Safety report: PG&E still takes 'reactive' approach to wildfire risks

Dive Brief:

A new regulatory report on the safety culture at Pacific Gas & Electric concludes the utility "continues to have a reactive, rather than proactive approach to potential issues" and warns that cost-cutting can have an impact on safety, while also finding significant improvements have been made.
The utility, which declared bankruptcy this year facing billions in wildfire-related liabilities, also faces fiscal restrictions: A judge this week ordered PG&E cannot resume paying shareholder dividends and must instead use the funds to improve safety.
The utility's future has been in turmoil for months, with regulators considering new corporate structures and leadership. Bloomberg reported Tuesday that the utility and several hedge funds may have struck a deal to have Bill Johnson — the outgoing head of the Tennessee Valley Authority — take the helm at PG&E.

Dive Insight:

There could be significant changes at PG&E by the end of the week, according to some reports: along with a possible new CEO, hedge funds are also working on an agreement to overhaul the board of directors.

Bloomberg reports talks on leadership are ongoing and could still fall apart. Johnson announced last year he would be leaving TVA in 2019.

Shares of PG&E were trading up more than 3% this morning, reversing a small loss Tuesday. In the U.S. District Court for the Northern District on Tuesday, Judge William Alsup stopped short of requiring the utility to complete an inspection of its entire system but did require additional tree removal.

PG&E in February announced it would take a $10.5 billion pre-tax charge related to third-party claims in connection with the 2018 Camp Fire, concluding its equipment was likely the cause of the deadly blaze. The California Public Utilities Commission (CPUC) has been working to address safety on the utility's grid, and is considering steps which could include new corporate structures and governance.

In a report delivered to the CPUC on March 29, NorthStar Consulting told regulators that it saw improvement from PG&E, but some changes were slower to happen.

"Overall, NorthStar found significant improvements in the safety culture and processes of PG&E," the firm said, comparing the utility's operations with recommendations in a 2017 report. However, new safety initiatives continue to be rolled out without a detailed cost-benefit analysis, and there were other areas marked for improvement.

"Although PG&E has made improvements to its safety culture, a number of issues remain," the report concluded. "There are indications that PG&E as an organization continues to have a reactive, rather than proactive approach to potential issues and a potential focus on productivity and performance targets relative to safety. These are cultural issues that require ongoing focus."

NorthStar also found that "little progress has been made across the organization to enable additional supervisory time in the field."