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PG&E Sparked at Least 1,500 California Fires. Now the Utility Faces Collapse



PG & E
             Corp.


PCG -0.96% equipment began more than one day in California on average in recent years as a historic drought turned the region into a tinderbox. The utility's unsuccessful efforts to prevent such accidents occur in a state of crisis

The fires included one on Oct. 8, 2017, when nearly 50-mile-an-hour winds are snapped up in California's Sonoma County wine country. The tree's top hit in half-century-old PG&E power line and knocked into a dry grass field, and state investigation found. It was among the 1

7 major wildfires that year that California investigators have tied to PG&E. Data from the state firefighting agency, Cal Fire, show the fires together scorched 193,743 acres in eight counties, destroyed 3,256 structures and killed 22 people.

 A mobile-home park after wildfires in Santa Rosa, Calif., In October 2017. "title =" A wild-life mobile home park in Santa Rosa, Calif., in October 2017. "/> </div>
<p>
          <span class= A car-home park after wildfires in Santa Rosa, Calif., in October 2017.


Photo :
            

        JOSH EDELSON / AFP / Getty Images
          

California's largest utility, with a history of safety and maintenance problems, has been scrambling for five years to reduce fire risks. It has been overwhelmed by the threat's severity and the challenge of shoring up thousands of miles of aging power lines and cutting and trimming millions of trees in a service area larger than Florida, according to Wall Street Journal review of court records, regulatory filings and interviews with current and form regulators and company employees. PG&E faces billions of dollars in legal claims, the specter of bankruptcy, and federal judging forcing his way into utility operations, the possible state regulators will break into pieces, and potential states criminal charges including homicide, due to its continuity in stopping the fires from starting.

"It's an organization facing collapse," said Arthur O'Donnell, a safety public supervisor at the California Public Utilities Commission until late last year. “There are no silver bullets that can fix things quickly.”

The decade's drought was unprecedented, bringing fire risks few in California had experienced. As conditions became more conducive to massive fires, the utility and its power lines kept providing sparks. PG&E spent heavily on its system, but could not prevent an increase in fires.

California Tinderbox

PG&E power lines and other equipment have more than 1,500 fires in the past few years, several of which have grown large to the region's dry conditions

Fires sparked by PG&E equipment

June 2014-Dec. 2017

Electric transmission lines

Number of fires sparked by PG&E equipment

Fires sparked by PG&E equipment

June 2014-Dec. 2017

Electric transmission lines

Number of fires sparked by PG&E equipment

Fires sparked by PG&E equipment

June 2014-Dec. 2017

Electric transmission lines

Number of fires sparked by PG&E equipment

Fires sparked by

PG&E equipment

June 2014-Dec. 2017

Electric

transmission lines

Number of fires sparked by PG&E equipment

PG&E didn't anticipate how quickly the drought would overtake heavily wooded areas of San Francisco and outside Sacramento, said Stephen Tankersley, who oversaw PG & E's vegetation-management program between 1999 and 2015. "It's hard to believe that anybody would have predicted that it would have been like this," said Mr. Tankersley, now a utilities consultant. "We've never seen anything like it."

Grounded dramatically and quickly, said PG&E spokeswoman Lynsey Paulo. She said the utility has reacted with speed and urgency. "We are very aware of the risk and we are doing everything we can to keep our customers and the communities safe," she said. “PG&E is risk-free as a top-tier enterprise risk. It is evident in our actions. ”

The utility removed 451,000 more trees from 2016 through 2018 than it had originally forecast, she said, in an" amped up "effort to deal with massive tree mortality.

" We aspire to have absolutely no wildfires, 'said PG&E CEO Geisha Williams in 2017. Ms. Williams at a 2018 conference

"We aspire to have absolutely no wildfires," said PG&E CEO Geisha Williams in 2017. Ms. Williams at a 2018 conference.


Photo:
            

        F. Carter Smith / Bloomberg News
          

"We aspire to have absolutely no wildfires," PG&E chief executive Geisha Williams said during a 2017 deposit in a lawsuit seeking fire-related damages from the company. She & # 39; s currently running thousands of miles of electrical conductors through forests created "an inherent exposure." PG&E declined to make her available for an interview.

The number of fires PG & E reported its equipment has risen in recent years just as it has stepped up spending on tree trimming and fire reduction programs. The state required it to report fires beginning June 2014. It has since released its equipment started about 1.550 fires through 2017. While most of the time, it has been launched within minutes, and stoked by winds have spread quickly.

PG&E executives tried to assure investors, politicians and the public last year that the company, which provides natural gas and electricity to 16 million people, was getting the wildfire threat under control. Then in November, another one through the town of Paradise, Calif., Killing 86 people and destroying about 14,000 homes.

California officials have yet to determine the cause of that blaze, the Camp Fire, the deadliest in state history. PG&E has reported a 115,000-volt line was damaged and dislodged from one of its towers in the area some 15 minutes before the fire was first reported.

 PG&E workers fix downed power lines burned by wildfires in Santa Rosa, 2017. "title = "PG&E workers fix down power lines burned by wildfires in Santa Rosa, 2017." /> </div>
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          <span class= PG&E workers fix down power lines burned by wildfires in Santa Rosa, 2017.


Photo:
            

        David Paul Morris / Bloomberg News
          

PG&E faces dozens of lawsuits from residents and insurers demanding it pay for four damages. California law makes utilities responsible for any fire started by their equipment, even if they are negligent. Analysts have pegged PG & E's wildfire liabilities as high as $ 30 trillion. That's $ 9.12 billion triple its market value, which has plunged from $ 25.32 billion in mid-October. The S&P Utilities index has fallen 0.8% over the period.

Credit agencies have downgraded PG&E and have raised the possibility of bankruptcy along with regulators, legislators and analysts, citing the huge liability that the company could face and the sourcing relationship between the company and California politicians. State lawmakers passed legislation last year to help the company from the prospect of bankruptcy after the 2017 fires by letting it pass some liability costs on to ratepayers. But the measure did not explicitly address fires in 2018. Now public opposition to PG&E has grown, complicating the prospects of any new political rescue.

Bankruptcies of regulated utilities are rare because their revenues are largely guaranteed by state and federal regulators. There have been utility bankruptcies in significant numbers since the 1980s when there was a fallout from canceled nuclear power plants. PG & E's Pacific Gas & Electric unit underwent bankruptcy reorganization from 2001 to 2004, as a result of the California energy crisis – the only utility in the state to take that step.

The California Public Utilities Commission and state lawmakers are debating proposals PG&E turn much of the four-related bond into securitized debt, which businesses and homeowners would pay off over many years through their power prices, already some of America's highest. Regulators are exploring whether PG&E could be split into separate gas and electric businesses or into smaller regional utilities.

The California attorney general's office recently said the company could face criminal charges, including manslaughter, in connection with fires. INVESTIGATIONS. PG&E is federal criminal probation resulting from felony convictions vote from the 2010 San Bruno natural-gas line explosion that killed eight people — it pleaded not guilty — and has a federally appointed monitor reviewing its gas safety practices.

 A PG&E natural -gas line on a San Bruno, Calif., road after the 2010 explosion. "title =" A PG&E natural-gas line on a San Bruno, Calif., road after the 2010 explosion. "/> </div>
<p>
          <span class= A PG&E natural gas line on a San Bruno, Calif., road after the 2010 explosion.


Photo:
            

        Noah Berger / Associated Press
          

U.S. District Judge William Alsup is considering whether PG&E may have violated the terms of its probation due to the fires. This month too, forcing PG&E to turn off power into fire-prone pockets during high-risk periods, saying "that inconvenience, annoying as it will be, will pale by comparison to the death and destruction that might otherwise result from PG & E- inflicted wildfires. ”PG&E has until Jan. 23 responded and declined to comment

Surviving San Bruno's fallout was a driving focus of company leaders for years, distracting it from the emerging wildfire threat, said Paula Rosput Reynolds, chairman of an independent panel that investigated PG&E after the explosion. "They were in crisis to crisis," she said. "PG&E faced two challenges as drought took hold." It needed to update many of its 125,000 miles of electrical lines – five to five times. From 2013 through 2017, it reported more than 16,000 sections of high-voltage lines. That is one down line every three hours. PG&E reported that it was dropped because trees fell on them but that many tumbled due to equipment failures. PG&E estimates about 30% stayed energized — a risk or risk.

 A PG&E worker locates a gas main line in Paradise. "Title =" A PG&E worker locates a gas main line in Paradise. "/> </div>
<p>
          <span class= A PG&E worker locates a gas main line in Paradise.


Photo:
            

        David Paul Morris / Bloomberg News
          

It also faced a massive tree-clearing campaign. It estimated in January 2018 that there were 120 million trees that could come into contact with its power lines and set out to trim 1.4 million annually.

It had problems finding skilled workers to do the job. Between 2014 and 2016, the let one contractor lower its requirements because of a shortage of qualified workers, according to a deposition of the contractor's operations manager as part of a wildfire lawsuit.

The task was complicated because some dangerous trees were on private land, forcing PG&E to negotiate with landowners, said Bob Fratini, a retired PG&E vegetation management manager. Residents sometimes pressured crews, he said, to just enough to satisfy minimum requirements.

"Utilities should be given the right to remove any tree that could cause an outage or fire," he said. California regulators recently gave utilities more latitude in this area, saying they could shut off power to homes or businesses that prevent tree crews from working. PG & E's Ms. Paulo said that isn’t necessary very often.

Sometimes, PG & E's tree-clearing created new problems. After PG&E workers removed two trees in January 2015 southeast of Sacramento, a gray pine was exposed to wind and leaning, according to a state investigation.

On a 102-degree day in September, the pine hit a 12,000-volt line And electricity ignited, dropping embers onto dry grass and sparking the Butte Fire, which burned 70,868 acres and 921 buildings. Two people died.

 A firefighter battles the Butte Fire near San Andreas, Calif., September 2015. "title =" A firefighter battles the Butte Fire near San Andreas, Calif., September 2015. "/> </div>
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          <span class= A firefighter battles the Butte Fire near San Andreas, Calif., September 2015.


Photo:
            

        JOSH EDELSON / AFP / Getty Images
          

In 2016, PG&E spent $ 435 million on a one-year flash hit dead trees hit by drought and beetle infestation, and $ 300 million more on other wildfire-related measures.

Since 2010, state inspectors assigned to audit PG & E's electrical operations have consistently found that the company completed maintenance and repair work behind schedule.

Wildfires returned with vengeance in 2017. PG&E voiced optimism it was getting the situation under control. Weeks after the 2017 fires, it filed a 660-page report with state regulators describing wildfires as its fifth-most significant safety risk, behind factors such as employee safety. PG & E's Ms. Paulo said that the exact rank was not important. "What is important is the fact that top-level risks are like receiving attention," she said.

"They never understood the risks," said State Sen. Jerry Hill, a longtime critic of the company's safety record. “They missed it in San Bruno and missed it with the wildfires. They didn't have a clue. ”

For years, PG&E and state officials were less than those of utilities in Southern California, where Santa Ana winds had historically posed a threat in autumn. ] The Tubbs Fire, October 2017. "title =" The Tubbs Fire, October 2017. "/>

The Tubbs Fire, October 2017.


Photo:
            

        George Rose / Getty Images
          

Now it was clear PG&E faced a similar danger in state officials was the manifestation of climate change. And growing population shift to Northern and Central California woodland areas had put more people in harm's way.

Two big Southern California utilities,

            Semper Energy
             's

      San Diego Gas & Electric and

            Edison International
             's

      Southern California Edison unit, assisted by state officials, had installed weather stations to track regional wind conditions and developed policies to proactively turn off electricity in areas with high fire risks. PG&E, which state officials had not pushed to the same, was behind in these measures.

After a deadly 2007 fire, San Diego Gas & Electric replaced 16,000 wood poles with steel poles, selectively insulated wires and widened gaps between wires, building a system to with 85 miles-an-hour winds. It has spent more than $ 1 trillion so far, said a utility spokeswoman, and is still implementing the changes

PG&E filed with state regulators last month to spend $ 5 billion from 2018 to 2022 to reduce fires by accelerating plans to insulate wires, replace power poles and towers, install safer equipment and cut down trees.

It is recommended to install technology that better allows engineers to automatically shut down equipment when fire risks are highest. It plans to install 600 smoke-spotting cameras to provide early fire warnings, up from nine currently installed, and add 1,300 local weather stations. PG&E estimates most of the proposed changes are completed until 2022, raising the prospect fires could continue for the next few years.

For Californians like Mike Holdner, trust in PG&E has eroded. Mr. Tubbs Fire, which killed 22 people, said he was suing the utility for a state-of-the-art investigation. "If it puts them into bankruptcy, so be it," he said, "if that's the way you have to change that culture."

Write to Russell Gold at russell.gold@wsj.com , Katherine Blunt at Katherine.Blunt@wsj.com and Rebecca Smith at rebecca.smith@wsj.com


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