The California Utility Deemed Responsible for Wildfires Filed for Bankruptcy Protection. Here’s What Happened

PG&E filed for bankruptcy protection, a step the company says was its “only viable option" now that it faces billions of dollars in wildfire liabilities.
By: | February 2, 2019 • 3 min read

Facing tens of billions of dollars in wildfire liabilities, Pacific Gas and Electric (PG&E) filed for bankruptcy protection January 29, a step that the company has said was its “only viable option.” PG&E provides gas and electricity to 16 million people in central and northern California.

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Snapshot: Some PG&E investors, elected leaders in California and public interest groups contend that bankruptcy is not needed and will hurt millions of ratepayers as well as anyone who owns shares in the utility or does business with it.

The filing creates uncertainty for the company’s creditors and people seeking compensation after losing homes and loved ones to fires started by PG&E’s equipment. The case could also cost the company hundreds of millions of dollars in fees, to Wall Street and white-shoe law firms.

Background: Faulty equipment and downed power lines have been implicated in some of the most damaging and deadly wildfires in the past few years. Late in 2018, California enacted a new law, SB-901, in an effort to support corporate responsibility and at the same time balance liability against driving utilities out of business. There was also heavy emphasis on mitigation.

Lead-Up: In the weeks before the PG&E filing, the public debate over the utility’s liabilities grew rancorous.

Protesters took over a California utility commission meeting on January 10, loudly venting their anger at the state’s largest power company over its alleged role in the state’s deadliest-ever wildfire — the Camp Fire.

Read More: California Infernos Put Sharp Focus on the Urgency of Wildfire Defense Strategies

Demonstrators solemnly read the names of 86 people killed in the November blaze. The California Public Utilities Commission, in turn, rushed through its agenda at the meeting in San Francisco. The company said in regulatory documents just after the Camp Fire in November that it may face significant liabilities related to wildfires.

What’s Next: After PG&E filed for bankruptcy, a federal judge declared the beleaguered utility in violation of its probation for the 2010 San Bruno gas pipeline explosion and spent three hours excoriating the company for its role in the blazes that have ravaged Northern California over the past two years.

“Does a judge turn a blind eye and let PG&E continue what you’re doing, let you keep killing people,” U.S. District Judge William Alsup said inside the San Francisco courtroom. “Can’t we have electricity that is delivered safely in this state?”

The finding sets the stage for the judge to add additional and costly terms to PG&E’s criminal probation for the deadly pipeline blast — requirements such as inspections and tree trimming, which the utility says could cost billions of dollars and lead to customer rates rising five-fold.

Back in Sacramento: The California Legislature could seek to expand the scope of legislation it passed last year that allowed utilities to pass on some of the costs of wildfires to its customers in the form of higher electricity rates. But voters would consider that a bailout of PG&E.

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One idea, introduced in a bill this past January, proposes creating an industry-financed insurance fund that pays for catastrophic wildfire costs. Such a fund might reassure investors that bankruptcy is no longer the most likely option when a utility is hit with huge damage claims, and it may also satisfy residents who oppose legislation that is too favorable to utilities.

Risk for Renewables: California has the most far-reaching renewable energy laws in the United States. But the PG&E filing is raising major questions about whether the state will be able to meet its ambitious targets for solar, wind and other types of green electricity. In court documents, PG&E asked the bankruptcy court to allow it to cancel up to $42 billion in power-purchase contracts signed over the past 15. More than three-quarters of those contracts commit PG&E to purchase solar, wind or other renewable energy. &

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]