PG&E calls Gov. Brown’s wildfire liability pitch ‘insufficient,’ posts $1 billion loss

Pacific Gas and Electric Co. said Gov. Jerry Brown’s proposal to shield utilities from strict liability for future wildfires was “insufficient” as the San Francisco company reported a nearly $1 billion loss Thursday stemming from the October firestorm.

Geisha Williams, the company’s CEO and president, said Brown’s proposal must be accompanied by sweeping reforms to policies that leave utility companies responsible for financial damages from catastrophic fires caused by their equipment, regardless of whether they were negligent.

“The governor’s proposal as a standalone measure represents some progress on reforming strict liability, but it’s insufficient,” Williams said Thursday in a conference call with Wall Street analysts. “It’s just one element of a more comprehensive set of solutions that are needed.”

Earlier in the week, Brown floated a proposal that would limit the strict liability utility companies face under a longstanding doctrine known as inverse condemnation. The plan got its first review Wednesday at a legislative committee hearing in Sacramento, where local lawmakers, regulators, scientists and survivors of the October 2017 wildfires weighed changes to the state’s policies on wildfire liability.

Lawmakers are attempting to come up with new liability laws before the end of the two-year legislative session. They face an Aug. 31 deadline to put bills on the governor’s desk.

“Action is required now,” Williams said Thursday. “In the same way that we need to take action to make our state’s communities and infrastructure more resilient, it’s critical that we address our public policies. Yesterday’s laws won’t help our state deal with the impacts of tomorrow’s wildfires.”

PG&E said it is already seeing spikes in insurance coverage costs compared to just a few years ago, based on the frequency and severity of the state’s wildfires. The company said it expects to spend $80 million more on premiums in both 2018 and 2019, compared with the year leading up to the devastating North Bay fires, because of rate increases and expanded coverage. It intends to recover much of the costs through customer rate hikes.

Just last month, Northern California’s dominant utility said it would take a $2.5 billion charge this quarter as part of the liabilities it expects related to Cal Fire’s assessment its equipment played a role in 12 of the region’s wildfires.

Without that charge and other one-time expenses, the utility would have posted a second-quarter profit of $601 million, or $1.16 per share, up from $440 million a year ago. Instead, it posted a loss of $984 million, or $1.91 per share.

Cal Fire said PG&E violated safety codes on eight of the 12 fires. Investigators have not yet determined the cause of the Tubbs fire, the most destructive of last year’s regional fires.

Some industry analysts have said PG&E’s financial responsibility from last year’s fires could climb to as high as $15 billion if it is liable for the massive blaze, which razed nearly 5,300 Sonoma County homes. PG&E executives and general counsel said Thursday they could not speculate how the company would manage being found liable for those damages but vowed it would have a plan in place to finance those potential costs. They said they have no additional insights into when Cal Fire may release those results.

As legislators work through potential changes to the liability laws, PG&E is at the same time pursuing legal means to change the inverse condemnation doctrine. The company recently filed a motion in the 1st District Court of Appeal challenging the policy, but does not anticipate a response until the fall. If granted review, that appellate process could take at least another year.

“I think that the governor’s proposal is constructive,” Williams said. “(But) it doesn’t go far enough in looking at inverse condemnation and the impact that it has on utilities like PG&E in the state of California. We do believe it’s just one of many things that need to be considered in a more comprehensive set of reforms.”

You can reach Staff Writer Kevin Fixler at 707-521-5336 or at

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