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PG&E’s Wild Fire Fiasco

Following the devastating wildfires in 2017 and 2018, for which the Pacific Gas & Electric Company (PG&E) was found to be partially at fault, the utility’s finances have taken a dive. Its liabilities from scores of lawsuits exceeds its assets by a wide margin, the standard accounting definition for being bankrupt. Of course, a company this big and this vital – it serves roughly half of California’s population – cannot really be allowed to go bankrupt, can it? It is merely under “bankruptcy protection”. But it certainly has no appetite for more lawsuits from more wildfires. Under new management and overseen by a court appointed bankruptcy judge, PG&E has assumed a low-risk, back to basics posture, no surprise.

Its mission, to the extent that it has one, is to re-emerge from bankruptcy protection unscathed and with some resemblance of normalcy restored. Anticipating hot, dry and windy conditions in October – a perennial feature of California weather made worse in recent years by climate change – the utility had earlier warned that it would shut off power to customers in advance to avoid sparking new wildfires or be blamed for them. The idea was to do this as a last resort, and selectively to minimize the loss of life and property. If the choice was between service or safety – read more lawsuits – PG&E would go for the latter.

 

Who needs more wildfires, or lawsuits?

As it turned out, hot, dry and windy conditions were forecast for large portions of the state for 9-10 Oct and PG&E decided to shut power off to about 738,000 customers in Northern and Central California – affecting roughly 1 million residents and businesses. Fortunately, no major fires were reported in PG&E’s service area and the company started restoring power to some 426,000 customers on the following day. In some cases, restoration took a day or longer since the company had to inspect the condition of the wires before it could re-energize them.

No matter how noble or justified the motivations, the service disruption, poorly planned and hastily communicated, did not go well with the public, those who were disrupted as well as those who might have been disrupted including this editor.

The backlash was immediate and unanimous. PG&E screwed up badly managing to turn more customers, regulators and politicians into skeptics on its ability to run a business.

To be fair, Southern California Edison Company (SCE), the other big utility that essentially serves the rest of the state – setting aside a few smallish areas – also shut off power to some 13,000 customers while putting another 200,000 on alert. But these were isolated and did not cause the massive disruptions caused by PG&E.

The new president of California Public Utilities Commission (CPUC), Marybel Batjer, was typical in stating that PG&E’s response “has been absolutely unacceptable” to communities, “to individual people, to the commerce of our state and the safety of our people.” Others, especially customers literally stranded in the dark and not knowing when the power will be stored, had even harsher words.

California Gov. Gavin Newsom was blunt in blaming PG&E for the blackouts. He said, “This is not a climate change story as much as a story about greed and mismanagement over the course of decades. Neglect, a desire to advance not public safety but profits.” Understandably, the newly elected governor wants to deflect any criticism of the incident on himself. He must have known that this was coming, did he not? And if not, why not?

The central question is if PG&E cannot operate its network safely and reliably, then why has it not done something about it already? Climate change is partly to blame for making the fire danger more prevalent and more deadly, but surely utilities in warmer and hasher climates manage to keep the lights on, don’t they?

 

Get ready for the next power shut off

Mindy Spatt, speaking for The Utility Reform Network (TURN), a customer advocacy group, said, “Every time you think PG&E can’t do worse, they do.” Making matters worse, PG&E’s website went down and the phone lines were flooded making it difficult for customers to get information on when the power may be restored.

Restoring power is not as simple as tuning on a switch. On average it takes about 48 hours but can take longer, especially in the case of a major shut off like this. The only silver lining, if there is one, is that more customers may decide that they cannot rely on the local utility for reliable service, prompting them to invest in self-generation, battery storage and/or back-up emergency generation. That would drive more customers away from the incumbent utilities.

While the debate about the wisdom of PG&E’s decision to shut off power drags on, a large wildfire erupted Northwest of Los Angeles in SCE’s service area forcing mass evacuations. The dry vegetation and gusty winds spread the fire despite efforts to contain it. Gov. Newsom declared a state of emergency in affected areas just as PG&E was restoring service in Northern California.

Clearly, the fiasco is far from over as everyone in the chain of command – from Governor to PG&E’s CEO Bill Johnson to commissioners at the CPUC are scrambling to decide how best to move forward. California is getting warmer and drier and the fire hazard is imminent and serious as was experienced during the recent events with major fatalities and massive loss of property. A better way must be found to balance the safety vs. service option.

This article originally appeared in the November 2019 issue of EEnergy Informer, a monthly newsletter edited by Fereidoon Sioshansi who may be reached at fpsioshansi@aol.com

Fereidoon P. Sioshansi, Ph.D.'s picture

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Discussions

Matt Chester's picture
Matt Chester on Oct 28, 2019 2:25 pm GMT

“This is not a climate change story as much as a story about greed and mismanagement over the course of decades. Neglect, a desire to advance not public safety but profits.” Understandably, the newly elected governor wants to deflect any criticism of the incident on himself. He must have known that this was coming, did he not? And if not, why not?

While it's fair to raise an eyebrow and question the intent of potentially deflecting blame as a politician, I have to agree that this is more a mismanagement story than one of climate effects all of a sudden wreaking havoc. Have we seen other utilities in disaster-vulnerable areas suffer these same fates?

Michael Keller's picture
Michael Keller on Oct 29, 2019 5:20 pm GMT

Mismanagement by the politicians is the real culprit.

Take a look at the utilities on the East Coast where hurricanes show up from time-to-time.

Do they get sued because parts of the grid get damaged. Nope. Over time, however, the grid is beefed up.

Do the state legislatures pass laws to allow the local utility to be sued because a hurricane shows up. Nope. 

The same common sense approach shows up in the Midwest where tornados occur on occasion. "Act of God" is recognized as a condition that is just collectively dealt with.

Michael Keller's picture
Michael Keller on Oct 29, 2019 5:23 pm GMT

"Climate Change" is nothing more than a deliberate ruse to deflect the spotlight from the guilty party. That would be the Democratically run state of California, with the underlying issue of too many people living in a tinder box.

The latter issue is the result of a massive increase in the state's population coupled with the inability of folks to live near the less fire prone coast. Inevitably, the population of the backcountry increases, as exacerbated by the exorbitant cost of coastal housing. In other words, the working folks are forced to live in the fire-prone backcountry.

However, the real problem lies with radical left, one-party rule that excessively diverts both taxes and energy costs into inane  "politically correct" policies. Examples include: mandated use of renewable energy that drives up the cost of energy; allowing the backcountry and forests to become full of kindling. The former means the utility is forced to spend money on exorbitantly priced renewable energy at the expense of properly protecting the grid. The latter creates an ideal environment for late summer and fall fires.

in the final analysis, the climate of California has not changed. Man has foolishly altered the land.

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