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PG&E to California: Maybe You Should Decide On the Next Blackout

David R. Baker and Mark Chediak

(Bloomberg) -- The chief of California utility giant PG&E Corp. has a suggestion for those state officials attacking the company over an unprecedented blackout it carried out last week to prevent wildfires: Maybe you should try making the call next time.

Bill Johnson, chief executive officer of the embattled power company, raised the idea in a letter to California Governor Gavin Newsom on Friday -- just before attending a meeting in San Francisco where he was blasted by state regulators. In his letter, Johnson said a “discussion is in order” about whether an agency such as the state’s utility commission or its fire agency should make future decisions on whether to turn off the lights. Currently, that responsibility lies with three PG&E vice presidents.

Johnson noted that PG&E’s analysis of the event went unchallenged at an inter-agency meeting ahead of the blackout, which plunged more than 2 million people into darkness. “There was consensus,” he said. And the company said it doesn’t intend to reimburse affected customers as Newsom has proposed that it do.

PG&E’s shutoff has drawn outrage from residents and state officials who say the blackout was more extensive than necessary and wasn’t properly communicated. Banks, offices, restaurants, pharmacies, grocery stores and others were forced shut. Traffic lights went down. Government agencies hauled out costly backup generators to keep critical operations running. In all, the economic impact may have topped $2.6 billion.

“I can tell you, you guys failed on so many levels on pretty simple stuff,” California Public Utilities Commission President Marybel Batjer said at the emergency meeting that her agency called with Johnson. “This isn’t hard.”

‘Digging Deep’

Commissioner Genevieve Shiroma described Johnson’s suggestion that the state consider deciding as “looking to give somebody else the responsibility versus digging down deep and looking at what meaningful changes need to be made.”

Johnson insisted that he wasn’t trying to evade responsibility but to bolster the public’s confidence in decisions made. “There is commentary out there that we can’t be trusted,” he said. “If the decision authority goes somewhere else, we would still do all the analysis.”

Others have raised the idea since the blackout. When asked about a state-level decision last week, Newsom himself would only call it an “interesting question” and “one we’ve asked ourselves on multiple occasions.”

Two consecutive years of deadly wildfires sparked by PG&E’s power lines during high winds drove the company into bankruptcy in January, facing $30 billion in liabilities. Johnson told the commission on Friday that cutting power last week may have helped prevent another disastrous blaze. After the winds subsided, PG&E found more than 100 instances of damaged equipment.

Poor Execution

“We didn’t have any catastrophic fires in northern and central California, and that was the sole purpose of the shutoff,” Johnson told the commission Friday.

He conceded however that the blackout wasn’t executed as well as it could’ve been. Local governments said they received conflicting information from PG&E representatives. A group of county and city officials compared the experience in a filing to “battling the Hydra” and said their liaisons were forced to sit “alone in a conference room” separated from the company’s emergency operations center by three security gates.

PG&E executives including Johnson acknowledged that they need to improve their communication and coordination with agencies -- because last week’s blackout won’t be the last. Johnson told commissioners that it will probably take ten years for PG&E to shore up its grid enough so that shutoffs can be “ratcheted down significantly.”

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 editor responsible for this story: Lynn Doan at ldoan6@bloomberg.net

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