfires in 2007 that it and Cox Communications were responsible for starting.

Those fires were costly to SDG&E, and yesterday the California supreme court refused to hear its appeal of a CPUC decision to not allow it to pass on some of its liability costs – $379 million – to customers.

California’s utility costs, regulation in play as PG&E files for bankruptcy

by Steve Blum • , , , ,

Pacific Gas and Electric filed for bankruptcy protection yesterday, beginning a process that could lead to significant changes in how electricity and natural gas service is delivered in northern California, and how much it costs. It also has the potential for changing the cost sharing calculations that determine how much telecoms companies pay to share poles and conduit with PG&E.

Assuming the federal court allows the bankruptcy to go forward – not a safe assumption according to analysts quoted by Barrons – private contracts and some regulatory directives by the California Public Utilities Commission could be, um, reimagined. PG&E hinted at what might change in its press release announcing the filing

As part of the filings, PG&E also filed various motions with the Court in support of its reorganization, including requesting authorization to continue paying employee wages and providing healthcare and other benefits. In the filings, PG&E also asked for authority to continue existing customer programs, including low income support, energy efficiency and other programs supporting customer adoption of clean energy. PG&E expects the Court to act on these requests in the coming days.

Translation: if you work for us, don’t make assumptions about your paycheck or benefits package for the time being, and if you’re relying on rents extracted by the CPUC or California legislature, make contingency plans.

It’s not time to push the panic button – an experienced bankruptcy judge won’t start slashing and burning – but it isn’t the time to rely on old certainties either. A new U.S. marshal just rode into town, and hasn’t decided whether the local sheriff is the solution or the problem.

Monday, in an emergency meeting held amidst a crowd of raucous protestors, the CPUC gave PG&E permission to borrow more money, which it will have to do to pay for operations during the bankruptcy proceedings – so called debtor in possession financing.

The CPUC also filed a brief with the federal judge overseeing PG&E compliance with criminal sanctions resulting from the deadly San Bruno natural gas explosion in 2010. According to Politico, the CPUC objected to a hugely expensive electric line inspection throughout PG&E’s territory proposed by judge William Alsup, arguing “the proposal interferes with their oversight and would endanger public safety”. It’s arguable whether Alsup’s idea would help or hinder public safety, but there’s no question that it shoves the CPUC aside. Which might be why he’s proposing it: CPUC oversight did not prevent the San Bruno explosion or the Camp Fire or any of the other fires, deadly or otherwise, that PG&E is implicated in.

California is losing its grip on utility service and infrastructure

by Steve Blum • , , , ,

Harold lloyd safety last

The future of northern California’s energy supply, and the utility pole routes that support it, will be largely in the hands of federal judges. Pacific Gas and Electric gave notice yesterday that it will, in all likelihood, file for bankruptcy protection in two weeks. The company said that it may have to pay as much as $30 billion in damages stemming from catastrophic wildfires it apparently played a role in starting in 2017 and 2018. That’s about three times more than the company was worth before its stock price nosedived on the news. A federal bankruptcy court will have to decide how to carve up whatever is available, and who gets control of the carcass.

Another federal judge is assuming an oversight role that, in theory, the California Public Utilities Commission is supposed to fill. Last week, judge William Alsup gave PG&E until the end of the month to come up with a plan for inspecting the more than 100,000 miles of electric lines it operates in California before the next fire season begins in June. He’s essentially PG&E’s probation officer, following the corporation’s of criminal conviction related to a natural gas line explosion in San Bruno in 2010.

So far, the CPUC hasn’t made any comment about PG&E bankruptcy plans or Alsup’s encroachment on its turf. Last month, CPUC president Michael Picker launched an investigation that could result in PG&E break up, or a takeover by the state, or any number of other fates. Or could have, before financial markets, trial lawyers and the federal judiciary got tired of waiting. At the time, Picker stated in a press release that “this process will be like repairing a jetliner while it’s in flight. Crashing a plane to make it safer isn’t good for the passengers”.

Yesterday, PG&E said the plane is going down. All we passengers can do is assume the position, and hope for the best.

PG&E pulls the plug, filing for bankruptcy

by Steve Blum • , , , ,

Rampart 300

With liabilities from California wildfires amounting to unknown billions of dollars, Pacific Gas and Electric company announced this morning that it plans to file for bankruptcy as soon as it’s legally able to do so. According to a company press release

The Company today provided the 15-day advance notice required by recently enacted California law that it and its wholly owned subsidiary Pacific Gas and Electric Company (the “Utility”) currently intend to file petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on or about January 29, 2019.

Governor Gavin Newsom released a statement saying he’s been engaged with the problem over the weekend…

The company should continue to honor promises made to energy suppliers and to our community. Throughout the months ahead, I will be working with the Legislature and all stakeholders on a solution that ensures consumers have access to safe, affordable and reliable service, fire victims are treated fairly, and California can continue to make progress toward our climate goals.

No reaction yet from the California Public Utilities Commission.