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As a publicly traded corporation, Pacific Gas and Electric reported $17.1 billion a year in revenues from its electric and gas operations. After operating costs, expenses and taxes, it still made out with a profit of $1.7 billion last year.

So why has California’s largest utility filed for bankruptcy?

PG&E may be solvent, but it is facing a cash-flow problem as a byproduct of $30 billion in potential liabilities from a series of catastrophic wildfires in Northern California in 2017 and 2018. In the company’s own words, the board has determined Chapter 11 “is ultimately the only viable option to restore PG&E’s financial stability to fund ongoing operations and provide safe service to customers.”

“A company the size of PG&E needs access to the capital markets, and right now, it’s under stress,” said Robert Labate, a San Francisco bankruptcy attorney with Holland and Knight, which has clients that do business with PG&E. “This is a way of getting breathing room.”

PG&E is being sued by thousands of wildfire victims for property damage, medical expenses and a heap of punitive and personal injury damages alleging corporate negligence. Insurance carriers that have paid claims to homeowners and businesses for property damage have filed dozens of subrogation complaints. Even local governments, such as Mendocino, Napa and Sonoma counties, as well as the city of Santa Rosa, have piled on with their own legal claims.

So even though the company was just absolved by state fire investigators in last year’s deadly Tubbs Fire, it still faces potentially tens of billions of dollars in liabilities. For one thing, its equipment remains a prime suspect in the Camp Fire that killed 86 people in Butte County late last year. A PG&E employee spotted flames near a shorted-out utility tower, at the same place Cal Fire identified as the start of the state’s most-destructive wildfire.

But bankruptcy will by no means solve PG&E’s long-term problems, which will require legislative and regulatory solutions. Because what will be just as important in the months and years ahead is consensus on a fundamental question: When can the utility pass disaster costs on to consumers as wildfires become more frequent and destructive?

And unfortunately for PG&E, that’s about public trust.

“There’s a lot of public distrust of investor-owned utilities right now,” said Tara Kaushik, a utility lawyer also with Holland and Knight. “There’s a sense that the utility has to be held accountable and to operate safely. But at the same time, we have these recurring wildfires that are making it unsustainable for them to continue operating.”

Even before the utility announced its intent to reorganize in bankruptcy court, the financial market expressed concerns about PG&E’s ability to recover costs associated with these recent disasters. It was part of the reason credit agencies recently downgraded PG&E to junk status, which only made it more expensive and difficult to access capital.

“The rating downgrade reflects the material exposure to new potential liabilities associated with the Camp Fire and the uncertainties associated with how the fire-related liabilities will be recovered,” said Jeff Cassella, vice president at Moody’s Investors Service.

As climate change impacts corporations’ bottom line, the same concerns have extended to other California utilities, triggering downgrades for both Southern California Edison, which services the Coachella Valley, and San Diego Gas and Electric.

Cassella noted that state lawmakers passed $1 billion legislation that did nothing to address the 2018 wildfires. SB 901’s most controversial provision, to make it easier for utility companies to absorb the cost of fire damages by borrowing money and charging customers to pay it back over many years, covered the 2017 fires and those that start in 2019, but not any when the Camp Fire hit.

PG&E also tried—but failed—to get the Legislature to loosen fire-liability laws. Under a legal doctrine called “inverse condemnation,” utilities are liable for any wildfire damage traced to their equipment even if they were not negligent in maintaining it. Unless the state Supreme Court decided to issue a different interpretation or voters approved a constitutional amendment, releasing utilities of this financial responsibility would be pretty much out of the question.

Enter the California Public Utilities Commission.

The five-member commission regulates investor-owned utilities in the state and could decide whether PG&E acted prudently and should be allowed to pass on wildfire costs—even the damages a utility pays out in lawsuits—to consumers.

But a precedent has been set that has made PG&E think twice about its ability to recover wildfire costs through rate increases. In 2017, the commission blocked San Diego Gas and Electric from passing on $379 million in liability costs stemming from a 2007 wildfire. In a unanimous vote, the commission found the utility’s management of its facilities unreasonable.

It’s unclear what the CPUC would do if PG&E asked to pass on costs from the latest wildfires.

“We don’t know yet,” Kaushik said. “They haven’t asked.”

Even without liabilities, the cost to maintain public safety is creeping up. PG&E is asking for a $1.1 billion rate increase for wildfire prevention, risk reduction and safety enhancements, which, if approved by state regulators, would increase the average residential customer bill by 6.4 percent, or $10.57 per month.

Wildfire victims and their lawyers are quick to question PG&E’s motives, calling Chapter 11 a tactic to discourage and discount lawsuits rather than taking responsibility for the spate of recent tragedies. Camp Fire victims recently rallied at the state Capitol with legal activist Erin Brockovich, who was portrayed by Julia Roberts in the 2000 box-office hit.

“This is another blow after the body blow of losing their homes and their lives,” said Noreen Evans, a former state legislator who is now representing 4,000 victims of 2017 and 2018 wildfires, at the rally. “It’s insult added to injury at a really hard time in their lives.”

Evans noted that under bankruptcy, wildfire victims with claims in trial court would be treated as unsecured creditors.

“Their claims would be delayed and probably discounted,” she said then—a fear that could now come true.

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Local Issues

Anna Dise slammed her hand into her car’s steering wheel, crying out for her father, Gordon, as he ran into their blazing home in Butte Creek Canyon.

She tried desperately to get the car to start, but it was no use. Worse yet, she was running out of time, and her dad wasn’t coming back out. One of the last things Dise saw before grabbing her two dogs and running for her life from the spreading Camp Fire was her childhood home’s kitchen disintegrating.

Dise called 911, but emergency personnel couldn’t get to her. To survive, she needed to find a way to outwit the blaze. She found a ditch and hunkered down, using what little water it held to douse herself and her beloved pets, Luna and Sirius, as embers rained down upon them.

Hours went by, and Dise, terrified the flames would consume her, stayed on alert as she spent the night outside.

“I had to stay awake and watch which way the fires were moving, all the hot spots,” she said on Nov. 9 at Chico’s Neighborhood Church, one of several locations temporarily housing evacuees and others rescued from the deadly Northern California blaze that ignited the previous morning.

In the early morning light, under a blanket of smoke, Dise hiked back to her house. There, she found its charred, skeletal remains and the car “all melted down.” There was no sign of her father.

“I don’t even think I saw my dad’s bones, but I know he was in there,” she said.

Inexplicably, a bag of family photos she’d abandoned was “untouched, no burns or anything.” That, along with her canine companions, provided some comfort.

“We lost everything except for each other,” she said.

Dise’s cellphone battery had died, so she walked to a neighbor’s house and waited for help to arrive. She heard chainsaws in the distance—the sound of Cal Fire personnel working their way through fallen trees—and was rescued around 7 a.m.

Dise’s harrowing story would be unfathomable were it not for the fact that so many other Butte County residents can relate to it. Indeed, tens of thousands of residents fled for their lives, as the Camp Fire bore down on the Paradise and Magalia ridge communities of Butte County, as well as several surrounding hamlets, including Concow and Butte Creek Canyon.

The blaze started the morning of Nov. 8 east of Paradise in the Plumas National Forest. The cause is still under investigation, but one of the primary questions is whether an issue with a nearby high-voltage power line is related. Already facing billions in lawsuits for allegedly sparking other California wildfires—including the Tubbs Fire in Napa, Sonoma and Lake counties in October of last year—PG&E reported to the California Public Utilities Commission that an outage occurred just before the first calls of the Camp Fire came in to authorities.

It spread quickly in the parched foothills, pushed by low humidity and high winds that blew embers for miles, triggering fires throughout the region. As of this morning (Nov. 20), the firestorm had destroyed more than 16,800 structures. It has consumed more than 151,000 acres and was 70 percent contained, according to Cal Fire.


Amid the gray, post-apocalyptic landscape, particularly in the residential portions of Paradise, streets leading to the few main arteries exiting to the valley below were strewn with vehicles. They’d been abandoned by occupants who’d been stopped in gridlock traffic and had no choice but to get out and try to outrun the fast-moving flames.

Some of the automobiles were so scorched that their make and model were unrecognizable. Only shells remained, and in some cases, trails of melted aluminum oozed on the asphalt below. Several were crushed by collapsed power polls or trees. Still others appeared eerily unscathed.

James Betts witnessed the confusion and panic first-hand. Huddled with other evacuees at Neighborhood Church the day after escaping the flames, he described how quickly the fire moved through his Paradise neighborhood and how fortunate he was to make it out.

He, along with a friend and several family members, including his grandmother and nephew, were alerted to the fire by loud explosions. Outside, they saw flames down the street and drivers backed up on the roadway, honking and yelling.

Nobody in Betts’ group had a car.

“I was screaming at people, begging them, ‘Please stop,’” he said. “It was like Armageddon outside. It was nuts.”

A stranger driving a pickup truck finally pulled up and all of them, plus their animals, piled into the bed. “We’re so lucky, we really are,” Betts said. “I gave him the biggest hug in the world. I don’t even know his name.”

Betts was echoed by fellow Paradise evacuee Oscar Albretsen, an epileptic who also was without transportation. “I honestly thought I was going to burn to death,” he said.

Rescue came in the form of his neighbors, who made room in their vehicle for Albretsen and his cat, Nibbler.

The scene he described on the downhill ride to Chico is surreal—a wall of fire on either side of the roadway, which was dotted with charred deer carcasses, abandoned cars with pets inside, and homes burning or burned to the ground with only their chimneys intact.

Albretsen’s last glimpse of the landscape in no way resembled his hometown.

“It’s beautiful, and a town where people are so good to each other,” Albretsen said. “Now it’s starting to dawn on me: Everybody lost everything.”

A version of this piece originally appeared in the Chico News & Review. Please consider donating to the GoFundMe campaign for employees of the News & Review who have been affected by the fire at www.gofundme.com/help-our-news-amp-review-family.

Published in Environment

Since 2007, the California Legislature has worked to encourage the development of telephone and Internet access through the California Advanced Services Fund. The fund provides financial assistance to both large telecommunications companies—including Frontier, AT&T, Charter and Cox—and independent broadband projects driven by community organizations that partner with smaller Internet service providers.

Thanks in part to the fund, the Legislature has grown closer to its goal of deploying broadband Internet service to 98 percent of Californians by 2017. But as the end of 2017 drew closer, many California legislators wanted to update the broadband-support program. The result: AB 1665, aka the Internet for All Now Act, which was authored by eastern Coachella Valley Assemblymember Eduardo Garcia.

After overwhelming approval in both houses, the bill now sits on the governor’s desk, as of this writing.

“We know that having broadband Internet access improves the state’s economy, enhances educational opportunities, and benefits public safety, (as well as) our medical field and patient care,” Garcia said during a recent phone interview. “Even in the Coachella Valley, civic participation requires a connection to the Internet now. So this law supports a program that invests in and ensures that the infrastructure is in place for the purpose of allowing carriers to connect all these homes, businesses, schools, hospitals, clinics and public safety services in remote areas, allowing them to communicate. It’s vital to what we all do on a daily basis.”

Garcia said the Legislature set the 98 percent connectivity goal about a decade ago. “We have now gotten to about 94 percent or so, and that last (unconnected) percentage happens to be in mostly underdeveloped areas like the eastern Coachella Valley, Imperial County and other rural parts of the state. So that’s what this program will do.”

However, the bill did not make it to the governor’s desk without controversy.

Stephen Blum is an executive team member of the Central Coast Broadband Consortium, a California Public Utilities Commission-funded group engaged in broadband planning and development in the state, He’s also the president of Tellus Venture Associates, his own broadband-development consulting agency. He is not fan of the Internet for All Now Act version that made it to the governor’s desk.

“There have been attempts in the last legislative session and the two previous sessions to put more money into the (CASF) fund, more or less keeping the program as it was,” Blum said. “This year, things changed. The incumbents (large corporate ISPs) including AT&T, Frontier and the California Cable and Telecommunications Association jumped in and said, ‘We want the bill to be X, Y and Z.’ … Assemblymember Eduardo Garcia took it and started adding language that reflected the desires of these cable and telephone company incumbents.

“The bill went through three revisions, and each time, more perks were added for the incumbents. So as it’s written now, AB 1665 is going to put $300 million into a CASF infrastructure grant account and make it virtually impossible for independent projects to be funded. Essentially, then, it becomes a fund for AT&T and Frontier to use at their discretion.”

Blum said some of the changes made to the act baffled him.

“One of the things this bill does that boggles my mind is it lowers California’s broadband speed levels—and it’s a significant change,” he said. “Right now, an area is fundable if there’s no existing service that provides 6 mbps (megabits per second) download and 1.5 mbps upload speeds. That’s the standard. This bill changes it to 1 mbps up. Now, that doesn’t sound like a big deal, but it is, because the difference between 1.5 or 1 mbps up is the difference between 1990 DSL systems and contemporary copper system architecture and electronics. You can take a 1990 DSL system, do relatively minimal upgrades to it, and reach the 6 down, 1 up speed standard required. You can’t get 6 down, 1.5 up without going in and doing substantial work. That’s the change that AT&T and Frontier pushed very hard for, because that allows them to do minimal upgrades in rural areas to meet their obligations. Now they’re going to have to invest even less money—because the state will pay for it.

“If you’re in an area that falls under the CASF umbrella … you’re looking at a future where you’re going to have service somewhere in the 6 to 10 mbps download range, and 1 mbps upload range, and that’s not going to change for 10 to 20 years, because once this stuff is in, there’s no point in upgrading it.”

Garcia defended the changes made to the bill.

“There are places throughout the state that still have absolutely no Internet service whatsoever,” Garcia said. “The intention of the bill is to get people connected. The debate was: Why would we allow for certain areas that are already connected to increase their speed capacity? We laid out a goal, through a bipartisan effort of Republicans and Democrats from both rural and urban parts of the state, to make sure that the primary focus of this legislation was to serve the unserved populations. We had people push back, saying that we should be trying to get higher network speeds in places that already had connectivity, and we wrestled with that. What we decided is that we could (try for higher network speeds) after we connect everybody to some service in the areas still having no service. So, modifications to the bill were made where we were not able to appease everyone, but get enough support to move the bill forward.”

Another controversial aspect of the bill: For “last mile” projects that connect established “mid-mile” broadband pipelines to end users like homes, hospitals or businesses, those end users will have to participate financially in the funding of their access. Is that reasonable or fair when the target population is disadvantaged?

“The thought was that there should be some investment, or ‘skin in the game,’ on everyone’s part in order to be considered for access to CASF grants, and ultimately be connected,” Garcia responded.

The Independent asked whether there is some sort of means test built into the bill in order for disadvantaged end users to obtain financial support via the CASF.

“There is a means test through the CPUC,” Garcia said. “There was some confusion that this bill was attempting to just give people free Internet access—that it was like a welfare-type of program where if you signed up, you got free Internet. That’s nowhere near the real case. We’re talking about infrastructure being developed, and that makes it that much more accessible for people to connect to some type of broadband service.”

Blum said when we spoke that he was hopeful the legislation was not a done deal.

“When it gets to the governor, I think there’s a conversation to be had at that point,” he said. “We think that’s where the final decision will get made, and we feel that’s still an open question.”

Published in Local Issues

A young lawyer for the Environmental Protection Agency had a heavy feeling as he headed to work one recent morning.

Like many EPA staffers, he’s been distraught over the steady stream of negative news about the Trump administration’s plans for his agency, and what it all means for his future. That morning the White House had released its budget proposal, calling on Congress to cut 31 percent of the EPA’s budget, more than 50 programs and 3,200 of the agency’s 15,000 employees.

The lawyer’s subway stop, the Federal Triangle Metro Station, dumps people out under a grand archway between two entrances to the EPA’s ornate limestone DC headquarters. As he went up the escalator, he encountered a small group of people standing in the cold wind, passing out fliers and holding signs that read: “Fight climate change; work for California.”

A man with a bushy gray mustache exclaimed: “I’m recruiting for California jobs!” and introduced himself to the EPA lawyer as Michael Picker, the president of California’s Public Utilities Commission, which regulates electric companies and other utilities.

Picker explained that he has 250 job openings—and more on the way. California’s Air Resources Board and Energy Commission also have opportunities for federal employees frustrated with the direction in which the Trump administration is headed.

“All the jobs will have impacts on climate change in some ways,” he said.

Picker’s recruitment drive is more than a publicity stunt: His agency is short-staffed already, and he’s steadily losing employees to retirement. He needs reinforcements to meet an enormous challenge in front of him. He needs to ensure that electric utilities make the investments necessary to generate enough clean energy to meet California’s ambitious climate change goals. (California is committed to getting 50 percent of its power from renewable energy by 2030.)

The EPA lawyer said his encounter with Picker last week lifted his spirits giving him a sense of “relief” and “hope.” He’d already considered seeking a job in California, where the state government has a strong commitment to environmental protection.

“There’s a pull and a push, especially with the budget coming out,” added the lawyer, who like other EPA staffers, didn’t want his name used for fear it would put his job in jeopardy.

This was just the kind of encounter that Picker hoped for when he decided to turn an already-planned trip to Washington, D.C., into a mini recruiting mission. His goal was to try to lure talented federal employees to California state government by promising them a chance to work someplace still committed to fighting climate change. He also spent a morning passing out fliers at the Energy Department. But he was especially happy with how things went outside EPA’s headquarters.

One EPA staffer ran inside and returned with a resume. An EPA engineer asked for extra fliers for his colleagues. Picker passed out business cards, offering to help the D.C. refugees navigate the cumbersome hiring process at California state agencies. “Thank you for offering to rescue us!” one EPA staffer bellowed as he walked past.

Picker’s challenge is bigger than getting companies to generate cleaner electricity. He also has to ensure they make investments to transform the electric grid to meet the challenges of all the additional renewable power that’s coming online.

The grid was designed as a centralized system where electricity was generated by relatively few large power plants. The grid now needs to get a lot smarter to manage many thousands of new sources of power, from large-scale solar and wind farms to solar panels on top of people’s homes. Cleaner electricity isn’t enough: California also wants to shift its vehicles to clean electricity: “That’s why we need people—to help build the infrastructure California needs to get greenhouse gases out of our economy. These tasks aren’t going to solve themselves.”

Despite all the rhetoric from the White House and EPA Administrator Scott Pruitt about major plans to transform the agency and downplay climate change, there hasn’t yet been a big exodus. EPA employees are passionate about the mission of the agency, and so far, many staffers say they’re still doing their usual work.

“Because nothing drastic has changed yet at EPA, people don’t have immediate pressure to leave,” said another EPA staffer who spoke with Picker. “You saw people taking those fliers. So it’s not that people aren’t thinking about it.”

She said she thinks California is smart to try to lure away the EPA’s talented employees at a time when their current employer is making it clear their work isn’t valued. She will definitely consider moving to California for a job, she said.

Fundamental changes are on the way, given that Pruitt and President Donald Trump have vowed to undo the biggest efforts undertaken by the EPA during the Obama administration—regulations to slash greenhouse gas emissions from cars and power plants and protect wetlands and waterways. Trump took a big step today with an executive order undoing many Obama-era regulations. EPA staffers will now be charged with justifying the elimination of regulations that they or their colleagues spent years crafting.

None of the EPA staffers I spoke with were willing to have their names published.

“We’re all afraid now of retribution if we talk. It’s already started to happen,” said one staffer.

John O’Grady, president of a national council of EPA employee unions, said EPA employees are right to be cautious. “We all pretty much are aware we cannot speak out in the press; that would not be a very smart move on the part of an employee.”

As Picker was wrapping up for the morning, a bundled-up bike commuter rode up to ask about an application he’d already sent in. Picker promised to help and then took a photo with some volunteers who had showed up to help him pass out fliers. One was a corporate lawyer, another a former Energy Department official, and third a solar executive from Oregon who was in town for business.

“I’m disillusioned by Trump’s budget proposal,” said Tom Starrs, a vice president of SunPower Corporation. ”On the other hand, I’m inspired by California continuing to address climate change and by the support at every level of government in California. It’s a unified front on climate change. It’s wonderful to see.”

Correspondent Elizabeth Shogren writes for High Country News, where this story first appeared.

Published in Environment

The Palm Springs Unified School District is expected to save more than $6.9 million in energy costs over the next two decades after the installation of solar systems at campuses across the district.

Among the 11 sites, including the district’s service center, is Cathedral City High School, where district officials are planning to hold a “flip the switch” event on Monday, Oct. 28.

Some of the solar systems are already in place, and the rest are expected to be installed by the end of the year, according to information distributed on a district PowerPoint presentation. The district includes schools in Palm Springs, Cathedral City, Desert Hot Springs, Palm Desert, Rancho Mirage and Thousand Palms.

With five different rate tiers between May and October, calculating the district’s power rate is complex, said Julie Arthur, executive director of facilities and planning for the district. However, the district has projected a savings of $6,949,731 over the next 20 years.

That figure assumes a roughly 2 percent annual increase in energy costs. Arthur said the true savings could be as much as $25 million, or even more, because the district has historically seen 3.75 percent increases, Arthur said.

“Just this summer, Southern California Edison had a 5 percent rate increase, so we’ve already saved 5 percent,” Arthur said.

(In an annoying bit of bureaucratic nonsense, Robert Villegas, a Southern California Edison spokesman, referred questions about rate increases over the years to the California Public Utilities Commission. When asked for that information, California Public Utilities Commission information officer Christopher Chow referred us back to Southern California Edison.)

Arthur said the district had explored wind energy as well, but opted for a solar solution with SunEdison, which assumed the installation and equipment costs. The district is only required to pay for the state inspections. Arthur did not know the precise cost, but estimated it would be roughly “a couple thousand” per site.

Because the solar panels will continue to generate power during the summer months when school is out, yet area energy consumption is at its peak, school and company officials called the partnership “a win-win.”

The school board approved a 20-year energy-service contract with SunEdison. It effectively locks Palm Springs Unified in to the 2012 rates the district paid to Southern California Edison.

“Wouldn’t you love to pay the same amount for your gallon of gasoline for the next 20 years?” Arthur said.

Formed in 2003, SunEdison focuses on making and installing solar systems for schools, prisons, commercial buildings and utilities.

“I’d love to have solar panels at every school,” Arthur said. “We just don’t have the parking lots to make it an option.” She said the district is also looking to add two additional school sites: Raymond Cree and Nellie Coffman middle schools.

Palm Springs Unified is one of three school districts statewide with SunEdison contracts.

“It seems to be mostly Southern California schools that are showing interest at this point,” said Dawn Brister, a SunEdison spokeswoman. “Palm Springs is an early adopter for solar. They really are ahead of the game.”

The district’s move to solar was part of its 2010 energy master plan, said Shari Stewart, Palm Springs Unified’s school board president.

“One of our main objectives is to go as green as possible, if we (can) save money,” Stewart said.

As for other valley school districts: Desert Sands Unified, which includes schools in Rancho Mirage, Indian Wells, Palm Desert, Coachella, La Quinta and Indio, is “researching potential projects but (has) nothing in the works at this time,” said Cynthia McDaniel, assistant superintendent of business services.

It is unclear whether Coachella Valley Unified has or is exploring solar power. Anita Meraz, a spokeswoman for the district with schools in Indio, Coachella, Thermal, Mecca and Salton City, did not return multiple emails or calls to her office and cell phone.

“I’m happy we’re one of the first,” said Stewart, of Palm Springs Unified. “We’re going to be saving a tremendous amount of money over the long haul.”

Published in Local Issues