Governor Attacks PG&E for Blackout Caused by ‘Greed and Neglect'

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(Bloomberg) — Faced with mounting public anger over massive blackouts, California Governor Gavin Newsom blamed PG&E Corp. for years of “greed and neglect” and demanded major structural changes at the bankrupt utility.

Newsom’s comments came as many Californians questioned whether PG&E overreacted to a windstorm that didn’t prove as powerful as forecast. The company cut electricity to more than 2 million people — the largest preemptive blackout in the state’s history — to prevent its power lines from sparking wildfires.

The Democratic governor, who on Wednesday called the blackouts “appropriate under the circumstances,” took a dramatically harsher tone Thursday, blaming PG&E for not hardening its grid and saying the outage was the result of years of bad choices. His comments came just before PG&E’s chief executive officer made his first public appearance, apologizing to customers for the “hardship” the power failures have caused while defending the decision. The company said it has restored service to about 31% of customers affected.

Story of ‘Greed’

“It’s decisions that were not made that have led to this moment in PG&E’s history — it is not conditions,” Newsom said at a Thursday evening press conference in the state’s emergency operations center. “This is not, from my perspective, a climate change story so much as a story of greed and neglect.”

Newsom said he wanted to see a “major reorganization of this entity” and said PG&E was too large to move quickly. But the governor stopped short of saying what kind of structural changes he preferred. He suggested the company needed to be far more surgical about future outages, saying some counties didn’t need to be included in this week’s blackouts. He acknowledged, however that such preemptive power cuts should remain an option for the state’s utilities when faced with dangerous winds.

PG&E, he noted, made a decision last November not to cut power near the town of Paradise during a windstorm. A transmission line then sparked the Camp Fire, the state’s deadliest blaze, which killed 86 people.

510,000 Without Power

After affecting almost 750,000 accounts — or about 2.25 million people — the utility said about 510,000 customers in Northern California were still without power on Thursday night. The adverse weather has mostly died down, and PG&E said it would begin to inspect an unspecified subset of the 25,000 miles of transmission lines that were shutdown, a necessary precursor to restoring power.

Newsom called on California utility regulators to review PG&E’s actions. A spokeswoman for the California Public Utilities Commission said the agency, as a policy, reviewed all intentional outages by California utilities.

PG&E filed for bankruptcy in January, facing an estimated $30 billion in liabilities from two consecutive years of deadly wildfires blamed on its equipment.

CEO Bill Johnson, who took over in May, said the company made a determination that the blackouts were necessary for safety reasons, to ensure “zero risk” of sparks. He told reporters at a San Francisco press conference that started an hour after the governor’s that it’s “very likely” the company will need to cut power again in the future. Johnson said the utility will try to be more “surgical” about shutoffs.

‘We Failed’

“This is not how we want to serve you, this is not how we want to run our business,” he said. “We are in the business of providing power, not taking it away.”

Johnson and other PG&E executives cited high wind-speed measurements in 21 of the 33 counties affected and said they found fallen tree branches on some lines that could have caught fire.

The main failure was in communicating with customers about the outages, company officials said.

Johnson said the utility posted outage maps with inconsistent or inaccurate information, its website crashed and its call center was overwhelmed. “We failed our customers,” said Laurie Giammona, senior vice president and chief customer officer for PG&E.

The CEO declined to respond directly to the governor’s remarks, saying: “I didn’t come here to deal with the past, I came here to help improve the future. I haven’t delved into all those matters. I might have some slight disagreement with the governor if I did.”

Johnson asked local residents not to take their frustrations out on PG&E workers, saying some employees had been shot at, punched and sworn at. “The buck stops with me,” he said.