California Commission Authorizes Pacific Gas and Electric’s Regionalization Plan

The California Public Utilities Commission on Jun. 23 approved Pacific Gas and Electric Company’s regionalization plan, in an enduring attempt to enhance the utility’s capability to meet their safety requirements.

In May 2020, California regulators accepted the utility’s bankruptcy reorganization plan with provisions, including changes to the company’s governance arrangement, enhanced oversight, and formation of local operating regions. Under a new oversight framework, the utility’s operating permit will be subject to a continuing review as part of an enforcement process focused on the company’s safety performance.

The regionalization plan ordered by the commission is a condition which the utility must meet, in order to comply with the bankruptcy plan. The approval follows a multi-party settlement agreement under which the utility’s service area will be separated into five particular territories: North Coast, North Valley/Sierra, Bay Area, South Bay/Central Coast, and Central Valley. The establishment of operational regions is intended to enhance the utility’s safety pursuits and local responsiveness.

Furthermore, the adoption of the agreement would consent to three proposed phases of the enactment of regionalization. The first phase involves the regionalization design and transition plan, while the second phase requires the implementation of the region boundaries and of the “Lean Operating System.” This system, according to the utility’s proposal, comprises four crucial elements: visual management, operational reviews, problem solving, and standard work. The final stage involves enhancing the aforementioned system and ensuring sustainability of the initiative.

The commission ordered the utility to conduct town hall meetings in the five regions until the end of the regionalization and report its implementation activities. Moreover, a regionalization stakeholder group will be created to monitor PG&E’s performance in the enactment of the plan. As part of the plan, regional executive officers are expected to oversee each region and report to the utility’s CEO and president.

The company filed to reorganize under Chapter 11 of the U.S. bankruptcy code in January 2019 as it was faced with billions of dollars in potential liability arising from the 2017 and 2018 Northern California wildfires.