California governor says PG&E must pay for power shutoffs

California Governor Gavin Newsom said on Monday that utility Pacific Gas and Electric Co (PG&E) should be held accountable for mismanaging last week’s widespread power shutoffs and urged the company to provide credits or rebates to affected customers.

Separately, the California Public Utility Commission, a state regulatory agency, ordered corrective steps by PG&E, the state’s largest investor-owned utility, while summoning eight of its top executives to an emergency meeting on Friday.

The utility, a unit of PG&E Corp, cut off electricity to more than 730,000 homes and workplaces in northern California last week in a bid to reduce wildfire risks posed by extremely windy and dry weather.

The precautionary shutdown, unprecedented in its scope, has been widely criticised as being haphazardly conducted on too large a scale, with insufficient advance notice to affected customers.

On Thursday, the governor said the power outage followed years of mismanagement by the utility and branded its handling as “unacceptable”.

Chief Executive Bill Johnson publicly acknowledged that day that PG&E had fallen short in its preparations for the outage.

In response to state officials’ latest moves, Johnson again acknowledged that there is room for improvement while defending the broad-scale power cutoff as “the right decision”.

He added that there “were no catastrophic wildfires started” last week in the utility’s service areas.

Decades of ‘greed and neglect’

Newsom said he had sent a letter to Public Utilities Commission President Marybel Batjer confirming that the agency will conduct a comprehensive inquiry and review of PG&E’s planning, implementation and decision-making process failures.

“Californians should not pay the price for decades of PG&E’s greed and neglect,” Newsom said. “We will continue to hold PG&E accountable to make radical changes – prioritizing the safety of Californians and modernizing its equipment.”

Newsom also urged the company to provide affected customers with an automatic credit or rebate of $100 per residential customer and $250 per small business as compensation.

Separately, Batjer sent PG&E executives an eight-page letter on Monday directing the utility outlining seven “major areas where immediate corrective actions are required”, the commission said in a statement.

“Failures in execution, combined with the magnitude of this [power shutdown] event, created an unacceptable situation that should never be repeated,” Batjer wrote.

“Loss of power is not a mere inconvenience – it endangers lives and property, especially those individuals who are reliant on power for medical reasons.”

Several of the corrective actions ordered by the commission dealt with website crashes and an overwhelming surge in call centre activity the utility experienced during the shutdown.

PG&E filed for bankruptcy in January 2019, citing potential civil liabilities in excess of $30bn from major wildfires linked to its transmission wires and other equipment.