Local Governments and Communities Should See Improved Coordination, Service Under PG&E Regionalization Proposal

July 23, 2020

Goodin Macbride Administrative Law Blog

On June 30, 2020, PG&E filed with the California Public Utilities Commission its application to move to a regional structure for certain of its operations and management functions, which is part of PG&E’s plan of reorganization to exit bankruptcy. The last decade of PG&E’s operations have been defined by the San Bruno pipeline disaster, the deadly 2017 and 2018 wildfires, and the sweeping power shutoffs of 2019, all of which show the problems created by centralized management of a utility whose service territory spans over half the state and the prioritization of shareholders over customers. The fundamental purpose of the regional structure is to improve PG&E’s connection with and understanding of the communities it serves, and to improve infrastructure and operational safety at the local level. If PG&E is able to implement the regionalization plan as it appears on paper, local governments and communities should see an improvement in service and a better working relationship with their utility.

Under the proposal, PG&E’s service territory will be divided into five regions: North Coast, Sierra, Bay Area, Central Coast, and Central Valley. These regions will follow county lines and are based to the extent possible on existing Cal Fire Unit boundaries, which should facilitate coordination between emergency response agencies, local governments, and PG&E during wildfires, power outages, and other emergencies. Each region will have a Regional Vice President and a Regional Safety Director who are responsible for improving operations, reducing risk, and improving safety performance based on improved knowledge of local conditions and infrastructure. The regions will share best practices, and each region will be evaluated regularly for its performance on safety and operations.

There will be five functional groups in each region:

• Customer Field Operations: This group will focus on customer-driven work (e.g., new service connections, outages, gas leaks) and will oversee PG&E’s compliance with its public safety and system reliability responsibilities. Customer field operations will have dedicated resources separate from PG&E’s large infrastructure project process, which will reduce service delays and prevent local projects from being preempted by larger projects, which is currently a routine occurrence under PG&E’s centralized structure.
• Local Electric Maintenance and Construction: This group will focus on maintaining and constructing PG&E’s electric distribution system, and will have control over scheduling and engineering resources, which will reduce delays and increase accountability.
• Local Gas Maintenance and Construction: As with the local electric group, this group will perform natural gas distribution work with increased local control over scheduling and resources. The local gas group will include PG&E’s existing natural gas leak survey program, its Locate and Mark program, and its corrosion teams.
• Regional Planning and Coordination: This group will provide the services necessary to complete local field operations, including work plan integration, reliability engineering, clerical support, and obtaining ministerial permits from local governments. PG&E expects the regional planning and coordinating teams to streamline the utility’s interactions with the local governments issuing the ministerial permits, reducing the time it takes to obtain permits and improving compliance with permitting requirements; improved permitting will in turn lead to more timely completion of maintenance and construction work.Community and Customer Engagement: This group will focus on building strong, collaborative relationships with local communities and customers, and will facilitate communication with PG&E so the utility is better able to understand and address local needs. The community and customer engagement teams will provide information about PG&E’s programs, events, and work plans that impact the community, and will have functional teams focused on local customer communications and service, community engagement, local government and K-12 school account management, and public safety.

PG&E proposes a phased implementation of the new regions. Design and transition planning will take place in the second half of 2020; regional boundaries will be confirmed and leadership, community and customer engagement teams, and customer field operations will be established in 2021; and local electric and gas maintenance and construction, and their supporting functions, will be established in 2022.

Certain utility programs and functions will remain centralized to ensure uniform decisionmaking and to maximize economies of scale where applicable:

• Standards and policies for electric and gas operations
• Electric transmission infrastructure and substations
• General construction and major construction programs
• Regulatory compliance
• Risk management
• Enterprise health and safety
• Most customer care functions
• Energy procurement
• Legal, financial, and human resources functions
• Discretionary permitting

While the specifics of PG&E’s regionalization plan will be refined through the CPUC process and through direct input from PG&E’s outreach to local governments and community stakeholders, PG&E’s transition to a regional structure should greatly improve local governments’ access to the utility for emergency planning, infrastructure work, and coordination across the board. Customers should also see faster and better service.

PG&E has proposed a series of CPUC-hosted workshops to obtain stakeholder input on the regionalization proposal, after which the utility will update its proposal for additional workshops and feedback. PG&E envisions the CPUC approving the utility’s new regional structure by March 2021, though the actual timeline and procedural process have yet to be determined. Local governments and community members can join the CPUC process to provide input on the regionalization proposal. Despite the current uncertainties about the exact terms of PG&E’s transition to a community-oriented structure or the timeline on which the CPUC will act, PG&E’s proposal appears to be a significant step toward becoming a better utility.