Dive Brief:

• Pacific Gas & Electric's penalty stemming from its role in the 2017 and 2018 wildfires should be increased to over $2.1 billion, an administrative law judge (ALJ) said Thursday, up nearly $500 million from the amount put forth in a proposed settlement agreement struck in 2019 among the utility, the Safety and Enforcement Division of the California Public Utilities Commission and other groups.

• The ALJ found that the $1.67 billion proposed penalty was not "commensurate" with the magnitude of PG&E's actions that contributed to the fires, and that PG&E should also return to ratepayers any tax savings the utility receives from its deductible financial obligations, estimated at $468.7 million.

• Groups opposed to the settlement argued that if the case against PG&E were fully litigated, the penalties against the utility would be at least $750 million more than the previous $1.67 billion amount.

Dive Insight:

One of the groups opposed to the settlement, The Utility Reform Network (TURN), called the ALJ's decision a "vast improvement" over the initial proposal.

"The original proposed penalties were too small and didn't send a strong enough message to PG&E or provide sufficient benefits to the customers PG&E harmed, and were not supported by consumer advocates," TURN said in a Feb. 27 statement. The ALJ's decision "not only increases the penalties PG&E will pay by $462 million but also requires PG&E to pass on tax savings of approximately $500 million to customers, as TURN had urged."

The changes from the proposed settlement include a new $200 million fine payable to a General Fund to help wildfire victims, an additional $198 million in wildfire-related expenditures that the ALJ found PG&E should be disallowed to collect from ratepayers and an additional $64 million to go toward "safety enhancement initiatives," such as ongoing audits of PG&E's records for maintenance of its distribution system.

These penalties are separate from multi-billion-dollar obligations that PG&E had struck with other stakeholders, such as wildfire victims and insurance companies, in December.

According to the ALJ, the groups that supported the $1.67 billion settlement agreement, including PG&E and the CPUC's Safety and Enforcement Division, had defended it as a "timely resolution" that is needed to help PG&E meet a June 30, 2020, deadline to emerge from bankruptcy and access the state's wildfire insurance fund.

A PG&E spokesperson said the utility was "disappointed" in the ALJ's decision.

"PG&E worked diligently over many months with multiple parties including the CPUC's own [Safety and Enforcement Division], the Coalition of California Utility Employees, and the Office of the Safety Advocate to reach a joint $1.675B settlement agreement that addresses multiple needs and would allow for additional investments to further strengthen the company's electric operations," the spokesperson said in an email to Utility Dive.