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How California Wildfires Forced PG&E to Declare Bankruptcy | WSJ - YouTube
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- [Narrator] This is the Camp Wildfire.
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On November 8th, 2018,
the fire tore across
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a rural section of northern California.
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It was deadliest and most destructive fire
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in California history.
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It consumed the town of
Paradise in a matter of hours,
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forcing its residents to flee in panic.
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(woman sobbing)
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- [Woman] Please, God!
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- [Woman] Please, God, just let us out!
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- [Woman] Let us get out safe!
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- [Narrator] An investigation
found that the Camp Fire
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was caused by a line
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owned by Pacific Gas
and Electric, or PG&E.
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It was the latest in a string of fires
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that ultimately led the
state's largest utility company
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to file for bankruptcy,
but with this bankruptcy,
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it isn't just shareholders and creditors
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who have an interest in
the future of the company.
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Millions of Californians
rely on the utility
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to keep the lights on,
and some are questioning
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whether PG&E can be trusted to
do that safely and reliably.
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That's because,
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according to documents reviewed
by the Wall Street Journal,
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the company knew for years
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its equipment had the
potential to start fires,
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yet repeatedly delayed
the necessary upgrades
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to make some of its lines safer.
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This is the story of how
PG&E filed for bankruptcy.
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(copier humming)
(pleasant orchestral music)
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In 1905, newly-incorporated
Pacific Gas and Electric
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was competing with other utilities
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to electrify northern California
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with power generated high
in the Sierra Nevada.
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- A vision of a regional power system
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was something that
really hadn't been tried
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in too many other places around the world.
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The predecessors to PG&E
built a series of dams
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then built long, high-voltage
transmission lines
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across the Central
Valley to San Francisco.
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PG&E emerged really through consolidation
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of a number of companies to
serve more and more parts
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of northern California with
increasing demands for energy.
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♪ I wash and dry your
clothes, play your radios ♪
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♪ I can heat your coffee pot ♪
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Remember, just plug in, I'm Reddy!
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- [Narrator] But safety
and reliability issues
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have plagued the utility since the '90s.
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In 1996, PG&E settled a
multi-million-dollar lawsuit
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alleging it tainted drinking water
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around Hinkley, California.
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In 2001, the California energy crisis
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resulted in rolling blackouts
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and drove the corporation's utility arm
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to file for bankruptcy, and in 2010,
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a PG&E gas pipeline exploded
in San Bruno, California,
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killing eight people.
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PG&E was placed on federal probation
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as a result of the explosion
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to ensure the utility operated safely
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in the communities it served,
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and many of those northern
California communities
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were growing in rural areas.
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- A lot of the residential construction
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that's occurred over
the last several decades
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has been in what we would call
the Wildland-Urban Interface,
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the fringe of the built environment,
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putting people out into the forest.
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Since that time, there hasn't been a lot
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of new construction of
the backbone system.
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- [Narrator] Many of the
utility's transmission towers
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were constructed in the first
half of the 20th century.
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Outside of Paradise is a
high-voltage transmission line
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owned by PG&E.
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The 56-mile line, known
as the Caribou-Palermo,
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was built in 1921.
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Its towers and lines tap
into a hydroelectric system
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known as the Stairway of Power.
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PG&E estimated the mean life expectancy
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of its high-voltage transmission towers
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was 65 years old, but the
company estimated the average age
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of all the towers still in service was 68.
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The oldest towers in the
system were 108 years old.
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- Equipment like these
high-voltage and low-voltage lines
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does fail, but the failure
is low-consequence,
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so you'd have an older transmission line
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that was nearing the
end of its service life
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and something would break
during a big winter storm
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in the Sierra, and when the storm ended,
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PG&E crews could go out and fix the line.
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What's changed is when the
power lines fail in California
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and the consequences of a failure.
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- [Narrator] From 2013 to 2019,
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a historic drought
swept across California,
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killing millions of trees
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and greatly increasing the risk of fire.
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According to a PG&E list
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obtained by the Wall Street Journal,
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the Caribou-Palermo was one of the grid's
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worst performing circuits.
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It also ran through areas
that were identified
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as posing elevated and extreme fire risks.
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In 2017, PG&E equipment started 18 fires
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that killed 22 people, according
to state fire officials.
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According to an internal
presentation from that same year,
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the company said it needed a plan
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to replace its steel
structure transmission towers
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and better manage its equipment
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to prevent it from causing fires.
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(quietly tense synth music)
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On the morning of November 8th, 2018,
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winds picked up before
sunrise near Paradise.
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A hook connecting a power line
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to a Caribou-Palermo tower failed,
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causing the line to strike the tower
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and emit sparks that fell to the ground.
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A few minutes later,
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a PG&E worker spotted a
small fire near the tower.
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That fire grew quickly.
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- Oh, my God!
(muffled chatter)
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- [Narrator] By eight a.m.,
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local officials had given
the order to evacuate.
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By 10:45, the fire had
overtaken parts of Paradise.
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- [Woman] Trying to get out of Paradise.
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This is bad.
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- [Man] Oh, my God!
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- [Officer] Ladder 13, it's bad!
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- [Man] Keep going!
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(tense synth music)
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(engine rumbling)
(tense synth music)
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- [Narrator] By six p.m.,
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the fire had completely consumed the town.
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(dramatic synth music)
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In the aftermath, the
local sheriff's office
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said bodies were found in vehicles,
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most likely of people who were
trying to escape the fire.
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Anthropologists and a
forensic dentist were tasked
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with identifying human remains
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that sometimes consisted
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only of a few bone fragments or teeth.
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(dramatic synth music)
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For PG&E, the destruction
caused by the Camp Fire
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was an existential threat.
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The utility faced thousands
of wildfire claims
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seeking damages for, amongst other things,
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wrongful death, personal
injury, and property damage.
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From October 2018 to January 2019,
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PG&E's market value slid
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from about $25 billion to nine billion.
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By declaring bankruptcy,
the utility's strategy
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was to fold these claims
into a bankruptcy proceeding,
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allowing the company to
negotiate settlements
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with all of its creditors,
including the fire victims.
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A Wall Street Journal investigation
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revealed the company knew
that 57 of the steel towers
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on the Caribou-Palermo line
needed hardware replaced
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and another 49 towers needed
to be replace entirely
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before the Camp Fire.
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In 2013, PG&E told federal regulators
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it had a $30 million
plan to replace equipment
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on the Caribou-Palermo line,
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but it repeatedly delayed
the project for five years.
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It was slated to begin
as late as June 2018,
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but it didn't happen.
(dramatic orchestral music)
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The utility released a
statement in response
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to the Journal's reporting,
saying the scheduled work
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wasn't maintenance-related
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and that the tower that
malfunctioned before the Camp Fire
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wasn't slated to be part of the project.
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PG&E later acknowledged in federal court
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it had long known that
its high-voltage lines
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could fail and trigger fires,
but said that such fires
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have historically been relatively rare.
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- [Michael] I think the
utilities in California
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recognize that they are operating
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in a different world today
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and that, if they cause fires,
they won't have a business.
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- [Narrator] In December 2019,
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state investigators
found a dozen violations
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the utility had committed
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in maintaining its
transmission lines and towers.
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PG&E acknowledges it still has work to do.
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Since the Camp Fire, it has
inspected all its towers,
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lines, and substations.
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It identified 1200 immediate safety risks
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and another 10,000 less urgent
repairs and is making fixes.
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It has also committed
to sharing the results
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of its inspections with state
regulators and the public.
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PG&E has also permanently
retired the Caribou-Palermo line.
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- Well, I think in the long run,
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all of the utilities need
to harden their grid.
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In the short run, and
maybe even the medium-term,
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PG&E is also going to be
turning off the power.
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- [Narrator] Since
2018, PG&E has initiated
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several weather-related power shut-offs
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to prevent its equipment
from starting more fires,
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including one that cut power
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to nearly 750,000 homes and businesses.
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PG&E's future remains uncertain.
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The utility has reached a
$13.5 billion settlement
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with fire victims but
faces an major hurdle
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in appeasing the state of California,
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which has raised the
specter of a public takeover
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if PG&E doesn't enact certain reforms.
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- If Pacific Gas and Electric is unable
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to secure its own fate and future,
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then the state will
prepare itself as back-up
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for a scenario where we
do that job for them.
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- People expect that their power
is gonna be on all the time
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and that the system will
not cause them to be afraid,
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but that's kind of where we live right now
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in northern California,
and until that changes,
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I think there is gonna be push
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for much greater oversight of a company.
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I think that's a challenging environment
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for a utility to operate in,
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particularly one that's trying
to get out of bankruptcy.
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(dramatic orchestral music)
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