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Power failures in California are about forest fires – but also about money



The red wind blew again this week – hot, dry gusts up to 75 miles per hour in some parts of Northern California. Usually their arrival means that forest fires are on their way, a recurring threat to life and property due to climate change and urban sprawl.

But this time it was a bit different. As the New York Times states, five of the ten most destructive forest fires in California's history were due, at least in part, to equipment from the power company Pacific Gas & Electric, which powers 16 million people in the upper half of the state. Due in part to liability claims by victims of past fires worth $ 8.4 billion, PG & E is in the midst of bankruptcy. When the red wind started blowing this time, PG & E shut off the power.

Did they do this out of excess caution and concern for safety? Certainly. However, at least one expert suspects another set of priorities at work: PG & E.'s ongoing bankruptcy hearings

A core feature of bankruptcy is to keep a business going while it finds out what it owes to whom. PG & E spent hundreds of millions of dollars figuring that out. "If the assumptions in your analysis turn out to be wrong, your whole strategy can blow up, be immensely expensive, and delay your bankruptcy," says Jared Ellias, insolvency law expert at Hastings College of the Law, University of California. So try it fast and with minimal chaos.

A wildfire would definitely qualify as chaos. This is largely due to the damage for which PG & E is on the hook. Expenses incurred during a bankruptcy take precedence over the expenses incurred before bankruptcy. The bills are in the language of the law "priority". Ellias says compensation for damages should come from a common pot, but claims by victims of fire in 201

9 could replace the previous victims in this case. 19659002] The rules are more complicated. This summer, California passed a bill called AB 1054, which set conditions for the payment of claims for previous fires and set up a $ 20 billion insurance fund to pay for future claims. This carefully negotiated, controversial plan did not consider what would happen if a massive fire broke out at the moment. "Of greater importance to PG & E is the fact that it does not have access to the fire insurance fund set up by AB 1054 this season," writes Mark Danko, a lawyer representing fire victims in an e-mail , "These funds would be available to PG & E for fires from 2020 at the earliest. Another reason for PG & E to protect themselves at the expense of the tariff payers by switching off the power supply, even if this is not absolutely necessary. "

A fire in 2019 would be a mess. "If you're well advised by great lawyers, and they are, and if you do not always want a fire, you really do not want it right now," says Ellias. "Imagine how ugly it would be if you had a competition between bankruptcy victims and victims of bankruptcy fires. That would be ugly, ugly, ugly – ugly for those involved, ugly for the Sacramento officials. "

PG & E looks, we say, highly motivated. In mid-October 2018, power was cut off across a wide area of ​​North Bay and the Sierra before a predicted wind event occurred. On 6 November 2018, PG & E warned 70,000 customers against doing it again but did not. Two days later, a tower on the Caribou-Palermo pipeline from PG & E lit the campfire that destroyed the city of Paradise and killed 88 people. It was the deadliest devastating fire in the US in a century.


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