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California Governor Attacks PG&E for Blackout Caused by ‘Greed and Neglect’

David R. Baker and Mark Chediak
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California Governor Attacks PG&E for Blackout Caused by ‘Greed and Neglect’

(Bloomberg) -- Faced with mounting public anger over massive blackouts, California Governor Gavin Newsom blasted PG&E Corp. for years of “greed and mismanagement” as the bankrupt utility restored power to more than half those left in the dark.

Newsom’s comments came as many PG&E customers questioned whether it overreacted to a windstorm that didn’t prove as powerful in Northern California as forecast. The company cut electricity to more than 2 million people -- the largest preemptive blackout in the state’s history -- to prevent its power lines from sparking wildfires.

The Democratic governor, who on Wednesday called the blackouts “appropriate under the circumstances,” took a dramatically harsher tone Thursday, blaming PG&E for not hardening its grid and saying the outage was the result of years of bad choices. His comments came just before PG&E’s chief executive officer made his first public appearance since the blackout began, apologizing to customers for the “hardship” the power failures have caused while defending the decision.

“It’s decisions that were not made that have led to this moment in PG&E’s history,” Newsom said at a Thursday evening press conference. “This is not, from my perspective, a climate change story as much as a story about greed and mismanagement, over the course of decades.”

By Friday morning, the company had restored service to nearly 60% of the 738,000 homes and businesses affected, according to a statement. Workers are now inspecting thousands of miles of transmission lines to make sure they are safe to transmit power.

READ MORE: Dark Shops, Spotty Phones, Rotting Fish: Life in a Mass Blackout

The violent winds, meanwhile, are ebbing in Northern California. Still, fire risk remains high in much of the southern half of the state, with strong winds and humidity “about as low as it can go,” said Marc Chenard, a senior branch forecaster with the U.S. Weather Prediction Center.

About 6,000 square miles of Southern California face extreme fire conditions Friday, including San Bernardino, Fontana and Thousand Oaks, the U.S. Storm Prediction Center said. Edison International’s Southern California Edison utility has cut power to more than 21,000 homes and businesses but warns outages could eventually impact another 223,000. Sempra Energy’s San Diego Gas & Electric Co. cut power to about 400 customers.

Illustrating the danger, a fire erupted late Thursday on the northern edge of Los Angeles. By morning, the wind-driven flames forced the evacuation of 25,000 homes and threatened California’s largest natural gas storage facility, Aliso Canyon, site of the biggest gas leak in U.S. history in 2015. The blaze’s cause hasn’t been determined.

For more, listen to this mini-podcast on California’s wildfire blackouts.

As PG&E worked to restore power, its shares took a beating on Wall Street Thursday, falling 29% after the utility was stripped of exclusive control over its bankruptcy process and a judge allowed competing plans from wildfire victims and bondholders to advance. The stock bounced back a bit Friday, gaining 1.1% at 2:11 p.m. in New York.

Newsom said he wanted to see a “major reorganization of this entity” and said PG&E was too large to move quickly. But the governor stopped short of saying what kind of structural changes he preferred. He suggested the company needed to be far more surgical about future outages, saying some counties didn’t need to be included in this week’s blackouts. He acknowledged, however that such preemptive power cuts should remain an option for the state’s utilities when faced with dangerous winds.

PG&E, he noted, made a decision last November not to cut power near the town of Paradise during a windstorm. A transmission line then sparked the Camp Fire, the state’s deadliest blaze, which killed 86 people.

“Zero risk”

Newsom called on California utility regulators to review PG&E’s actions. A spokeswoman for the California Public Utilities Commission said the agency, as a policy, reviewed all intentional outages by California utilities.

PG&E filed for bankruptcy in January, facing an estimated $30 billion in liabilities from two consecutive years of deadly wildfires blamed on its equipment.

CEO Bill Johnson, who took over in May, said the company made a determination that the blackouts were necessary for safety reasons, to ensure “zero risk” of sparks. He told reporters at a San Francisco press conference that started an hour after the governor’s that it’s “very likely” the company will need to cut power again in the future. Johnson said the utility will try to be more “surgical” about shutoffs.

‘We Failed’

The main failure was in communicating with customers about the outages, company officials said. Johnson said the utility posted outage maps with inconsistent or inaccurate information, its website crashed and its call center was overwhelmed. “We failed our customers,” said Laurie Giammona, senior vice president and chief customer officer for PG&E.

Johnson asked local residents not to take their frustrations out on PG&E workers, saying some employees had been shot at, punched and sworn at.

“The buck stops with me,” he said.

(Adds outage detail in seventh paragraph. An earlier version corrected a quote in the headline, first and fourth paragraphs.)

--With assistance from Brian K. Sullivan, Samuel Dodge and Christopher Palmeri.

To contact the reporters on this story: David R. Baker in San Francisco at dbaker116@bloomberg.net;Mark Chediak in San Francisco at mchediak@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Joe Ryan, Joe Richter

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