Pacific Gas & Electric, California’s largest utility, said Monday that it had agreed to plead guilty to involuntary manslaughter in connection with the Camp Fire, the state’s deadliest wildfire.
Facing tens of billions of dollars in wildfire claims, PG&E has been in bankruptcy reorganization since early last year. The company is racing to emerge from bankruptcy by June so that it can qualify for inclusion in a new state wildfire fund that could cover the costs of future fires.
The plea agreement, struck with the district attorney in the county where the Camp Fire occurred, followed the announcement on Friday that Gov. Gavin Newsom was willing to approve PG&E’s plan to emerge from bankruptcy. Under the plan, victims of the wildfires have agreed to a payment of $13.5 billion.
“Today’s charges underscore the reality of all that was lost,” Bill Johnson, PG&E’s chief executive, said in a statement, “and we hope that accepting those charges helps bring more certainty to the path forward so we can get victims paid fairly and quickly.”
The plea agreement, announced in a securities filing, said PG&E had accepted a maximum penalty of $3.5 million and “no other or additional sentence will be imposed on the utility in the criminal action in connection with the 2018 Camp Fire.” The company will also pay the district attorney’s office $500,000 to cover the cost of its investigation.
The agreement must be approved by a state court, which is scheduled to consider it on April 24, and the bankruptcy court.
The Camp Fire started after a hook holding a PG&E transmission line broke from a nearly 100-year-old tower near Paradise. The company repeatedly failed to maintain that line even though it cut through a forested and mountainous area known to experience strong winds, the California Public Utilities Commission concluded in a report last year.
Victims of the Camp Fire could in theory use PG&E’s guilty plea to bolster their claims against the company. The agreement says that the state would not oppose any effort by PG&E to try to settle those claims as part of its bankruptcy.
But Karen Gowins, who lost her home in the Camp Fire, criticized the plea agreement on Monday and said that the company may never be fully held to account for its failings.
“I don’t see this as a win for the victims no matter which way it all goes,” said Ms. Gowins, who is a member of a committee that represents wildfire victims in PG&E’s bankruptcy case. “Basically, they’re just going to slap them on the hand. I keep saying, ‘Only the Lord can open a door now.’”
Ms. Gowins fears that people like her will ultimately receive little from the utility for their losses. Half of the $13.5 billion settlement PG&E reached with wildfire victims will be in the form of company stock, which has fallen sharply since mid-February when stock markets began tumbling because of the expanding coronavirus outbreak.
“I’m just not sure how Paradise is going to be able to stand back up on its feet,” she said.
Kirk Trostle, who also lost his home in Paradise, said the deal was inadequate and called on prosecutors to bring charges against PG&E officers. He said most of his two dozen family members who lived in the town have scattered across the state.
“They decimated my entire town,” Mr. Trostle said. “To me, this is just a drop in the bucket for what should be happening to PG&E.”
Mike Ramsey, the Butte County district attorney, said the penalty was the maximum allowed under California law. He added that other government agencies could seek bigger damages from PG&E, including a roughly $2 billion proposed fine by the utilities commission.
PG&E will plead guilty to unlawfully causing a fire and 84 counts of involuntary manslaughter. That is one less than the Camp Fire’s total toll because officials have ruled one death a suicide, Mr. Ramsey said.
Under the deal, the district attorney’s office would receive information about PG&E’s safety practices from a federally appointed monitor for the next two years.
The guilty plea could also affect federal court’s decision on whether the utility is in compliance with its probation for a 2010 gas pipeline explosion in San Bruno, a town south of San Francisco. PG&E was convicted of six felonies for violating a pipeline safety law and obstructing an investigation. The judge overseeing that case, William H. Alsup, has been highly critical of PG&E’s safety record and last year ordered its board to visit Paradise to see first hand the destruction the company’s equipment had caused.
The company’s stock closed up 12.5 percent, to $8.12, on Monday afternoon but still far from the nearly $18 it hit a month ago.
Mark Toney, executive director of the Utility Reform Network, which represents ratepayers before the California Public Utilities Commission, said he is hopeful that the judges who review the plea agreement will impose tougher penalties.
“I see this connected to the bankruptcy and PG&E wanting to close the books,” Mr. Toney said.
PG&E sought bankruptcy protection early last year — its second Chapter 11 filing in two decades — with $30 billion in liabilities related to wildfires ignited by its poorly maintained electrical system.
Under an agreement with Mr. Newsom announced on Friday, the utility pledged billions of dollars to help wildfire victims, improve safety and make other changes.
As part of that deal, PG&E will not pay dividends to shareholders for three years. The agreement should allow the utility to exit bankruptcy by June 30, a state-mandated deadline for it to take part in the fund designed to help utilities pay claims from future wildfires.
A federal judge’s approval is still needed for the company’s bankruptcy plan.
Original source: New York Times