California Governor Wants ‘Strike Team’ to Develop Utility Plan

California Governor Gavin Newsom on February 12 said the state has formed a “strike team” as it works to develop plans to help not only utility ratepayers but also utility employees. The move comes in the wake of the bankruptcy filing by Pacific Gas & Electric (PG&E) as the state’s largest utility deals with its liabilities from a series of wildfires.

The governor, delivering his State of the State address Tuesday, said “We are all frustrated and we’re angry that it’s come to this. PG&E didn’t do enough to secure dangerous equipment or plan for the future. My administration will work to make sure PG&E upholds its obligations.” Newsom said he wants to ensure victims of the wildfires receive justice, and he wants to protect utility customers and workers.

Newsom said the team, which includes financial advisers and bankruptcy attorneys, “will develop a comprehensive strategy that will be presented in 60 days.” He said his administration will invest in greater safety and renewable energy goals and will continue to phase out power generation from fossil fuels.

“Regulations and insurance practices created decades ago didn’t anticipate these changes,” Newsom said. “We must map out longer-term strategies, not just for the utilities’ future, but for California’s energy future.”

PG&E filed for Chapter 11 bankruptcy protection last month. The utility said it faces an estimated $30 billion or more in liabilities from wildfires in 2017 and 2018.

PG&E’s situation is impacting the state’s other investor-owned utilities, as both Southern California Edison and San Diego Gas & Electric have had their credit ratings downgraded due to concerns about their exposure to possible fire claims. Newsom on Tuesday said “the problems we face are far greater than PG&E,” as he talked about not only the credit downgrades but also the impact of climate change on the state.

“We must map out a longer-term framework not just for the utilities’ future, but for California’s energy future, to ensure that the cost of climate change doesn’t fall on those least able to afford it,” he said.

Seth Hilton, a partner at Stoel Rives in San Francisco, told POWER in a recent interview about the PG&E bankrutpcy that California utilities face challenges because “PG&E is potentially caught in a situation, as are the other utilities, where they can be held strictly liable for damages from the fires. There is a risk that PG&E will not be able to pass some or all of those costs on, and this bankruptcy is a way to deal with it.

“The concern here [is that] the fire risk is not going away,” Hilton said. “This may be a process to deal with [liabilities from] the 2018 fires, but there’s going to be risk going forward due to climate change and its impact on California.”

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).