PG&E faces possible breakup, government takeover

23 December 2018 by Steve Blum
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Pacific Gas and Electric could be broken up, reorganised or brought under closer control by the California Public Utilities Commission. The decision to launch a broad investigation into PG&E’s future, including the possibility of a public takeover, was made by commission president Michael Picker and released late on Friday, after financial markets had closed and the holiday exodus had begun.

Radical action of this sort, taken against a major utility, is cause for concern by telecoms companies too. Generally, it signals a change to much more aggressive utility regulatory regime in California. Specifically, it increases the threat of future criminal and civil liability, affects management of and access to utility poles and conduit, and puts a major source of independent dark fiber in jeopardy.

PG&E is implicated in the ignition of the Camp Fire, which killed at least 85 people in Butte County, and destroyed entire towns. A federal judge overseeing PG&E’s probation for a past corporate criminal conviction, stemming from a gas line explosion in San Bruno that killed eight people (pictured above), is demanding answers about possible new crimes committed by the company. The CPUC opened a separate investigation into whether PG&E broke state laws regarding gas line protection, and expanded its review of electric utility wildfire prevention practices.

All that, just within the past two months. In his decision, Picker said standard remedies aren’t working…

This Commission was, and remains, concerned that the safety problems being experienced by PG&E were not just one-off situations or bad luck, but indicated a deeper and more systemic problem. The fact that imposing penalties on PG&E (the Commission’s standard tool for addressing safety problems) did not seem to change the situation reinforced this concern…

The next phase of this proceeding will consider a broad range of alternatives to current management and operational structures for providing electric and natural gas in Northern California.

Options under consideration include various methods of bringing PG&E’s executives and board of directors under tighter CPUC control, or replacing them altogether, breaking the company up into smaller pieces, on a business line and/or regional basis, and taking over the company and turning it into a publicly owned utility of one kind or another.

Picker’s decision – technically, a “scoping memo and ruling” – comes in an investigation that began in 2015. It’s just another step, albeit in a new direction, in a process that will grind on for many more years.