California’s PG&E blasted over ‘greed and neglect’
Its shares plunged after the utility was stripped of control over its bankruptcy process with plans from wildfire victims allowed to be mooted
San Francisco — Faced with mounting public anger over massive blackouts, California governor Gavin Newsom blamed Pacific Gas and Electric (PG&E) for years of “greed and neglect” and demanded major structural changes at the bankrupt utility.
Newsom’s comments came as many Californians questioned whether PG&E overreacted to a windstorm that did not prove as powerful as forecast. The company cut electricity to more than 2-million people — the largest pre-emptive blackout in the state’s history — to prevent its power lines from sparking wildfires.
The Democrat governor, who, on Wednesday, called the blackouts “appropriate under the circumstances”, took a dramatically harsher tone on Thursday, blaming PG&E for not hardening its grid and saying the outage was the result of years of bad choices. His comments came just before PG&E’s CEO made his first public appearance, apologising to customers for the “hardship” the power failures have caused while defending the decision.
The company said it has restored service to more than half the customers affected, according to a statement issued at about 11pm California time.
Shares of PG&E plunged on Thursday after the utility was stripped of exclusive control over its bankruptcy process and a judge allowed competing plans from wildfire victims and bondholders to advance. The surprise led Citi analysts to cut the stock to sell and warn that there’s a 75% chance the shares could fall to zero.
Story of ‘greed’
“It’s decisions that were not made that have led to this moment in PG&E’s history — it is not conditions,” Newsom said at a Thursday evening press conference in the state’s emergency operations centre. “This is not, from my perspective, a climate change story so much as a story of greed and neglect.”
Newsom said he wanted to see a “major re-organisation of this entity” and said PG&E was too large to move quickly, but stopped short of saying what kind of structural changes he preferred.
It’s ‘very likely’ the company will need to cut power again in the future ... the utility will try to be more ‘surgical” about shut-offs’Bill Johnson, PG&E CEO
He suggested the company needs to be far more surgical about future outages, saying some counties didn’t need to be included in this week’s blackouts. He acknowledged, however, that such pre-emptive power cuts should remain an option for the state’s utilities when faced with dangerous winds.
PG&E, he noted, made a decision last November not to cut power near the town of Paradise during a windstorm. A transmission line then sparked the Camp Fire, the state’s deadliest blaze, which killed 86 people.
312,000 without power
After affecting almost 750,000 accounts — or about 2.25-million people — the utility said about 312,000 customers in Northern California were still without power late on Thursday. The adverse weather has mostly died down, and PG&E said it would begin to inspect an unspecified sub-set of the 40,000km of transmission lines that were shutdown, a necessary precursor to restoring power.
Newsom called on California utility regulators to review PG&E’s actions. A spokesperson for the California Public Utilities Commission said the agency, as a policy, reviewed all intentional outages by California utilities.
PG&E filed for bankruptcy in January, facing an estimated $30bn in liabilities from two consecutive years of deadly wildfires blamed on its equipment. CEO Bill Johnson, who took over in May, said the company made a determination that the blackouts were necessary for safety reasons, to ensure “zero risk” of sparks.
He told reporters at a San Francisco press conference that started an hour after the governor’s that it’s “very likely” the company will need to cut power again in the future. Johnson said the utility will try to be more “surgical” about shut-offs.
“This is not how we want to serve you, this is not how we want to run our business,” he said. “We are in the business of providing power, not taking it away.”
Johnson and other PG&E executives cited high wind-speed measurements in 21 of the 33 counties affected and said they found fallen tree branches on some lines that could have caught fire.
The main failure was in communicating with customers about the outages, company officials said. Johnson said the utility posted outage maps with inconsistent or inaccurate information, its website crashed, and its call-centre was overwhelmed. “We failed our customers,” said Laurie Giammona, senior vice-president and chief customer officer for PG&E.
The CEO declined to respond directly to the governor’s remarks, saying: “I didn’t come here to deal with the past, I came here to help improve the future. I haven’t delved into all those matters. I might have some slight disagreement with the governor if I did.”
Johnson asked local residents not to take their frustrations out on PG&E workers, saying some employees had been shot at, punched and sworn at. “The buck stops with me.”