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Federal Judge Calls PG&E 'Recalcitrant Criminal,' Delays New Probation Ruling

SAN FRANCISCO (CBS SF/AP) -- A federal judge in San Francisco called PG&E "a recalcitrant criminal" at a hearing on Thursday, but delayed ruling on whether to impose additional strict probation conditions aimed at preventing catastrophic wildfires.

U.S. District William Alsup is overseeing PG&E's probation for its conviction in a criminal pipeline safety case stemming from a fatal natural gas pipeline explosion in San Bruno in 2010.

As part of the probation, he announced in April plans to order PG&E to hire its own crew of inspectors to search for trees in danger of falling on electrical lines; to document the age of every piece of equipment on its high-voltage transmission lines and towers; and to videotape inspections of the towers.

At the start of Thursday's two-and-a-half hour telephone hearing, Alsup said, "If there ever was a corporation that deserved to go to prison, it is PG&E for the number of people it has killed in California."

The judge was referring to fatal wildfires that were sparked by branches and trees falling on electrical lines in the North Bay in 2017 and by a broken hook on a transmission tower in Butte County in 2018, which resulted in the Camp Fire and the deaths of 84 people.

"I'm going to do everything in my power to protect the people of California," the judge said.

PG&E attorney Kevin Orsini argued that the utility's inspection system has now been transformed and contended the proposed conditions would interfere with the California Public Utilities Commission's regulatory oversight.

Alsup said PG&E's arguments on inspection issues over the past few months were like a "broken record."

But after CPUC attorney Christine Hammond said the agency was concerned the conditions would reduce its "ability to pivot" to address problems, Alsup said he would be willing to reconsider the conditions, if the CPUC could reassure him that inspections were being improved.

"If the PUC were to say 'we've got it under control,' I'll go along with that," the judge said.

He asked Hammond to submit a brief in two weeks describing improvements in wildfire safety.

Alsup also ordered PG&E and prosecutors from the U.S. Attorney's Office, who handled the pipeline safety case, to file a brief within three weeks on possible agreements on improvements. He said he may then hold another hearing before deciding whether to impose new probation conditions.

Earlier Thursday, California power regulators unanimously approved Pacific Gas & Electric's $58 billion plan for getting out of a bankruptcy caused by in a series of deadly wildfires despite ongoing worries about the utility's ability to safely operate its crumbling electrical grid.

The vote by California's Public Utilities Commission came just a few hours after a federal judge ripped the company for continuing to engage in reckless behavior that he believes is endangering even more lives.

A federal trial will determine whether PG&E's plan also can gain the required approval of U.S. Bankruptcy Judge Dennis Montali by a June 30 deadline.

PG&E cleared a key hurdle in to end its nearly year-and-half stint in bankruptcy with the Public Utilities Commission's approval of a complex plan resolving more than $50 billion in claimed losses after the company's fraying electrical grid ignited a series of catastrophic wildfires during 2017 and 2018. The Northern California fires killed more than 100 people and destroyed more than 27,000 homes and other buildings.

PG&E used the bankruptcy process to settle those claims for $25.5 billion, including $13.5 billion earmarked for the wildfire victims, although some survivors are convinced they will wind up getting much less. That's because half of the $13.5 billion consists of PG&E stock that critics of the plan worry will be worth considerably less, especially if the company is blamed for causing more fires later this year.

Before regulators voted, a litany of speakers urged the company's chief regulator to reject the complex proposal because they believe it doesn't do enough to ensure the nation's largest utility will do enough to protect the 16 million people who rely on it for power.

"More communities are angry, frustrated and finished with PG&E," Public Utilities Commission President Marybel Batjer acknowledged before the agency's vote on the plan

U.S. District Judge William Alsup also raised the same worries during a hearing focused on whether he should order PG&E to hire more people to inspect its power lines, trim trees and adhere to other potentially expensive requirements aimed at reducing the fire risks posed by its poorly maintained equipment.

The mandate is being considered as part of a five-year probation that PG&E began serving in January 2017 for felony convictions stemming from an explosion in its natural gas lines that killed eight people in San Bruno, California, in 2010.

Alsup blasted PG&E for "flim flamming" him about its newfound commitment to safety in previous hearings while expressing worries that California power regulators haven't done enough to prevent ""a recalcitrant criminal" from causing more death and destruction as the risk of more wildfires rise with the summer temperatures.

"If there ever was a corporation that deserved to go to prison, it is PG&E," Alsup said.

Companies can't be imprisoned, though, an issue that will be highlight next month when PG&E plans to plead guilty to 84 felony counts of involuntary manslaughter for a 2018 wildfire that wiped out the town of Paradise, California. PG&E will pay a maximum fine of $4 million for those crimes.

Alsup wants to force PG&E to adopt even more safety measure while he supervises the utility's probation for the San Bruno explosion through January 2022, but the company is appealing his proposed restriction on the grounds that those policing powers should be left to the state Public Utilities Commission.

In Thursday's hearing, Alsup repeatedly expressed frustrations about PG&E's past assurances that the utility had become more vigilant bout trimming trees and upgrading its equipment, only to have the utility's grid ignite more fires. Those promises "ring hollow after awhile," Alsup scolded PG&E's lawyers before labeling past attempts at improving the maintenance of its power lines as "crappy."

While Alsup was raising more safety hearings, one of PG&E's top executives delivered more reassurances about the company's future direction during Thursday's hearing in the bankruptcy court trial.

"We can provide safe service moving forward," testified Jason Wells, PG&E's chief financial officer.

Christine Hammond, an attorney for the Public Utilities Commission, said state regulators believe PG&E has been making significant progress toward operating more safely during an appearance before Alsup. She told the judge that regulators are committed to "do more, do better, do faster."

The Public Utilities Commission promised to provide Alsup with more details about its controls on PG&E in a document due in two weeks. PG&E must file additional documents with Alsup in three weeks.

Michael Aguirre, a lawyer representing two PG&E customers, urged Alsup not to trust the Public Utilities Commission or the company that it regulates. "Keep the pressure on," he pleaded.

The plan approved by California regulators clears a path for them to revoke PG&E's state license and make it easier for the state to turn the utility into a not-for-profit cooperative. It also requires PG&E to break up its sprawling service into regional divisions and overhaul its board of directors. The company plans to replace 11 of its 14 current board members, including CEO Bill Johnson, who will step down from that job June 30.

But the reforms included in PG&E's plan still might not be enough, acknowledged Clifford Rechtschaffen, one of the the five board member on the Public Utilities Commission. "It's not perfect from any stakeholder's perspective," he said before voting in favor of the plan.

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