In the aftermath of California wildfires, Pacific Gas & Electric filed for bankruptcy protection.
Fire investigators with the California Department of Forestry and Fire Protection, known as “Cal Fire,” determined that PG&E equipment was responsible for major wildfires in 2017, according to news reports. In total, the fires burned in eight counties, destroying thousands of structures and killing 22 people, news outlets reported. (Cal Fire determined that the “Tubbs Fire” in October 2017 was caused by a private electrical system adjacent to a residential structure. Investigators did not identify any violations of state law related to the cause of the Tubbs fire, the department said in a Jan. 24 statement.)
Yet to be determined is whether PG&E equipment played a part in the “Camp Fire” that started on Nov. 8 and killed 86 people and destroyed 14,000 homes. If PG&E is held responsible for the Camp Fire it could face tens of billions in liabilities for loss of life and property damage, news outlets have noted. The utility is already dealing with hundreds of lawsuits from homeowners looking to recover damages. It may have little choice but to pass on costs to ratepayers.
To limit its liability, PG&E on Jan. 29 filed for Chapter 11 bankruptcy protection. That filing promises to be complicated and lengthy. Criminal charges are also possible against the utility. The Wall Street Journal reported that the utility is also losing support in Sacramento where state lawmakers are distancing themselves from a growingly unpopular supplier of electricity and natural gas. So, any state bailout seems unlikely.
Also at risk are contracts with renewable energy providers such as wind and solar, most of which are at rates well above market prices. PG&E has $34.5 billion in renewable energy contracts for electricity delivery between now and 2034, and all are at risk of being canceled through the bankruptcy process, according to reporting by The Wall Street Journal. This poses significant challenges to the state’s goals to achieve carbon emissions reductions; but at the same time, it could provide some relief to the state’s ratepayers who were being asked to support the cost of very expensive long-term green contracts, and may also be asked to pay for wildfire damages.
Not to be overlooked is the cost to 16 million California ratepayers who are already paying almost twice the national average for power.