CPUC warns PG&E of enhanced enforcement

The state utility regulator warned the Pacific Gas & Electric Co. it could be subject to enhanced enforcement, pointing to recent filings in its criminal probation revealing no meaningful changes to its vegetation management efforts.

In a letter sent Tuesday, California Public Utilities Commission President Marybel Batjer warned outgoing PG&E Chief Executive Officer William Smith about the utility's wildfire mitigation efforts.

James Noonan, spokesman for PG&E, said, "We know we have more to do, and we are committed to doing it the right way. There are some issues that the CPUC's Wildfire Safety Division has raised, and we are working to address those concerns."

While she didn't mention the company's potential responsibility for September's deadly wildfire in Shasta County, Batjer wrote that CPUC staff has been directed to "conduct a fact-finding to determine whether a recommendation to place PG&E into enhanced oversight and enforcement process is warranted." She referred to recent court filings in the criminal probation pending before U.S. Judge William Alsup of the Northern District of California.

"These fact-finding activities are well underway and are being undertaken expeditiously," Batjer wrote. "My concerns arose from what appears to be a pattern of vegetation and asset management deficiencies that implicate PG&E's ability to provide safe, reliable service to customers. Specifically, Wildfire Safety Division staff has identified a volume and rate of defects in PG&E's vegetation management that is notably higher than those observed for other utilities."

Batjer's letter coincides with an order issued by Alsup on Tuesday requesting PG&E to provide additional information by Dec. 16 about the records the company keeps with respect to individual distribution lines. USA v. Pacific Gas & Electric Co., CR-14-00175 (N.D. Cal., filed April 1, 2014).

PG&E admitted in quarterly filings with the U.S. Securities and Exchange Commission last month that it could face liabilities for the Zogg fire in Shasta County that killed four people.

In response to Alsup's request last month for the utility to explain any potential role it might have had in the Zogg fire, PG&E said the California Department of Forestry and Fire Protection has not concluded what role if any PG&E equipment played.

In the Tuesday order, Alsup directed PG&E to see if there was any evidence that a particular tree was trimmed or removed prior to Zogg and if it was identified for any work by a patrol. The judge also questioned the risk model PG&E uses in areas selected to be worked for enhanced vegetation management.

In her letter Tuesday, Batjer advised PG&E the CPUC's order to force PG&E into enhanced enforcement "does not replace or limit CPUC enforcement authority, including authority to issue orders to show cause, and orders instituting investigation and to impose fines and penalties."

PG&E is in the midst of obtaining safety certification, a requirement for investor-owned utilities to enjoy the benefits of California's new wildfire insurance fund. Utilities could dip into the $21.5 billion reserve to offset wildfire liabilities that exceed insurance coverage. Batjer, in the letter, pointed out the certification process is separate from the enforcement process, "and does not preclude the CPUC from pursuing remedies for past conduct."

"In particular, the enhanced oversight and enforcement process mentioned above is unique to PG&E because of its failed record in safety, and it is not tied to the statutory requirements for the issuance of a wildfire safety certification," Batjer wrote.

Smith, the outgoing CEO at PG&E, is set to be replaced by Patricia Poppe, effective January.