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Fires Started Near California Utilities' Facilities, But Causes Remain Under Investigation

Two California utilities said that equipment malfunctions at remote locations occurred minutes before wildfires broke out that have since spread to become the state's deadliest.

In filings with the California Public Utilities Commission, Pacific Gas and Electric (PG&E) and Southern California Edison provided preliminary reports on the equipment failures and subsequent fires that ignited nearby. Both utilities said that the cause of the Camp Fire and the Woolsey Fire remain under investigation and that they are cooperating with authorities.

In a follow-up filing with the U.S. Securities and Exchange Commission, PG&E said that the total cost of claims against it could exceed limits set by its wildfire insurance policy.

On November 8, the Camp Fire began near the northern California city of Paradise. By the morning of November 13, the fire had consumed 125,000 acres and was around 30% contained. Fire officials reported 42 fatalities and said that the fire had destroyed more than 6,500 single-family homes and 260 commercial structures. 

PG&E submitted an electric incident report to utility regulators, which says that at around 6:15 on November 13, the utility experienced an outage on the Caribou-Palermo 115 kilovolt transmission line in Butte County. Later that day, aerial observers reported damage to a transmission tower on the transmission line, in the area of the Camp Fire.

At 2:22 p.m. that same day and far to the south, a 16 kilovolt circuit at Southern California Edison's Chatsworth substation relayed. Two minutes later, at 2:24 p.m., first reports of the Woolsey Fire came in, indicating that the fire began in the vicinity of the utility substation. The fire's cause remains under investigation, as does the cause of the substation circuit relay.

Enough Insurance?

In its SEC filing, PG&E said that it renewed its liability insurance coverage for wildfire events to cover around $1.4 billion in potential liability. It said that if its equipment is determined to have caused the fire, then the utility "could be subject to significant liability in excess of insurance coverage" that could have a "material impact" on its financial condition.

In September, California lawmakers passed into law Senate Bill 901 to address the state's growing number of wildfires and shift some of the financial burden as a result of those fires off of utilities. According to news reports, utilities will have to provide new details to California utility regulators on vegetation removal and electricity shutoff plans. Regulators must sign off on those plans, an action that lawmakers said was intended to ensure more accountability in the aftermath of a fire.

Utility regulators will be given new guidelines to help determine a utility’s liability. Reports said that for fires that begin in 2019 and beyond, utility companies will be able to shift some fire-related costs to consumers, but only to the extent that regulators determine the company wasn’t negligent. State regulators opened a proceeding in late October to begin to implement provisions of SB 901.

Content Discussion

Randy Dutton's picture
Randy Dutton on November 26, 2018

What equipment failed? What company manufactured it? From what country was the component manufactured? Did the failed equipment meet spec, or did the manufacturer 'cheat' on design and/or materials? When I attended an auto parts convention in Beijing, managers of US companies located there spoke of the notoriety of Chinese companies qualifying to make a product, then cheating on design and materials during production to save money. Manager of Johnson Controls talked about how it drove him crazy to hear Chinese subcontractors rationalize about how they didn't think changing materials for production mattered, as long as they met the qualifying test.

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