PG&E says it could face significant liability due to September Zogg Fire

PG&E sign and background of electric wires.
Flickr; Matthew Fern

Dive Brief:

Pacific Gas & Electric (PG&E) could face significant liability and thinks it’s reasonably possible it will face a loss due to the Zogg Fire sparked in late September, whose cause is currently under investigation by state officials as well as a county-level district attorney’s office, according to a quarterly filing with the U.S. Securities and Exchange Commission Thursday.

The utility last weekend turned off power to approximately 345,000 customers due to high fire risk conditions, and has found more than 100 cases of debris and other things falling onto its powerlines during shutoffs this year, which would have likely led to fires if it hadn’t de-energized its lines, Bill Smith, interim CEO of parent company PG&E Corp, said during a call with analysts, adding, “generally speaking, what we’re doing is working.”

“The question I would ask is ‘working for whom?'” April Rose Maurath Sommer, executive and legal director of the Wild Tree Foundation, questioned, adding that the shutoffs took a huge toll on communities as well as the environment, in areas where PG&E deployed diesel generators to provide temporary power.

Dive Insight:

The 2020 wildfire season has been historic and challenging for PG&E’s customers, with over 4 million acres burned in the state, 3 million of which are in the utility’s service area, Smith said on Thursday’s call.

Many of these fires were not caused by utility equipment, and “[I] think it showed the public in general that this is a much broader issue than PG&E,” Smith said, adding, “there’s a better acceptance this year of the nature of the challenge.”

The Zogg Fire began in late September in California’s Shasta County, destroyed 204 structures, causing four fatalities and injuring one person. Earlier in October, PG&E filed a report with state regulators informing them that the California Department of Forestry and Fire Protection had taken possession of some of its equipment as part of its investigation into the cause of the fire, which has not yet been determined.

The fire is also being investigated by the Shasta County District Attorney’s Office, PG&E Corp reported in its quarterly filing.

“While the cause of the 2020 Zogg fire remains under investigation and there are a number of unknown facts surrounding the cause of the 2020 Zogg fire, the Utility could be subject to significant liability in connection with this fire,” the company said in its 10-Q.

PG&E Corp recorded $83 million — translating to $0.04 per share — in income available for common shareholders in the third quarter. In July, the company exited Chapter 11 bankruptcy, after paying out $25.5 billion to resolve liabilities from wildfires caused by its powerlines in the preceding years.

On Sunday, PG&E shut off power to approximately 345,000 customer accounts due to windy, dry weather conditions that increase the risk of wildfires. By Wednesday, power was restored to essentially all customers who can receive service, the utility said.

PG&E is on track to meet the goals outlined in its wildfire mitigation plan, the utility said. It has “hardened” 257 miles of its system — either by transferring equipment underground, or installing stronger poles and covered conductor, and has also managed vegetation around more than 1,624 miles of distribution and transmission lines.

But the fact that the utility found evidence of debris falling into its powerlines during the shutoffs seems to indicate existing problems with its infrastructure maintenance, according to Maurath Sommer, who is concerned that the utility is focusing on the wrong strategies — placing a heavier emphasis on vegetation management and power shutoffs, which she says are not the most effective way to prevent fires.

“The most effective ways are undergrounding, covered conductors and decreasing the miles of transmission and distribution lines that exist by installing microgrids,” Maurath Sommer said.

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