Pacific Gas & Electric must design a new inspection program that will assess every piece of equipment on each of its transmission towers and "protect California from further mayhem by PG&E," U.S. District Judge William Alsup wrote in an order on April 29.
Alsup, who is overseeing PG&E's felony probation period, said the utility sounds "like a broken record" because it routinely excuses itself by insisting that all of its transmission towers have been inspected and any noted faults have been addressed.
In 2019, the utility's inspection program missed "dangerous conditions entirely," Alsup said, citing an independent monitor who spot-checked PG&E's work. The monitor sampled inspection work on 550 miles of power lines in high-fire-threat districts that had recently been part of PG&E's "enhanced" program. The monitor found 3,280 "risk" trees that PG&E contractors failed to identify, including 15 "urgent conditions" that could have resulted in fatalities, injuries or serious damage if not rectified, Alsup said.
In one instance, PG&E contractors marked an urgent condition—a tree that was one foot away from a primary conductor—as "tree work complete," Alsup said. In another example, the monitor found a tree within inches of a primary conductor, noting there were burn marks on portions of the tree due to its ongoing intermittent contact with the conductor.
"Thanks to the monitor's spot-checks, PG&E went out and fixed all these urgent problems," Alsup said in the order. "The point, however, is that PG&E's outsourcing [inspection] scheme remains sloppy and unreliable. PG&E is fond of handing-up records indicating completed work, but the monitor's spot-checks show how untrustworthy these records can be."
"We are aware of the court's order and are currently reviewing," PG&E spokesperson James Noonan said in an email statement to California Energy Markets. "We share the court's focus on safety and recognize that we must take a leading role in working to prevent catastrophic wildfires."
Alsup in his order also imposed the following set of new probation requirements:
- Employ internal inspectors to identify trees and limbs in violation of California clearance laws and spot-check the work of contracted tree trimmers to ensure that no hazardous trees or limbs were missed.
- Require all contractors performing such inspections to carry insurance sufficient to cover losses suffered by the public should their inspections be deficient and thereby lead to a wildfire.
- Keep records identifying the age of every item of equipment on every transmission tower and line. Every part must have a recorded date of installation. If the age of a part is unknown, PG&E must conduct research and estimate the year of installation.
PG&E's probation period will end in January 2022 and cannot be extended. Alsup suggested that the California Public Utilities Commission, along with the governor and the Legislature, consider the following additional measures after the probation period ends: fines for utility violations of vegetation-management and infrastructure-remediation requirements; executive bonuses tied to safety management; and continued toleration of public-safety power shut-offs as a lesser evil until PG&E has come into compliance with state law and the grid is safe to operate in high winds.
Alsup told PG&E to respond to his order by May 28.
Separately, two wildfire victims asked U.S. Bankruptcy Judge Dennis Montali, who is overseeing PG&E's bankruptcy case, to reject potentially thousands of victims' votes due to a conflict of interest.
Karen Gowins, a Camp Fire victim and former member of the Official Committee of Tort Claimants, on April 25 asked Montali to require victim lawyer Mikal Watts and his firm to inform his wildfire-victim clients that he received litigation financing from investment groups with ties to PG&E's plan of reorganization .
Gowins said that Apollo Global Management Group, a private equity firm that is providing about $604 million in financing in PG&E's proposed plan, is providing Watts' firm with litigation financing and that Apollo "stands to reap great rewards if [PG&E's] proposed plan is approved."
Watts and his firm "continue to advise his 16,000 clients, and indeed all other fire victims whether they are represented by counsel or not, to vote for the [PG&E] proposed plan," Gowins said. "In this regard, Mr. Watts' interest aligns precisely with the interest of his lender, but not necessarily with that of his clients. Conflict rules were created to cure precisely this kind of situation."
In a response to Montali, Watts said he provides a standard retention agreement to clients that says the firm represents multiple clients and "cannot serve as an advocate for one client against another client, but must assist all clients in pursuing their common purposes" .
Gowins and Tubbs Fire victim William Abrams requested Montali issue an additional order that designates any yes votes on PG&E's plan from Watts and his affiliated counsel's victims as "not obtained in good faith and not counted" in the PG&E plan vote, unless a conflict waiver has been obtained from those voting victims.
Other law firms representing about 11,000 wildfire victims disagreed with Gowins' and Abrams' argument, stating that the majority of fire victims who have voted on PG&E's plan have already voted yes . The firms said that 20,229 out of 20,501 victims have voted yes so far on PG&E's plan.
In total, there are about 70,000 victim claims and victims have until May 15 to submit their votes. PG&E will need victims whose collective claims comprise at least two-thirds of the dollar amount of total claims to vote yes on the utility's restructuring and settlement plan. PG&E will also need more than half of the victims with claims in each claimant class to vote yes (see CEM No. 1577).
In a separate statement published this week in the news media, Allan Zaremberg, president and CEO of the California Chamber of Commerce, urged victims to vote yes on PG&E's plan, stating that if the plan is not approved, significant electricity rate hikes could occur.
"Californians rely on affordable and dependable electricity supplies," Zaremberg said. "Key to stabilizing energy rates will be ensuring the solvency and future health of the essential companies that provide that energy."