California Gov. Gavin Newsom rejected a $13.5 billion settlement that Pacific Gas & Electric struck last week with thousands of people who lost homes, businesses and family members in a series of devastating fires that drove the nation’s largest utility into bankruptcy.
The decision, announced late Friday in a five-page letter to PG&E CEO William D. Johnson, was a major setback in the utility’s race to meet a June 30 deadline to emerge from bankruptcy protection.
Newsom said the plan “falls woefully short” under state law, because proposed changes to PG&E’s governance and financing were insufficient to “provide safe, reliable, and affordable service to its customers,” the San Francisco Chronicle reported. The decision came a week after PG&E announced it had reached the agreement with victims’ attorneys to settle claims from 2015, 2017 and 2018 fires that were blamed on PG&E’s power lines.
“For too long, PG&E has been mismanaged, failed to make adequate investments in fire safety and fire prevention, and neglected critical infrastructure,” Newsom wrote. “PG&E has simply violated the public trust.”
The San Francisco-based company needs a deal if it wants to draw from a special $21 billion fund created by the Democratic governor and state lawmakers to help insulate utilities if their equipment sparks other catastrophic fires, according to the Santa Rosa Press Democrat. The law says that the company must include a ramped-up program to prevent new fires, as well as other changes in how it does business. Newsom said the company’s proposals don’t meet the test.
PG&E spokeswoman Lynsey Paulo said the company believed its plan complied with the state law and “is the best course forward for all stakeholders.”
The risk of wildfires has escalated during the past few years amid dry, windy conditions that have become more severe in a changing climate.