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April 29, 2020, 11:48 p.m. EDT

PG&E ordered by judge to overhaul safety practices

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By Katherine Blunt

A federal judge is ordering PG&E Corp. to overhaul its tree-trimming and power line inspection practices after the company pleaded guilty to state manslaughter charges for sparking the deadliest wildfire in California history.

U.S. District Judge William Alsup, who oversees PG&E's federal criminal probation from an earlier safety violation, said PG&E must employ a team of experts to identify trees growing too close to its power lines and then check the work of contractors hired to trim them. He also required the company to keep better records and improve inspections on its high-voltage transmission lines.

In his order Wednesday evening, Judge Alsup slammed the company for failing to maintain key parts of its electric grid even as it paid millions of dollars in shareholder dividends and made political contributions.

"PG&E cheated on maintenance of its grid -- to the point that the grid became unsafe to operate during our annual high winds, so unsafe that the grid itself failed and ignited many catastrophic wildfires," Judge Alsup wrote.

PG&E said in a statement that it was reviewing the judge's order.

"We share the court's focus on safety and recognize that we must take a leading role in working to prevent catastrophic wildfires," the company said. "We remain focused on preparing for the wildfire season ahead."

Judge Alsup oversees PG&E's criminal probation stemming from a felony conviction for safety violations, after a company natural-gas pipeline exploded and killed eight people in 2010. He has for months been considering how to improve PG&E's safety practices after its equipment sparked a series of deadly wildfires in 2017 and 2018.

PG&E sought bankruptcy protection last year, citing more than $30 billion in liability costs related to those fires, which collectively killed more than 100 people. It has so far agreed to pay more than $25 billion to settle claims from fire victims, insurers and local governments and agencies.

Many of the 2017 fires, which destroyed hundreds of thousands of acres in California's wine country, started when trees and branches blew into PG&E's lower-voltage power lines.

Then, in November 2018, a century-old hook on a high-voltage transmission line broke and released an energized conductor, igniting the Camp Fire, which killed 85 people and destroyed the town of Paradise, Calif.

PG&E last month agreed to plead guilty to state felony manslaughter charges for its role in starting the Camp Fire.

The company has for months faced challenges in finding enough contractors to expedite work on hundreds of thousands of trees growing dangerously close to live power lines. Under the new probation requirements, the company will have to bring some of its tree-trimming force in-house to assure the quality of the work.

In his order, Judge Alsup criticized PG&E's tree contractors for failing to identify and complete necessary work in high-risk areas. Last year a federal monitor tasked with overseeing PG&E's compliance with its probation terms found numerous problems with company records keeping track of the work, including what appeared to be a falsified record by a contractor.

"PG&E's outsourcing scheme remains sloppy and unreliable," Judge Alsup wrote.

In addition, Judge Alsup required PG&E to create a complete system of records detailing the age and condition of all of its transmission line equipment. The company has admitted that it doesn't have complete records on its transmission system, some of which was built during the first half of the 20th century.

The judge also criticized PG&E's transmission inspection program, noting that the company failed to find and fix the hook that broke and started the Camp Fire despite having inspected the line in recent weeks. He ordered the company to design a more thorough inspection program requiring its inspectors to log their work carefully and take videos in the process.

He ordered the inspectors to carry enough insurance to cover wildfire losses should their inspections fail to find problems with equipment.

The judge noted that PG&E's probation term will end in January 2022. In his order, he urged California regulators and lawmakers to consider harsher penalties for utilities that violate tree-trimming and maintenance requirements.

Write to Katherine Blunt at Katherine.Blunt@wsj.com

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