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Proposed Decision Different Will Be Limited to Differences Between the POD and the Proposed Decision Different STATE OF CALIFORNIA GAVIN NEWSOM, Governor PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE SAN FRANCISCO, CA 94102-3298 FILED 04/20/20 01:21 PM April 20, 2020 TO PARTIES OF RECORD IN INVESTIGATION (I.) 19-06-015: Investigation 19-06-015 was filed on June 27, 2019 and is assigned to Commissioner Clifford Rechtschaffen and Administrative Law Judge Sophia J. Park. This is the Decision Different of Commissioner Rechtschaffen concerning the penalties and other remedies that should be imposed on Pacific Gas and Electric Company for the role its electrical facilities played in igniting wildfires in its service territory in 2017 and 2018. A Presiding Officer’s Decision (POD) in this proceeding was issued on February 27, 2020. The opportunity to file an appeal of the POD has passed. Pursuant to Public Utilities Code Section 1701.2(e) and Rule 14.7 of the Commission’s Rules of Practice and Procedure, Commissioner Rechtschaffen’s Decision Different need not be served on the parties, nor are comments required. However, in this instance, Commissioner Rechtschaffen is giving parties the opportunity to comment on his Decision Different. Concurrent opening comments are due within 10 days of the issuance of the Decision Different. No reply comments will be permitted. Because parties have already had an opportunity to file appeals of the POD, and respond to other parties’ appeals, comments on Commissioner Rechtschaffen’s proposed Decision Different will be limited to differences between the POD and the proposed Decision Different. To the extent that any comments exceed that scope, they will not be considered. Except as otherwise specified in this letter, parties shall adhere to the rules for filing comments on a proposed decision, as delineated in Rule 14.3 of the Commission’s Rules of Practice and Procedure. These Rules are accessible on the Commission’s website at www.cpuc.ca.gov. Consistent with these rules, the comments may not exceed 15 pages in length. The POD and any decision different from the POD may be considered at the Commission’s May 7, 2020 Business Meeting or other future Commission Agenda. To confirm when the item will be heard, please see the Business Meeting Agenda, which is published on the Commission Website 10 days before each Commission Business Meeting. 333875920 1 / 184 April 20, 2020 Page 2 When the Commission considers the POD and any decision different from the POD, the Commission may act by adopting all or part of the decisions as written, amend or modify the decisions, or set aside and prepare its own decision, so long as the Commission’s decision is based on the record developed in the investigation, and if the decision differs from the POD, has a written explanation of the differences. (See Public Utilities Code Section 1701.2(e).) Only when the Commission acts does the decision become binding on the parties. Michelle Cooke for Anne E. Simon Chief Administrative Law Judge AES:gp2 Attachment 333875920 2 / 184 COM/DECISION DIFFERENT CR6/gp2 Agenda ID 18312 Decision DECISION DIFFERENT OF COMMISSIONER RECHTSCHAFFEN (Mailed April 20, 2020) BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Investigation on the Commission’s Own Motion into the Maintenance, Operations and Practices of Pacific Gas and Electric Company (U39E) with Respect to its Electric Facilities; and Order to Show Investigation 19-06-015 Cause Why the Commission Should not Impose Penalties and/or Other Remedies for the Role PG&E’s Electrical Facilities had in Igniting Fires in its Service Territory in 2017. DECISION DIFFERENT OF COMMISSIONER RECHTSCHAFFEN APPROVING PROPOSED SETTLEMENT AGREEMENT WITH MODIFICATIONS 333875920 1 3 / 184 I.19-06-015 COM/DECISION DIFFERENT CR6/gp2 TABLE OF CONTENTS Title Page DECISION DIFFERENT OF COMMISSIONER RECHTSCHAFFEN APPROVING PROPOSED SETTLEMENT AGREEMENT WITH MODIFICATIONS ........... 1 Summary ............................................................................................................................ 2 1. Factual Background ................................................................................................... 3 2. Procedural Background ............................................................................................ 4 3. Violations Found by SED .......................................................................................... 8 4. PG&E Position on Violations ................................................................................. 12 5. Summary of Proposed Settlement ......................................................................... 14 6. Party Positions on Proposed Settlement ............................................................... 15 7. Standard of Review .................................................................................................. 18 8. Discussion ................................................................................................................. 19 Penalty Factors ................................................................................................... 19 8.1.1 Severity of the Offense ............................................................................... 20 8.1.2 Conduct of the Utility ................................................................................ 21 8.1.3 Financial Resources of the Utility ............................................................. 24 8.1.4 Totality of Circumstances in Furtherance of Public Interest ............... 26 8.1.5 Consistency with Precedent ...................................................................... 27 Amount and Structure of Penalty ................................................................... 30 Disallowances .................................................................................................... 34 Anticipated Tax Benefits .................................................................................. 40 Imposition of Fine ............................................................................................. 46 System Enhancement Initiatives ..................................................................... 50 8.6.1 Funding of Initiatives ................................................................................. 50 8.6.2 Root Cause Analyses .................................................................................. 51 8.6.3 Format and Availability of Reports and Data ........................................ 56 8.6.4 Timing of Wildfire Safety Audit ............................................................... 57 Tubbs Fire ........................................................................................................... 58 i 4 / 184 I.19-06-015 COM/DECISION DIFFERENT CR6/gp2 Future Review of Costs Associated with 2017 and 2018 Wildfires ........... 61 Further Consideration of Systemic Issues ..................................................... 63 Approval of Proposed Settlement with Modifications ............................... 66 9. Rulings on Motions .................................................................................................. 69 10. Motion Requesting Other Relief, Appeals, and Request for Review ............... 70 11. Comments on Decision Different .......................................................................... 73 12. Assignment of Proceeding ...................................................................................... 74 Findings of Fact ............................................................................................................... 74 Conclusions of Law ........................................................................................................ 79 ORDER ............................................................................................................................. 80 Appendix A – Settlement Agreement ii 5 / 184 I.19-06-015 COMM/DECISION DIFFERENT CR6/gp2 DECISION DIFFERENT OF COMMISSIONER RECHTSCHAFFEN APPROVING PROPOSED SETTLEMENT AGREEMENT WITH MODIFICATIONS Summary This decision approves with modifications a settlement proposed by Pacific Gas & Electric Company (PG&E), the Commission’s Safety and Enforcement Division, the Commission’s Office of the Safety Advocate, and the Coalition of California Utility Employees, which resolves all issues in this investigation concerning the penalties and other remedies that should be imposed on PG&E for the role its electrical facilities played in igniting wildfires in its service territory in 2017 and 2018. With the modifications to the settlement agreement, this decision imposes penalties totaling $2.137 billion, which consist of: x $1.823 billion in disallowances for wildfire-related expenditures (an increase of $198 million from the proposed settlement agreement); x $114 million in System Enhancement Initiatives and corrective actions (an increase of $64 million from the proposed settlement agreement); and x a $200 million fine payable to the General Fund, which shall be permanently suspended. In addition, this decision requires any tax savings associated with the shareholder obligations for operating expenses under the settlement agreement, as modified by this decision, to be returned to the benefit of ratepayers. These modifications to the settlement agreement are appropriate given the widespread harm resulting from the 2017 and 2018 fires at issue in this investigation; the uncertainty that PG&E would otherwise recover from ratepayers a substantial portion of the costs identified in the settlement
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