‘Plan B’ for PG&E Takeover Moves Forward
Lawmakers advanced a measure that would let the state appoint a receiver or take over PG&E if the utility fails to provide safe and reliable service.

SACRAMENTO, Calif. — California lawmakers advanced a measure Tuesday that would let the state appoint a receiver or take over Pacific Gas and Electric if the utility fails to provide safe and reliable service after it leaves bankruptcy.

Senate Bill 350, called the Golden State Energy Act, cleared the state Assembly’s Utilities and Energy Committee on Tuesday by a vote of 12-2.

PG&E takeover
Sen. Jerry Hill addressed the Assembly’s Utilities and Energy Committee on Tuesday. | California Assembly

In his remarks to the committee Tuesday, bill author Sen. Jerry Hill (D-San Mateo) said the measure is a “plan B” if PG&E doesn’t undergo the safety transformation it has promised.

“As much as we push forward with that change, we must also be prepared to step in should the company not meet its obligations or commitments in the future,” Hill said. “SB 350 is our preparation. I hope it’s unnecessary and that it’s never triggered. But we owe this preparation to the residents of San Bruno and Santa Rosa and Napa and Butte County and Paradise” — communities devastated by PG&E-caused catastrophes in the past decade.

It is unlikely the state will try to seize PG&E anytime soon, especially with its budget in shambles from the COVID-19 shutdown. The purchase of PG&E would cost tens of billions of dollars and saddle the state with the task of performing the estimated $40 billion in upgrades that PG&E’s aging infrastructure requires.

State investigators, for example, blamed a poorly maintained 100-year-old PG&E power line for starting the November 2018 Camp Fire, the state’s deadliest and most destructive wildland blaze. The Camp Fire and a series of conflagrations in 2017 caused PG&E to file for bankruptcy in January 2019. The utility is expected to emerge from its Chapter 11 reorganization later this month.

As PG&E has been trying to leave bankruptcy, state officials have been putting mechanisms in place to allow for a takeover of the utility if needed.

The California Public Utilities Commission recently approved PG&E’s reorganization plan, along with a process of enhanced oversight and escalating enforcement that could lead to the CPUC revoking PG&E’s certificate of public convenience and necessity (CPCN), its license to operate as a monopoly utility in central and Northern California. (See CPUC Approves PG&E Bankruptcy Plan.)

In a May 28 meeting, CPUC Commissioner Martha Guzman Aceves said her vote for PG&E’s bankruptcy plan was bolstered by the likely passage of SB 350. The bill would authorize the CPUC to ask a court to appoint a receiver for PG&E or to revoke its CPCN. The bill allows the governor to establish a nonprofit public-benefit corporation called Golden State Energy to take over PG&E’s assets and operations.

“This bill will give ratepayers a genuine alternative,” Guzman Aceves said. “If PG&E fails to provide safe, reliable and affordable energy service, then the commission could petition the court to appoint a receiver or revoke PG&E’s CPCN.”

The bill next faces a vote on the Assembly floor and a concurrence vote by the Senate on Assembly amendments. After that it could go to Newsom for his signature. The governor has indicated he supports the measure.

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