CEO Blames ‘Climate Change’ for Her Company’s $17 Billion in Fire Damages

In late July and August, wildfires destroyed an area much bigger than New York City in northern California, causing over 100 homes to go up in smoke and ashes. And this was just one of many devastating blazes that have killed at least 56 people in the Golden State.

State officials don’t know what caused most of the fires, but officers of the region’s electric utility, PG&E Corp. say they know what is to blame: climate change.

The wildfires in recent years, PG&E has said, are just the latest of many instances where global warming has produced weather conditions that lead to the creation of very intense (and frequent) fires.

“Climate change is no longer coming, it’s here,” Geisha Williams, chief executive officer of PG&E, said in a published email. “And we are living with it every day.”

And of course scientists agree with that conclusion. But PG&E has an extremely urgent and compelling reason to blame the wildfires on environmental changes. California state investigators have connected PG&E equipment to some of the blazes, which could lead to unprecedented legal liability. Since the wildfires began the giant utility has lost 40% — $14 billion — of its market value.

Several of the wildfires are said to have been caused by trees hitting electric utility lines, including ones last October that destroyed 9,000 buildings and killed 44 people. So now PG&E is looking at liabilities for damages, and they could amount to as much as $17 billion. This in turn could cause financial ruin unless CEO Williams is able to persuade the California government that the public utility’s legal problem is, in fact, a climate change problem, so it shouldn’t be held accountable for the losses.

Williams’s legal defense has now become: “don’t blame us, blame climate change.” And it is a legal theory that is gaining popularity with other utilities, such as  PG&E’s neighbors, Edison International and Sempra Energy.

They are both now claiming the same defense, and they are hoping it will work and even serve as a blueprint for other utilities. It is a worldwide problem as global warming has been blamed for producing extreme weather events everywhere, such as hurricanes that caused unprecedented damages and financial losses in Texas and Puerto Rico last year.

Williams has begun a lobbying campaign to try to protect PG&E from legal and financial liability. It may be an uphill battle since the laws of California say that owners of property damaged in fires are able to collect monetary compensation from utilities linked to fires. Cases have held that this is true even if the companies themselves have been found to be not negligent.

As a utility CEO Williams believes that utilities shouldn’t be held liable every  time a tree branch falls on a power line during a storm. This is especially true if it can be proven that the utility followed all required safety rules.  With the increasing frequency of wildfires such liability could be so onerous that the utilities would all go bankrupt unless they can greatly increase the rates they charge customers.

Instead, Williams argues that the test for her company’s liability should be whether they acted “reasonably” in trying to prevent fires. If they did the prudent things, such as trimming trees and brush around power lines, she believes the utility should be off the hook. In that case, she believes, insurance or government agencies would pick up the cost of damages being suffered by property owners.

“No one is suggesting the utilities should get a free pass if they were negligent,” Williams said. “But the current legal policy of unlimited, strict-liability has the potential to financially cripple companies.”

It is refreshing to see major corporations admitting that climate change is real, even if their motivations are not exactly altruistic.