Dive Brief:

• A group of Northern California residents and businesses have filed a lawsuit against Pacific Gas & Electric (PG&E) for damages caused by the October 2019 Kincade Fire, a week after the utility emerged from a bankruptcy caused by a series of earlier wildfires.

• State investigators have not determined the cause of the Kincade Fire, but PG&E — which settled its previous wildfire liabilities and exited Chapter 11 bankruptcy earlier this month — has stated that it could face a $600 million loss related to the blaze. 

• The implications for PG&E will depend on the extent of damages plaintiffs are seeking, which isn't specified in the lawsuit, according to Steven Weissman, a lecturer at the Goldman School of Public Policy, University of California, Berkeley. "If it's just a few million dollars, then a company the size of PG&E can probably work its way around that. If it's a multi-billion dollar suit, then it's a very different story," he said.

Dive Insight:

PG&E emerged from Chapter 11 bankruptcy July 1, after committing to a $25.5 billion payout to resolve liabilities stemming from a series of wildfires caused by its power lines between 2015 and 2018. But experts have noted that it still faces the risk of catastrophic wildfires in its service territory.

The Kincade Fire occurred in October 2019, ten months after the company filed for bankruptcy. The fire burned roughly 78,000 acres and nearly 200,000 people had to be evacuated during the blaze, according to the complaint. The California Department of Forestry and Fire Protection (CAL FIRE) has not yet made a determination on the cause of the fire, but PG&E in a May filing with the U.S. Securities and Exchange Commission noted that it's "reasonably possible" it will incur a loss related to it.

"[T]here are a significant number of victims whose lives were horribly impacted by the Kincade Fire and this is the only way we have to get them full, fair and reasonable compensation," Jack Weaver, partner at Welty Weaver & Currie, told Utility Dive, adding that the attorneys were not able to bring a lawsuit against the utility until it came out of bankruptcy. 

"I live in this community, I care about this community and I've seen first hand the devastation that the Kincade Fire brought," Weaver said. 

The complaint, filed July 8 with a California county court, accused PG&E of failing to address safety hazards on its system and adopting a "run to failure" approach with its infrastructure. The plaintiffs also alleged that PG&E has prioritized corporate profits and compensation over maintaining its system.

"This pattern and practice of favoring profits over having a solid and well-maintained infrastructure that would be safe and dependable for years to come left PG&E vulnerable to an increased risk of a catastrophic event such as the Kincade Fire," the complaint states. 

"This is a continuation of the absolute lack of preparation and care exhibited by PG&E, and we hope that now that they're out of bankruptcy and back in business, they'll pay more attention to protecting communities from these fires," Stephen Murray, an attorney with Murray Law Firm, which is part of the lawsuit, told Utility Dive.

In an emailed statement, PG&E spokesperson Deanna Contreras noted that CAL FIRE has not yet determined the cause of the Kincade Fire and PG&E has not been able to review the evidence collected by the agency.

"At PG&E, we remain focused on reducing wildfire risk across our service area while also limiting the scope and duration of Public Safety Power Shutoffs that may occur this wildfire season," she added. 

Weaver noted that if PG&E is found liable for the Kincade Fire, it would have access to the $21 billion wildfire insurance fund created by California lawmakers in 2019, as a safety net for them to be able to have financial remuneration available for the victims.

However, there are restrictions to that access, according to Weissman — for instance, PG&E might not be able to draw from the pool before CAL FIRE officially determines that it triggered the Kincade Fire. Moreover, he added, PG&E would have to reimburse the fund any money that reflects "unreasonable conduct" on their part, as determined by the California Public Utilities Commission. 

So hypothetically, "if PG&E had to face a billion dollar liability and if the PUC concluded that the company was unreasonable, and it has to reimburse the pool, that would probably be a very difficult thing for PG&E to do under its current financial circumstances," Weissman said.