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Copper Tip Energy Services
Vista Projects
Copper Tip Energy
Vista Projects

Is Climate Change or Negligence Responsible for California Fires?

These translations are done via Google Translate

By Mark Chediak


It was California’s biggest fire yet. In late July and August, wildfires devastated an area north of San Francisco far bigger than New York City, destroying more than 100 homes and injuring 2 fire fighters. It’s just one in a rash of fast-spreading blazes that have killed at least 56 people this year and last in the Golden State.

Authorities don’t yet know the cause of some of the fires, but the region’s giant utility, PG&E Corp., see a culprit at work — climate change. The blazes in recent years, it said, are the latest example of how global warming has produced unusually hot, dry conditions that spawn more frequent and intense fires. “Climate change is no longer coming, it’s here,” Geisha Williams, chief executive officer of PG&E, said in an email. “And we are living with it every day.”

Scientists tend to agree with that assessment. But California’s biggest utility has an especially compelling reason to link the fires to the environment. State investigators have tied PG&E equipment, such as trees hitting power lines, to some of the blazes in October that in total destroyed nearly 9,000 structures and killed 44 people. It faces damage liabilities totaling as much as $17 billion, and possible financial ruin — its stock is down about 37 percent since the fires — unless Williams can convince California lawmakers that the company’s problem is, in fact, a climate change problem.

Green Mantle

Invoking the environment is a clever strategy in a state that’s taken on the green mantle in the face of a skeptical Trump administration. (Indeed, President Donald Trump offered his own reason for the fires last week, blaming a lack of water and bad environmental laws. It was roundly dismissed.) Williams’s battle cry — don’t blame us, blame climate change — is catching on. PG&E’s neighboring utilities, Edison International and Sempra Energy, are echoing the defense, and it may well serve as a blueprint for utilities worldwide as global warming produces extreme weather events such as hurricanes that have slammed Texas and Puerto Rico.

Williams is deploying the argument in a lobbying campaign she’s waging to shield PG&E from liability. California law holds that property owners can collect compensation from utilities linked to fires — even if they weren’t negligent. She argues that because of the increasing frequency of fires, utilities shouldn’t be held responsible each time a tree branch falls on a power line during a storm if it followed all safety rules. Instead, the test should be whether the utility acted “reasonably” in trying to prevent fires, things like trimming trees and brush around lines, she contends. In that case, insurance or government agencies would pick up the damages.

“No one is suggesting the utilities should get a free pass if they were negligent,” Williams said. But the current legal policy of unlimited, strict-liability has the potential to financially cripple companies, she said.

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Some California lawmakers insist PG&E hasn’t even met the reasonable standard, pointing to signs that in some cases PG&E allegedly violated fire safety rules, according to reports by the California Department of Forestry and Fire Protection, or Cal Fire. “Climate change and the so-called new normal do not ignite fires,” said California State Senator Jerry Hill, a frequent PG&E critic. “The Cal Fire findings show that suspected negligence by PG&E did.”

PG&E says it believes it has met the state’s high safety standards.

The utility hasn’t been blamed for any of this year’s fires, but it’s got plenty of financial worries dealing with the ones from 2017. On a recent investor call, Williams raised the stakes by saying PG&E has brought up the prospect of bankruptcy with lawmakers unless the state changes the law. It’s already taken a $2.5 billion charge stemming from the October fires. PG&E has shown that it won’t shy away from court protection. It entered bankruptcy in 2001 after incurring $9 billion in debt by buying power for more than it could charge customers. It emerged three years later.

Suspended Dividend

The $17 billion in potential liabilities today, as estimated by JPMorgan Chase, are significant, representing about 75 percent of its market capitalization of $22 billion. PG&E suspended its dividend in December as it tries to assess damage costs. Some consumer advocates are skeptical of the bankruptcy warnings. ( Creditors seem to agree. While prices have dropped since last year’s fires, they are nowhere near distressed levels.)

Williams is winning some adherents, including California Governor Jerry Brown. He’s proposed a bill that would lesson utilities’ exposure to damages from fires, citing climate change. Brown echoes Williams in contending the utility needs to be financially healthy in order to invest in renewable energy and help the state meet its climate goals.

The daughter of Cuban political refugees, the 57-year-old Williams is the nation’s first Latina CEO of a Fortune 500 company. After first working at Florida Power & Light, she joined PG&E in 2007 and became CEO in March last year — just seven months before the big wildfires in October.

Now, as she deals with the existential threat posed by the fires, she’s bolstering PG&E’s wildfire prevention activities, including stepping up aerial patrols of its power lines, setting up a new wildfire operations center that works round the clock and expanding a network of weather monitoring stations. Still, Williams understands that the Holy Grail is a change in the liability law. At a recent energy conference in Houston, she said — jokingly — that if she fails to do that, “I won’t be here in two years.”

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