California is still coping with the fallout from last year’s devastating wildfires, even as it fights several new blazes, including the state’s largest on record.
Pacific Gas & Electric (PG&E) says wildfires — and uncertainty surrounding the state’s intensifying disasters — will have a big part in defining its future, including its clean energy programs.
“What the wildfire conversation is doing right now is it’s really putting huge uncertainty on the utility’s ability in the future to attract capital to invest in California’s clean energy goals,” said Steve Malnight, PG&E’s senior vice president of strategy and policy, at Advanced Energy Economy’s annual Pathway to 2050 event.
Earlier this summer, state investigations found that PG&E lines were the cause of several fires that killed at least 15 people and razed over 5,000 homes last fall. The news caused a further downward spiral in the utility’s stock, which had already dropped 40 percent since the fires. The company reported a $1 billion net loss in Q2.
PG&E holds that it met state maintenance requirements, but California law means the utility can still be held liable for the billions of dollars in monetary fallout. Some estimates suggest that could top $15 billion.
Now the utility is boosting a suite of policies in the state legislature in hopes of aiding the utility’s financial health. PG&E said the changes are vital for helping the state cope with the future.
“One of the things we all have to confront and recognize is that the situation is changing fundamentally; the dynamics of the environment and the extreme weather...[are] changing,” said Malnight. “We have to change how we set up, run, own, operate the grid, and continue to advance things like vegetation management and wildfire mitigation. We have to, at the same time, advance the laws of California to actually deal with the issues of tomorrow — not the problems of yesterday.”
Malnight said the utility would like to see serious reform of inverse condemnation, the law that means liability falls on the utility, and consideration of Assembly Bill 33, which would use state bonds to pay back victims through charges on ratepayer bills. The bill’s author has a son who works at the utility.
Those moves, Malnight said, would help PG&E clarify its financial condition.
“It should make us all nervous that today investors are looking at the utilities in California and saying they are un-investable, they are untouchable,” said Malnight. “These are not the words you want when utilities need billions of dollars every year from debt and equity markets.”
The utility has found something of an ally in Governor Jerry Brown. In July the governor proposed a plan that outlines “a framework for judges to use when determining liability” that could shift some of the responsibility.
PG&E has called that proposal “progress,” but says it’s ultimately insufficient to address the problems it sees as inherent in California's policy. It also doesn’t remove liability for the 2017 fires. Fire victims have also criticized the plan, however, even calling it illegal.
Malnight said parties also need to look ahead at a collective and collaborative reckoning to change the state’s approach to wildfires and mitigation. That includes proactive vegetation management planning, as well as strategies for pole and equipment placement.
PG&E said it plans to be a key stakeholder in making sure the state has a grid resilient to future threats like climate change.
“When I think about that brave new grid, we want to build it and we want to run it,” said Malnight during a conference panel on the electric grid’s future. “To build that brave new grid, we’re going to need billions invested in California — by you, by us, by all sorts of people.”
But Malnight cautioned that the current situation threatens California’s ability to achieve its goals, including in clean energy programs like electric vehicles and energy storage.
“We want people to come invest in California, so we can create jobs here and build new clean energy here,” said Malnight. “If there’s uncertainty about how stable that investment is going to be, they’re not going to come. […] If we bring stability to that, I think we can really get back to where we were before, which is: Let’s bring money into California, let’s view it as an attractive place to invest, because of our ambitious goals.”
