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Calif. regulators mull possible PG&E restructuring, breakup

On the heels of a slew of investigations into the cause of wildfires in Northern California and continuing questions over its safety culture, the California Public Utilities Commission has proposed to revamp Pacific Gas and Electric Co.'s corporate structure.

The commission on Dec. 21 issued a ruling that it said was launching the next phase of its investigation into the safety culture of Pacific Gas & Electric and its parent company, PG&E Corp. The utility is on a five-year probation after receiving six felony criminal convictions — for violating pipeline safety laws and obstructing a related investigation — related to the company's deadly 2010 gas pipeline explosion in San Bruno, Calif. In recent weeks, questions have been raised due to allegations of falsifying thousands of documents on gas safety records after the San Bruno explosion.

According to a report by a consultant hired by PG&E Corp. and a similar report by the commission staff, the utility did not have sufficient staff to respond to excavator requests to locate and mark where underground systems are. The utility falsified records to show that it is meeting all the requirements.

In a news release, the PUC outlined several options that it will consider. Among them are replacing some or all members of the board of directors at PG&E Corp. and Pacific Gas & Electric, retaining new corporate management and conditioning the utility's return on equity on safety performance.

Other options include splitting Pacific Gas & Electric's electric and natural gas utilities into separate companies under a holding company, creating several regional subsidiaries, revoking holding company authorization so that Pacific Gas & Electric becomes fully regulated, and reconstituting some or all of the utility under public ownership.

"This is not a punitive exercise," PUC President Michael Picker said in the news release. "The keystone question is would, compared to PG&E and PG&E Corp. as presently constituted, any of the proposals provide Northern Californians with safety natural gas and electric service at reasonable rates?"

Comments will be accepted by Jan. 30, 2019, and other options may be presented for consideration.

Also on Dec. 21, the PUC proposed a rulemaking, as directed by California Senate Bill 901, establishing a methodology for utilities to recover costs related to wildfires. The commission will consider it at a meeting scheduled for Jan. 10, 2019.