https://finance.yahoo.com/news/pg-e-goes-bankrupt-happens-170715837.html
Is it good or bad?
Inevitable. They didn’t spend the money to keep their basic infrastructure in shape. The equipment that started the Camp Fire was 100 years old! Were they spending their money on pie in the sky new projects? I’m not sure. But it is absolutely certain that they weren’t being responsible with their lines and equipment.
What is baffling to me is how did it take 1,500 fires to force the hand?
There is a LOT of politics involved with California’s utlitiies. Regardless, they were spending millions every year (as approved by the state).
Well, they definitely were spending big on renewables, such as solar and battery, as per state requirements.
And since it has a history of safety and maintenance problems going back years…BK was the prudent choice.
Long article in WSJ today about their efforts over the past few years. The one thing that really struck me was that PG&E has a service area larger than Florida. That’s a whole lot of forest/grassland to prune back. 125 miles of electrical lines, 120 million trees which could come in contact with lines…
sorry, the article is behind a paywall, but for those of you who subscribe, its worth a read.
(edited to add that I see igloo already posted the article.)
Bankruptcy frees them from financial responsibility for the damage caused by the fire.
Not entirely. A bankruptcy judge will decide how the assets should be distributed. They also have some insurance to cover the losses, but not nearly enough.
My impression is that PG & E was operating like a homeowner putting solar panels on a house with a hole in the roof and a sinking foundation.
Asked my bankruptcy lawyer H about this. Insurance will be pooled to cover liability claims and that money is not available to creditors, but likely wouldn’t cover the losses completely as noted above.
There are lots of ins and out so but this should be correct in a general sense.
BK will also ‘encourage’ the state to figure out a way to cover a bunch of losses by perhaps rolling more bonds to be paid off by future rate payers.
“The power conductors are almost always uninsulated,” Alsup wrote. “When the conductors are pushed together by falling trees or limbs, electrical sparks drop into the vegetation below. During the wildfire season when the vegetation is dry, these electrical sparks pose an extreme danger of igniting a wildfire.”
It looks like a few sandbags could have stopped a tsunami.
I’m curious how/who provides power for California in the various ways bankruptcy might play out. I wonder if another company would even want to attempt to take on their assets given clearly high maintenance needs and continued increased fire risk in the future due to climate change. If they clear their liability somehow through bankruptcy and remain in business, will they be looking for rate increases to replace/improve maintainance on their equipment? (And if they don’t escape all their liability in this situation, where do they get the money to pay out any fines or settlements - except through rate increases?). If they are insured, maybe it covers some of that liability once, but I’d kind of assume they might become uninsurable after this.
Utilities aren’t like other businesses. The barriers to entry are high because of the need for infrastructure. Someone else doesn’t just sail in and take their customers as they would in many other industries. Even banks have a fairly orderly takeover process. But I don’t know what the model is for this.
They said the service will be uninterrupted. Apparently, they had gone through bankruptcy before and emerged from it. I guess their mode of operation is rinse and repeat. When dust settles down, it looks like taxpayers and customers will pick up the bill however it is dressed. If taxpayers are footing the bill, wouldn’t a tighter oversight be a good idea? Shouldn’t CA take a closer look when the first wildfire happens instead of letting it burn through dozens of wild fire before taking any action?