California regulator lays foundation for PG & E bailout

The highest utility regulator in California said Thursday that his agency could help the utility avoid a financial catastrophe due to fires in the state.

Michael Picker, chairman of the California Public Utilities Commission, said his agency did not want PG & E and other state-owned utilities owned by investors to file for bankruptcy. In a gesture he admitted to be unusual, he informed investors and analysts of his point of view before making a public statement on Thursday, which could have contributed to the skyrocketing action after hours. .

The commission, said Picker, will soon begin to incorporate a provision into a new national law allowing utilities to pass fire costs on to their customers.

The provision of the law, SB901, allows utilities such as PG & E to manage forest fire costs by using obligations that customers would pay over time. But the public service must first go through a bankruptcy stress test that determines the amount of costs that it can absorb by itself – anything that goes beyond that can be passed on to customers .

In an interview with The Chronicle, Picker said he felt the process could apply to wildfires this year and last year. But as the law currently only allows utilities to issue bonds for fires that broke out in 2017, Mr. Picker admitted that a "clean-up legislation" might be needed.

State fire investigators did not determine the cause of the deadly fire that broke out in the camps at the foot of Sierra Nevada, east of Chico. However, PG & E told the regulators last week that some of its equipment located near the point of origin of the fire in Butte County had a problem just before the start of the fire, contributing to speculation on fuels and at least one legal action against the public service.

Picker's remarks to The Chronicle and in a public statement came after Bloomberg said he spoke at a Wall Street analysts' call, saying he was considering perspective of the bankruptcy of PG & E.

The report appears to have boosted the shares of the parent company, PG & E Corp. While PG & E's shares were down more than 30% at the close of trading on Thursday, bringing the company's value back to $ 9 billion, they allowed a dramatic rebound in after-hours trading. , climbing more than 44% and erasing the losses of the day.

The title was trading after regular working hours at $ 25.60, which is still almost half of its opening price last Thursday, the day the fire started.

Picker said that allowing the utilities to go bankrupt was "not a good policy".

"They must be in good financial health to be able to provide the goods and services that clients need," he said in an interview. "If they can not borrow money, they have cash flow problems and they can not manage the vegetation, that's a problem." It's not a good policy, let them become financially unstable. "

The spokesperson for PG & E, Lynsey Paulo, said in an email that the utility agreed with Picker to assert that "an essential element for the provision of safe electrical service is the long-term financial stability ".

"Access to affordable capital is critical to implementing security measures and meeting California's ambitious clean energy goals," Paulo said in an email. "The recently enacted legislation has recognized the importance of healthy public financial services to California's electricity customers, and its timely implementation is critical to achieving this goal."

Mr. Picker also stated that the Public Utilities Board would broaden the scope of a three-year investigation into PG & E's safety culture from the fallout from the San Bruno pipeline explosion. in 2010, to also include recent wildfires.

"It's really about safety culture, not about San Bruno," Picker said. "That's what they did afterwards? Did they do things that they know how to work, did they monitor them and did they discover that they did not meet expectations for particular actions? What did they learn to improve? Until now, I would say that all the evidence does not confirm the fact that they have a strong safety culture. "

It is unclear what additional measures, if any, the legislature will consider to assist PG & E if investigators determine whether his equipment has triggered the campfire.

In response to Senator Picker's public statement on Thursday, Senator Bill Dodd of D-Napa issued a statement from his own dictator stating that this year's legislators "have imposed significant new demands" on the companies of the United States. 39, electricity and commission.

"I expect the Public Service Commission to act quickly to institute these stricter standards," SB901 author Dodd said in a statement. "It is important that the safety culture survey deals with the structure and internal controls of the public service."