Weather and Natural Disasters

Attorney who sued PG&E before faults California for history of utility fire disasters

Key Points
  • At least 41 people have died in the current Northern California wildfires, and in Sonoma County alone 22 people perished and the fatalities could rise.
  • State officials are looking into reports of whether downed power lines from PG&E caused by strong winds sparked the fire.
  • "Realistically, you're looking at $5 billion or $6 billion in damages," said Gerald Singleton, an attorney who specializes in wildfire litigation.
Pacific Gas & Electric Co. (PG&E) employees work to fix downed power lines burned by wildfires in this aerial photograph taken above Santa Rosa, California, U.S., on Thursday, Oct. 12, 2017.
David Paul Morris | Bloomberg | Getty Images

An attorney specializing in wildfire lawsuits said PG&E could potentially be on the hook for up to $6 billion in damages if found liable for the deadly Northern California wildfires.

"From everything we've learned, it looks like PG&E is responsible for at least some of the fires," said Gerald Singleton, of the Singleton Law Firm based in San Diego County's Solana Beach. Even so, he pointed out the cause hasn't been definitively determined.

Regardless, Singleton said there's a history of California's investor-owned energy utilities generally failing to do proper maintenance. "They often times don't perform the maintenance that needs to be done, and as a result, you get these types of catastrophic fires that just destroy communities," he said.

At least 41 people have died in the Northern California wildfires, and in Sonoma County alone 22 people perished and the fatalities could rise since dozens of others remain listed as missing, according to authorities. Overall, the wildfires have scorched more than 220,000 acres and destroyed an estimated 5,700 structures.

As of Tuesday, the cause of the wildfires in Northern California remained "under investigation," according to Cal Fire.

State officials are looking into reports of whether downed power lines caused by strong winds and an exploding transformer from PG&E may have caused the so-called Tubbs Fire that started the evening of Oct. 8. The Tubbs Fire wiped out entire neighborhoods in Sonoma County's largest city of Santa Rosa, including the suburb of Coffey Park.

There also are questions being raised about what started the nearby Nuns Fire, which burned into Napa Valley and started an estimated 15 minutes after the Tubbs incident, according to Cal Fire estimates.

In an SEC regulatory filing Friday, PG&E acknowledged that the causes of the fires are being investigated by Cal Fire, adding that the probe includes "the possible role of power lines and other facilities" of its Pacific Gas & Electric utility subsidiary.

According to the San Francisco-based company's filing, "It currently is unknown whether the [PG&E] utility would have any liability associated with these fires."

PG&E, California's largest investor-owned utility, has seen its stock under pressure as a result of concerns about its current fire liability. The stock fell sharply Friday and Monday, losing about a quarter of its value in that stretch, but Tuesday was trading up about 3 percent.

The company has about $800 million in liability insurance for potential losses in connection with the wildfires, according to its SEC filing.

"If the amount of insurance is insufficient to cover the utility's liability or if insurance is otherwise unavailable, PG&E Corp's and the utility's financial condition or results of operations could be materially affected," the company's filing stated.

"Realistically, you're looking at $5 billion or $6 billion in damages," said Singleton of the current wildfires. He said it's likely to "dwarf all the other ones" that involved fires linked to California utilities.

A firefighter on October 15, 2017 near Santa Rosa, California.
Getty Images

In 2010, PG&E was blamed for the San Bruno gas pipeline explosion that killed 10 people in the San Francisco Bay area. Initially, the utility faced a $1.6 billion fine from the California Public Utilities Commission (CPUC) for the San Bruno blast, but the amount was reduced. Last year, a federal jury convicted PG&E of violating pipeline safety laws and obstructing investigators after the disaster.

Also, the state's utility regulator in April fined PG&E around $8 million in connection with the so-called Butte Fire in 2015 that destroyed more than 900 structures and killed two people. Cal Fire blamed the utility for maintenance violations in connection with a tree that sparked the blazes.

Similarly, it's possible high winds on Oct. 8 in Northern California counties may have caused the wildfires due to power line sparks involving trees.

"Given the way all this started, it's certainly consistent with what you'd expect to see when there is a power line ignition," said Singleton. "There will be an investigation, and if it wasn't, PG&E will be off the hook."

A day after the wildfires were reported in Sonoma and Napa counties, PG&E issued a press release saying its "meteorologists reported overnight gusts between 50 and 75 miles per hour, which aided the fires in the Northern parts of the energy company's service area, especially Napa, Sonoma, Mendocino and Lake counties. Those winds damaged PG&E's electrical system in some locations."

PG&E also has sent CNBC an email statement Tuesday that said at least one gust was 79 mpg.

"These destructive winds, along with millions of trees weakened by years of drought and recent renewed vegetation growth from winter storms, all contributed to some trees, branches and debris impacting our electric lines across the North Bay," the statement said. "In some cases we have found instances of wires down, broken poles and impacted infrastructure."

The CPUC, the state utility regulator, said in a written statement that Cal Fire will provide "findings and facts of the fires." Also, the regulator said it "will conduct in-depth investigations following the fires if utility involvement is suspected."

"Winds were strong, certainly not hurricane force," said Singleton. "They were in the 50s and 60s [mph range], and they were absolutely what can be anticipated at this time of year. That's one of the things in terms of culpability you look at."

Singleton represented plaintiffs in the 2015 Butte Fire and the 2007 San Diego Gas and Electric wildfires. SDG&E is owned by Sempra Energy.

The attorney was in Sonoma County on Monday talking to people affected by the current wildfires. After listening to harrowing stories of survival, he said the only reason some survived is a person in the household woke up and looked out the window and saw the flames and quickly left in a car.

"There was a major breakdown in terms of the warning system up here in Sonoma," he said.

In contrast, the attorney said emergency alerts went out to many people during the large 2007 San Diego County fires, which burned more than 200,000 acres, destroyed about 2,500 structures and caused several deaths. The San Diego blazes were blamed on sparks from SDG&E utility lines.

"One of the things they did wonderfully in San Diego — and certainly they made mistakes in terms of the response — was so many people got those reverse-911 calls or got notified on their cell phones," said Singleton.

The attorney said he believes that California energy deregulation has led to instances of inadequate safety practices and contributed to fire risk. For one, he said rate hikes requested from the state for maintenance can sometimes lack accountability when it comes to where the money ultimately goes.

"When you have a public utility that exists not to make money but to furnish a service, there's no incentive not to do maintenance that you bill for," he said. "But when you have a private utility, whether it be PG&E, SDG&E or any of these others, there is an incentive to save as much money as possible because that can then become profit for your shareholders."

There's also been controversy sometimes whether ratepayers should pay the costs of expensive incidents such as wildfires or if an investor-owned utility should be forced to absorb it on their own.

PG&E told CNBC on Tuesday that the utility "maintains an unwavering focus on delivering safe and reliable electric and gas service to the customers and communities that we serve."

CNBC also reached out to SDG&E for comment. CPUC didn't respond to requests for comment about whether more regulations were needed to deal with wildfire risk.