PG&E May Face $166 Million Penalty for Mismanaging Blackouts

A California state agency is recommending PG&E Corp. pay $165.7 million in fines and penalties for mismanaging preemptive blackouts last fall to prevent wildfires, saying the company cut power to thousands of customers with no warning.

If approved by state regulators, the proposal from the Public Advocates Office of the California Public Utilities Commission would force PG&E to give $400 refunds to many of those customers, who lost electricity service without prior notice during three blackouts last October. For blacked-out customers who rely on medical devices in their homes, PG&E would spend up to $5,000 per person to provide backup power, such as a generator or battery.

PG&E started resorting to deliberate blackouts after its equipment caused some of the worst wildfires in California history, forcing the company into bankruptcy last year. The utility emerged from Chapter 11 in July after having paid $25.5 billion to resolve fire claims.

“We want PG&E to be held accountable,” said Nathaniel Skinner, safety branch program manager with the Public Advocates Office. “We see some improvement -- we hope they improve -- but this is about how they performed during these events.”

California regulators opened a probe into last year’s shutoffs, which caused widespread disruptions and forced the closure of schools and businesses. During one outage in October 2019, PG&E cut power to more than 2 million people across Northern California.

The proposed penalty would need the approval of a judge overseeing the proceeding as well as the commission’s five voting members to take effect. The money would come from PG&E shareholders, not customers. In addition to customer refunds, PG&E would have to spend $102 million on sectionalizing its electricity grid -- making it easier to isolate portions of it to limit the size of blackouts.

PG&E filed its own opening comments in the proceeding Friday, arguing that it shouldn’t face any penalties for last year’s outages.

A PG&E spokeswoman said the company was working to reduce the frequency, size and duration of safety blackouts this year, and has improved customer communication and support. PG&E already gave customers affected by one of last year’s outages $86 million in bill credits, she said.

The utility already has turned off power multiple times this autumn during dry, windy conditions, including earlier this week when it blacked out about 350,000 homes and businesses, impacting more than 1 million people. But its shutoffs this year have been smaller and more targeted than last year’s.

©2020 Bloomberg L.P.

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