Wild Fire Fiasco: California utility’s decision to shut off power to avoid wild fires backfires

October 12th, 2019, Published in Articles: EE Publishers, Articles: Energize, Featured: EE Publishers

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Following the devastating wild fires 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 wild fires. Under new management and overseen by a court appointed bankruptcy judge, PG&E has assumed a low-risk exposure, down 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 wind conditions in October – a perennial feature of California weather made worse in recent yeas by climate change – the utility had earlier warned that it would shut off power to customers in advance to avoid sparking new wild fires, 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.

As it turned out, hot, dry 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 & Central California – affecting roughly 1 million residents and businesses. Fortunately, no major fires were reported and the company started restoring power to some 426,000 customers on the following day. In some cases, restoration may take a day or longer since the company has to inspect the condition of the wires before it can 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 harsher climates manage to keep the lights on, don’t they?

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&Es 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 takes about 48 hours but can take longer, especial 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 incumbents.

Clearly, the fiasco is far from over as everyone in the chain of command – from Governor Newsom 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.

Acknowledgement

This article is to be published in the November 2019 issue of EEnergy Informer, an industry insider newsletter published by Menlo Energy Economics, and is republished here with permission.

For further information and subscriptions, contact Dr Fereidoon P. Sioshansi, president, Menlo Energy Economics, fpsioshansi@aol.com, www.menloenergy.com. See also his new book entitled “Consumer, Prosumer, Prosumager“.

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