California Supreme Court rules against case seeking damages from PG&E over its planned power outages

Last week, the California Supreme Court ruled that Pacific Gas & Electric Co. is protected from a class-action lawsuit that sought billions of dollars in compensation for losses suffered because of the utility’s 2019 power shut-offs.

In October of that year, PG&E equipment sparked the Kincade Fire, triggering Sonoma County’s largest ever evacuation and wildfire, which burned over 77,000 acres and destroyed 374 structures. At the same time, the utility was intermittently shutting down power to hundreds of thousands of customers in roughly 30 Northern California counties in an effort to avoid igniting blazes.

While favorable to deadly wildfires, the planned blackouts had serious and far-reaching consequences, hindering businesses and cutting off some people for days at a time from electricity, water and other vital resources.

PG&E and other utilities relied particularly heavily on widespread power shut-offs in 2019 and 2020 in a desperate effort to curb ignitions in the wake of devastating 2017, 2018 and 2019 wildfire seasons. The past couple of years have seen less extreme fire weather conditions and less need for shut-offs, although they continue to play a key role in utilities’ wildfire mitigation strategies.

In a case that started almost four years ago in bankruptcy court, plaintiffs, led by Anthony Gantner of Napa Valley, argued that PG&E’s preemptive shut-offs hinged on the fact that the corporation had neglected maintenance of its aging system for decades in favor of higher profits. For that reason, the company should be liable for the resulting damages, the plaintiffs argued.

The high court, however, took up a different question with implications for the litigation’s fate and beyond: whether the powers granted to the California Public Utilities Commission (CPUC) to oversee utilities prevent such a lawsuit from moving forward.

Ultimately, the justices unanimously decided that because the CPUC manages utilities’ use of planned blackouts — or public safety power shut-offs — allowing a private lawsuit for damages would undermine the agency’s regulatory authority.

The “suit interferes with the PUC’s broad supervisory power over how utilities can and should respond to the present threat of catastrophic wildfires,” the state Supreme Court ruling said.

That makes sense to Michael Wara, director of the Climate and Energy Policy Program at Stanford University and a prominent wildfire safety expert.

“The utilities in California face a situation where there are times and places that it is simply unsafe to operate their system. They bear some of the responsibility for that,” he said. “Others do to … But allowing lawsuits for losses with (public safety power shut-offs) would, in my view, place PG&E in an untenable position from a public policy standpoint.”

Moreover, Wara said, yes, the company’s corner cutting in the early 2000s contributed to its current predicaments, but utilities across the West are facing similar problems. The focus should be on minimizing impacts of future shut-off events, efforts that will be most effective through the CPUC, he said.

Indeed, the CPUC does dictate when planned shut-offs are appropriate and how they’re rolled out. In fact, after the fall 2019 outages, the commission penalized PG&E for violating guidelines, mostly in failing to appropriately evaluate safety risks or properly notify customers. Still, the agency cannot give pass along those penalties directly to customers who are harmed.

“I don't think anybody should be satisfied with this in the general public,” said Steve Weissman, an emeritus lecturer with the Goldman School of Public Policy at U.C. Berkeley. The energy policy expert also previously served as a CPUC administrative law judge.

The court’s decision “raises questions going forward because it doesn't set clear boundaries around what things utilities are protected from and what they're not,” he said.

Concerns over that possibility led Weissman to submit an amicus brief in the case.

“There's a tendency to blur the line between the responsibility of a regulatory agency and the responsibility of a court. Regulators focus on setting up rules for the behavior of the utilities and then finding out whether or not they complied with those rules. But that doesn't let the utility off the hook for everything it does. I mean, you take this decision to its full extension, and suddenly the utility can't be sued for anything because everything utility does is subject to regulation in one way or another.”

The court concedes in its ruling that the “proposed holding might limit the ability of some customers harmed by (planned outage) events to seek compensation.” But, their hands are tied, the justices write, by the rules set forth by the legislature that outline the commission’s authority.

Ultimately, the ruling states that plaintiffs aren’t left “without remedy,” but just that the “remedy lies before the commission.”

That might be less than satisfying to critics of the CPUC who assert the regulatory body has time and again failed to hold utilities, including PG&E, accountable.

To plaintiff Gantner, the regulator failed to keep PG&E in check over decades, leading to consequences that spurred this very debate. “The conundrum is ‘shouldn’t the public have a right to sue where the CPUC isn’t doing its job?,’” he said.

Gantner said the ruling still left a narrow door open for the litigation to continue. He and his attorneys are weighing if and how to proceed.

“In Your Corner” is a column that puts watchdog reporting to work for the community. If you have a concern, a tip, or a hunch, you can reach “In Your Corner” Columnist Marisa Endicott at 707-521-5470 or marisa.endicott@pressdemocrat.com. On Twitter @InYourCornerTPD and Facebook @InYourCornerTPD.