Pacific Gas & Electric was the only California utility to file for bankruptcy protection when the state went through a self-inflicted energy crisis in the early 2000s. Now it is poised to be the first to file for bankruptcy protection as the state goes through a wildfire crisis.
PG&E, which serves an enormous swath of communities from Santa Barbara to Humboldt counties, filed notice Monday that it intends to file a petition to reorganize its debts under the protection of Chapter 11 of the federal bankruptcy code. Under Chapter 11, companies try to work out a deal with creditors that wipes out part of their debt and puts them on a path to long-term survival.
But bankruptcy is essentially a backward-looking process. It's about the debts you have amassed, which in PG&E's case include as-yet undetermined (but no doubt enormous) sums associated with last year's devastating Camp fire.
What about the fires to come?
The increasing amount of development in areas that were once wild is pushing power lines deeper and deeper into areas that are rich in vegetation that turns to kindling during the state's seemingly endless dry season. This is a problem not just for PG&E, but for all the state's utilities.
The state's big utilities have started installing equipment to cut off power when winds threaten to thrust trees into their lines. That will help, but the real solution is to clear the areas around power lines so they cannot be downed by windblown tree limbs, and that's a gargantuan task.
According to the Wall Street Journal, a report PG&E filed with the state in January 2018 estimated that its lines were threatened by 120 million trees. With the utility trimming trees at a pace of 1.4 million a year, it can't possibly get its corporate arms around that problem.
The utility might be able to ameliorate the problem by burying power lines. But that's an expensive process, and PG&E has 125,000 miles of lines.
Property owners can and should be part of the solution, and the state Legislature took steps last year to give them more incentive to clear their land to provide a margin of fire safety. Insurers also are a factor, as the rates they charge in areas with high fire risks can deter development. And so are local governments, which can do significantly more than they are doing now to increase the supply of affordable housing in cities.
But it seems inevitable that utilities will face more lawsuits, because we will certainly have more destructive wildfires. Our changing climate will guarantee that. And going into bankruptcy now won't reduce the liability exposure for wildfires and the lawsuits they bring in the future.