Assemblyman Jim Patterson discusses PG&E bankruptcy and the future of electricity

Assemb. Jim Patterson speaking at a recent Assembly Budget Committee meeting. (Contributed by the Office of Assemblyman Jim Patterson)

Pacific Gas and Electric recently announced its plan to file for a Chapter 11 bankruptcy. The utility currently provides its service to over five million customer accounts. The company stated in their public announcement, “We do not expect any impact to natural gas or electric service for our customers as a result of the Chapter 11 process.”

They cited the northern Calif. wildfires of 2017 and 2018 as one of the main reasons behind their bankruptcy filing; “PG&E faces extensive litigation and significant potential liabilities resulting from these wildfires.”

In a discussion with Assemb. Jim Patterson (R-Fresno), he cites inverse condemnation–a law that is written in the state’s constitution–as one of the biggest contributing factors to PG&E’s bankruptcy. He states, using an example to explain the concept of inverse condemnation, “PG&E has a whole bunch of transmission lines. If a high-wind storm blows a tree limb a couple of football fields away and hits a power line [owned by PG&E], PG&E is one percent responsible, but they become 100 percent liable for all costs. This is what has prompted the $30 billion estimated price tag of being responsible for the fires.”

Patterson also says about service costs, “The price tag may go up because the bankruptcy judge is essentially going to tell PG&E, ‘you have to do whatever it takes to keep the lights on.’”

He further explains, briefly referencing PG&E’s 2001 bankruptcy, “This bankruptcy will end. But, because this one is so complex and many faulty decisions have been made, I think this one is going to be longer than two years. The implications here are that keeping the lights on could very well be a problem and it could be very expensive. ”

Patterson suspects that PG&E might come out of the bankruptcy with a different model. He refers to San Diego Gas and Electric as a company that is already testing a new model for their services. Currently, the city of San Diego is trying the method of creating a community choice aggregation. SDG&E would own all the power lines, but the city would resort to an entity separate from SDG&E to buy and sell power for the region’s citizens.

While discussing the PG&E situation with Patterson, the assemblyman also brought up another point regarding his worry on growing issues with Calif.’s electricity. He notes, “Our electricity that drives the economy is becoming less reliable and more expensive…this is a supply and demand problem. We will have more rolling brownouts and blackouts when the supply of electricity does not meet the demand.”