PG&E equipment likely to be blamed for starting lethal Camp Fire, utility says

San Jose Mercury News (CA)

Feb. 28-- Feb. 28--PG&E believes its equipment will likely be found to be the cause of the Camp Fire, an inferno that scorched Butte County in November 2018 and became the deadliest and most destructive fire in California history, the embattled power provider said Thursday.

That grim prognosis -- PG&E's first official acknowledgement that it believes its equipment probably ignited the lethal Camp Fire -- was contained in PG&E's fourth quarter and full year financial report, which the disgraced utility released Thursday.

"The company believes it is probable that its equipment will be determined to be an ignition point of the 2018 Camp Fire," PG&E stated in an assessment that was a key component of its full-year and fourth-quarter of 2018 financial results.

In recent years, financial, credibility, legal and liability woes have mounted dramatically for the utility, which already was a convicted felon after being found guilty for crimes it committed before and after a fatal natural gas explosion caused by PG&E that killed eight and destroyed a San Bruno neighborhood in 2010.

Third-party claims connected to the Camp Fire now total at least $10.5 billion, while claims arising from the 2017 infernos have reached the $3.5 billion mark, including a $1 billion increase during the final three months of 2018, PG&E stated. Through the end of 2018, PG&E's insurance had covered just $1.38 billion of the company's expenses and liabilities from the Camp Fire disaster, and only $842 million from the 2017 infernos.

On Jan. 29, confronted by the strain of wildfire-related liabilities that could reach $30 billion, along with other debts, PG&E filed for a Chapter 11 bankruptcy.

Despite the admission by PG&E, and even if the company's expectations are formally confirmed by the investigative results for the Camp Fire, these new disclosures may prove only cold comfort for victims of the Butte County inferno, which essentially destroyed the town of Paradise.

"Everyone is concerned that the fire victims are not going to be fully compensated for their losses in the Camp Fire, Paradise Mayor Jody Jones said. "I don't think anybody is going to be made whole because of the bankruptcy.

In its bankruptcy filing, PG&E listed $51.69 billion in debts and hoping to ward off its creditors until it can reorganize its shattered finances.

"It's unfortunate that PG&E's equipment may have started the worst fire in California history," said state Sen. Jerry Hill, whose district includes parts of Santa Clara County and San Mateo County and contains San Bruno. "But at the same time, PG&E's bankruptcy may prevent the victims of that fire from receiving just compensation."

PG&E pointed to four key developments for the new assessment of its involvement in the Camp Fire, which is being investigated by both the state Department of Forestry and Fire Protection and the state Public Utilities Commission.

First, Cal Fire has posted coordinates on its website for the Camp Fire origin that are near a PG&E transmission tower on the company's Caribou-Palermo complex of transmission lines, stating the blaze began at 6:33 a.m. on Nov. 8, 2018.

Second, at 6:15 a.m., the Caribou-Palermo line de-energized and at 6:30 a.m., a PG&E employee reported that a fire was burning near the tower.

Third, later in November, PG&E observed an array of damage at the transmission tower, including broken equipment, signs of worn components and a flash mark.

Fourth, at 6:45 a.m on Nov. 8, nearby PG&E facilities known as the Big Bend Circuit experienced a power failure.

"PG&E employees subsequently patrolling the (Big Bend Circuit) location observed damage to the pole and equipment and downed wires," PG&E said. "Although Cal Fire has identified this location as a potential ignition point, based on the condition of the site PG&E has not been able to determine whether the Big Bend Circuit may be a probable ignition point."

San Francisco-based PG&E recorded a $10.5 billion pre-tax accounting expense, formally known as a charge, connected to claims arising from the Camp Fire that was recorded against the company's financial results for the fourth quarter of 2018 as well as all of 2018.

In addition, the company also took a $1 billion pre-tax charge linked to claims arising from the October 2017 infernos in the North Bay Wine Country and nearby regions. That was in addition to a previous charge of $2.5 billion for those blazes. The new charge was specifically connected to the Atlas and Cascade fires of 2017.

For all of 2018, and including the effects of the charges, PG&E lost $6.85 billion. Revenue totaled $16.76 billion, which was down 2.2 percent from revenue of $17.14 billion in 2017. In 2018, electricity revenue totaled $12.71, down 3.1 percent from 2017. Gas system revenue totaled $4.05 billion in 2018, up 0.9 percent from 2017.

The Caribou-Palermo circuit has been taken out of service in the wake of the Butte County firestorm, which killed 86 people. The 56-mile line was de-energized in December 2018.

"Preliminary results from the enhanced inspections on this transmission line have identified some equipment conditions that require repair or replacement," PG&E stated.

PG&E declined to specify on Thursday the precise nature of the equipment problems that it's discovered on the Caribou-Palermo circuit.

"This entire transmission line will remain out of service until it is verified to be fully safe or decommissioned," PG&E said.

Paradise Mayor Jones wondered whether PG&E has been diligent enough in keeping the Caribou-Palermo in good working condition.

"If it is determined that PG&E did not properly maintain these lines, they need to be held accountable," Mayor Jones said.

Also of concern, according to according to Steven Weissman, a professor with UC Berkeley's Goldman School of Public Policy, are PG&E's long-stalled efforts to repair and replace equipment on the Caribou-Palermo circuit. Of particular concern is that, after being warned in a 2013 assessment by the North American Electricity Reliability Corp., or NERC, that significant upgrades were needed on the line, PG&E didn't schedule repairs until December 2018 -- weeks after the Camp Fire erupted.

It wasn't until July 2017 that PG&E proposed to the Federal Energy Regulatory Commission that a $30.3 million program be launched to ensure that power lines didn't contact the ground or make contact with towers or other lines on the Caribou-Palermo circuit.

"At a minimum, the fact that PG&E has been delaying compliance with its obligations under the NERC directive, it raises questions as to whether PG&E is adequately staffing its work in this area," said Weissman, who is a former PUC law judge and former PUC policy advisor.

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