Utilities and Grids

Early on the morning of 8 November 2018 a hook on a transmission tower failed on the Caribou–Palermo line in Butte County, California. The tower had been built in 1921, and the line's owner, Pacific Gas and Electric, had been warned that it was ageing (state investigators, reported). A live conductor fell, and in dry, high winds the sparks started a fire that within hours had destroyed the town of Paradise. The Camp Fire killed 85 people and destroyed about 18,800 structures. PG&E later pleaded guilty to 84 counts of involuntary manslaughter (June 2020), one for each death counted in the charges.

PG&E's estimated wildfire liabilities, from the Camp Fire and from earlier fires its equipment had started, rose to about $30 billion (reported), roughly three times what its shares were worth after they fell below about $10 billion. The reason was a California legal doctrine called inverse condemnation, which makes a utility liable for property damage from a fire its equipment starts even if it was not negligent, combined with the risk that the state's regulator would then refuse to let it recover the costs from customers. On 29 January 2019 PG&E filed for Chapter 11, its second bankruptcy in two decades: the first, in April 2001, came when a badly designed wholesale market made it buy power at soaring prices and sell it at frozen retail rates. Between the two, a PG&E gas pipeline had exploded in San Bruno on 9 September 2010, killing eight people, and a federal jury had convicted the company of pipeline-safety violations and obstruction in 2016.

It emerged on 1 July 2020 under a plan that paid about $25.5 billion for wildfire claims, including a Fire Victim Trust funded with $6.75 billion in cash and $6.75 billion in PG&E stock (reported). California, meanwhile, had passed AB 1054 in July 2019, creating a Wildfire Fund of about $21 billion, paid for half by utility shareholders and half by a customer surcharge, to pay claims above a utility's insurance, in exchange for an annual safety certificate and a cap on what a utility found imprudent must reimburse. When the Eaton fire in January 2025, linked in lawsuits and investigations to Southern California Edison's equipment, threatened to exhaust the fund, the legislature extended it in September 2025 with SB 254, about $18 billion of further contributions split 50:50 between customers and shareholders. Through all of it PG&E's rate base, the capital on which it is allowed to earn a return, never stopped growing. The right to earn on it had to be won back.