PG&E Responds to California Public Utilities Commission’s Draft Resolution to Implement Enhanced Regulatory Oversight

Rhea-AI Summary

Pacific Gas and Electric Company (PCG) responded to a draft resolution from the California Public Utilities Commission (CPUC) proposing Enhanced Oversight and Enforcement due to deficiencies in their Enhanced Vegetation Management program. The CPUC's draft demands a corrective action plan and progress reports from PG&E. PG&E acknowledges past shortcomings and is committed to taking corrective actions. The company has already implemented several enhancements, including a risk-focused wildfire management strategy and increased transparency measures. PG&E will respond to the CPUC's resolution within 20 days, with further oversight expected.

Positive

• Implementation of a new Enhanced Wildfire Risk Model using machine learning for improved predictive analysis.
• Shift from an activity-based to a risk-focused approach in the 2021 Wildfire Mitigation Plan.
• Formation of a Wildfire Risk Governance Steering Committee to oversee vegetation management and improve transparency.

Negative

• CPUC identified deficiencies in PG&E's Enhanced Vegetation Management program, prompting increased scrutiny and oversight.
• Draft resolution could imply regulatory penalties or further restrictions on operations depending on PG&E's corrective actions.

Pacific Gas and Electric Company (PG&E) today issued the following statement in response to a draft resolution released by the California Public Utilities Commission (CPUC):

Today, the CPUC issued a draft resolution proposing to place PG&E into step one of the Enhanced Oversight and Enforcement program established last year in its approval of our Chapter 11 Plan of Reorganization. The CPUC cited shortcomings in our 2020 Enhanced Vegetation Management, which is part of our comprehensive Community Wildfire Safety Program. The first step directs us to submit a corrective action plan and progress reports to the CPUC.

The findings received today are consistent with concerns raised in prior reports from the CPUC and our Federal Monitor about our Enhanced Vegetation Management program. We continue to take this feedback seriously. We have already implemented improvements to this program and will continue to do so as outlined in our 2021 Wildfire Mitigation Plan (WMP).

We will promptly prepare the corrective action plan to address the issues in the draft resolution, with clear timelines and commitments. We are committed to this critical work, and we welcome continued feedback and oversight from the CPUC and other stakeholders as we continue to learn, adapt and strengthen our system for the long term.

PG&E shares the CPUC’s focus on safety and recognizes that we must take a leading role in reducing the risk of wildfires throughout our service area. We understand that the most important responsibility that we have as a company and as individuals is to keep our customers, communities and our workforce safe. That is our focus every day, we know we have more to do, and we are committed to doing it the right way.

Enhancements Already in Progress That Address Issues Identified by CPUC

We will continue to meet with the CPUC’s Wildfire Safety Division on a consistent basis to provide updates on our progress in vegetation management improvements, as we have done since last fall.

Since receiving feedback last fall from the CPUC and our Federal Monitor regarding our Enhanced Vegetation Management program, we took immediate action to improve. Those improvements—many of which we believe address the issues raised in today’s draft resolution from the Commission—are reflected in our 2021 WMP.

For example, we have already implemented the following:

• Enhanced Wildfire Risk Model Using Machine Learning Capabilities: Our new Wildfire Risk Model consists of significant improvements from our prior model and leverages predictive analysis of environmental conditions that have the potential to turn a small fire into a major wildfire. We’ve developed and implemented machine learning capabilities, enabling an evolution from static to dynamic risk models. Additionally, we’re using state-of-the-art remote sensing capabilities to obtain an understanding of both the fuel type and conditions that contribute to fire spread in our high fire risk areas. These enhancements will help us target and prioritize our work to address the highest wildfire risk areas.

• Evolved from Activity-Based Program Measures to Risk-Focused Program: Our 2020 WMP was primarily activity-based, focused on miles of lines completed for our key wildfire safety measures, such as Enhanced Vegetation Management and System Hardening. We have moved to a 2021 WMP that is risk-focused, addressing the highest risk areas for mitigation as our top priority, informed by our enhanced predictive wildfire risk models.

• Elevated Transparency and Oversight: Our newly formed Wildfire Risk Governance Steering Committee—which is chaired by our Chief Risk Officer, Sumeet Singh, and includes leaders from Electric Operations, Risk and Internal Audit, and other teams, as well as representatives from our Federal Monitor and Governor’s Office as independent observers—is responsible for approving the selection of Enhanced Vegetation Management work locations and monitoring regular reporting of work completed to ensure actual work is aligned with the planned risk reduction and performed with the highest level of quality.

In addition, we are working to implement the following:

• Enhancing Multi-Layer Work Verification: For 2021, we are adding more than 200 work verification inspectors—nearly tripling that workforce—performing post-tree work inspections on work performed in High Fire-Threat Districts (HFTDs) for both enhanced and routine vegetation management programs—resulting in the verification of 100% of vegetation management work performed in HFTDs. We are also implementing use of Ground-Based LiDAR with vehicles as a post-inspection review of completed circuits for vegetation management work. Additionally, we have staffed a centralized team of arborists to investigate any concerns or findings raised by the CPUC, Federal Monitor, Operational Observer or any of our external stakeholders to ensure timely follow-up and resolution of identified issues.

• Accelerating Execution Through Lean Operating System: We are implementing a more effective operating structure that establishes daily operating reviews to improve visibility into all facets of our performance, including safety, quality and work completion for our wildfire risk reduction programs. The Lean Operating System will facilitate rapid response and problem-solving—at both the regional and functional levels—and help accelerate our 2021 WMP implementation in a standardized, coordinated way across PG&E.

Enhanced Vegetation Management Program Underway Since 2019

Through our Enhanced Vegetation Management program, we inspect all of our approximately 100,000 miles of overhead electric assets at least annually to identify and clear vegetation that might grow or fall into utility equipment. Our enhanced program inspected and trimmed or removed vegetation on or near more than 4,300 line-miles of distribution lines within HFTDs between 2019 and 2020. In 2021, PG&E will conduct enhanced vegetation management on at least another 1,800 miles of distribution lines as part of our ongoing and multi-year effort to reduce the risk of vegetation contacting our powerlines in our highest risk areas.

Enhanced Oversight and Enforcement Process

The CPUC established this regulatory process as part of its approval of PG&E’s Chapter 11 Plan of Reorganization. This framework was designed to help ensure that we meet our safety and operational commitments, and to help us correct any issues promptly if they arise. It includes six escalating steps, triggered by specific events, and provides that if PG&E takes appropriate corrective action, the CPUC will move PG&E to a lower step or out of the process.

PG&E will respond to the CPUC’s draft resolution within 20 days. The Commission will then vote on the resolution.

We welcome the CPUC’s oversight and expertise as we work collectively to protect our customers, communities, and state from wildfire threats and climate change.

PG&E’s Safety Certification

As noted by the CPUC, the Enhanced Oversight and Enforcement process does not affect PG&E’s receipt of a Safety Certification, which the CPUC’s Wildfire Safety Division issued on January 14, 2021. Separately today, the CPUC issued a resolution that would ratify the Safety Certification, if approved at the CPUC’s April 15 meeting.

About PG&E

Pacific Gas and Electric Company, a subsidiary of PG&E Corporation (NYSE:PCG), is a combined natural gas and electric utility serving more than 16 million people across 70,000 square miles in Northern and Central California. For more information, visit www.pge.com and www.pge.com/news.

Forward-Looking Statement

This press release contains forward-looking statements that are not historical facts, including statements about the beliefs, expectations, estimates, future plans and strategies of PG&E, including but not limited to statements regarding the enhanced oversight and enforcement process, the 2021 WMP, vegetation management work verification, and lean operating system. These statements are based on current expectations and assumptions, which management believes are reasonable, and on information currently available to management, but are necessarily subject to various risks and uncertainties. In addition to the risk that these assumptions prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include factors disclosed in PG&E Corporation’s and PG&E’s joint annual report on Form 10-K for the year ended December 31, 2020, and other reports filed with the SEC, which are available on PG&E Corporation’s website at www.pgecorp.com and on the SEC website at www.sec.gov. PG&E Corporation and PG&E undertake no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events or otherwise, except to the extent required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210225006328/en/

FAQ

What did the CPUC propose for PG&E in the March 2023 draft resolution?

The CPUC proposed placing PG&E into step one of the Enhanced Oversight and Enforcement program due to shortcomings in their Enhanced Vegetation Management.

How is PG&E addressing the CPUC's concerns regarding wildfire safety?

PG&E is preparing a corrective action plan and has already implemented enhancements like a risk-focused wildfire management strategy.

What timeline does PG&E have to respond to the CPUC's proposal?

PG&E is required to respond to the CPUC's draft resolution within 20 days.

How many miles of distribution lines does PG&E plan to manage for vegetation in 2021?

PG&E plans to conduct enhanced vegetation management on at least 1,800 miles of distribution lines in 2021.

What is the significance of PG&E's Wildfire Risk Governance Steering Committee?

The committee is responsible for overseeing vegetation management work and ensuring quality and safety in wildfire risk reduction efforts.