The ruling, the first to apply the cost-recovery framework of Assembly Bill 1054, found that PG&E is entitled to a presumption that it operated its system reasonably because it held a wildfire safety certificate. That 2019 law, passed while the utility was in bankruptcy, created a ratepayer- and utility-financed wildfire fund and allows utilities to charge customers for costs not covered by the fund, provided regulators find the utility acted prudently.

“PG&E’s conduct related to the ignition of the Kincade and Dixie Fires is presumed to have been reasonable (or prudent), and no party to the proceeding has created a serious doubt as to the reasonableness of PG&E’s conduct leading up to the fires,” the judge wrote.

Ratepayer advocates had argued that the utility should absorb the costs, but the judge concluded they failed to show PG&E broke the law, violated commission standards, or proved that another utility would have acted differently under similar circumstances.

At a recent hearing, PG&E President Carla Peterman said the utility’s wildfire certification entitled it to the presumption of prudent conduct and that advocates had offered no evidence to raise serious doubts. She also warned that denying full cost recovery would undermine the law’s intent and jeopardize the company’s financing, potentially driving customer costs higher.

PG&E attorney Henry Weissmann characterized the advocates’ arguments as opinions about what the utility could have done differently, rather than proof that its practices were substandard.

Attorneys for Cal Advocates, the ratepayer arm of the commission, pointed to findings by the commission’s safety arm that PG&E violated regulations. In the Dixie Fire, which started July 13, 2021, in the Feather River Canyon, they argued that managers failed to shut off a power line despite warning signs hours earlier. At a minimum, they said, the still-live line should have been de-energized by midday, but it remained live for several more hours until a technician could reach the remote Butte County site, where a tree had fallen on the line and fire had begun to burn.

PG&E said its control-room operators saw nothing indicating a dangerous condition and followed company policy by dispatching a technician and monitoring electrical data that showed nothing serious. The utility said the troubleshooter was delayed because a bridge was closed for maintenance.

In the Kincade Fire in Sonoma County, advocates argued that PG&E left part of an unused high-power transmission line dangling and energized for years before it sparked the blaze that forced mass evacuations. They said the utility should have conducted a formal risk assessment rather than leaving the equipment in place for more than a decade to make it easier to restore power to a nearby mothballed geothermal facility if needed.

The proposed decision now goes to the full California Public Utilities Commission for a final ruling. If approved, PG&E would be clear to raise rates to recover the remaining debt from the two fires, a prospect that could intensify scrutiny of how the state balances utility wildfire liability against the interests of customers who ultimately pay the bill.