Pacific Gas and Electric did two rounds of proactive cuts over the weekend, in response to warnings of high fire danger due to weather conditions. It was no false alarm. Cal Fire’s online map shows more than a dozen wildfires in PG&E’s territory, including the Sand Fire in Yolo County that’s grown to at least 2,200 acres. There’s no basis to speculate why any of those fires began – that’s a question for later.
However, there is reason to suspect that it might have been worse if PG&E hadn’t cut off electricity to approximately 23,000 customers in Butte, Napa, Solano, Yolo (but not where the Sand Fire began) and Yuba counties. Before power could be turned back on, PG&E crews had to inspect 800 miles of lines and, according to a PG&E press release, they “found instances of damage to de-energized equipment caused by the extreme weather event”.
CAL FIRE has determined that the Camp Fire was caused by electrical transmission lines owned and operated by Pacific Gas and Electricity (PG&E) located in the Pulga area.
The fire started in the early morning hours near the community of Pulga in Butte County. The tinder dry vegetation and Red Flag conditions consisting of strong winds, low humidity and warm temperatures promoted this fire and caused extreme rates of spread, rapidly burning into Pulga to the east and west into Concow, Paradise, Magalia and the outskirts of east Chico.
The investigation identified a second ignition sight near the intersection of Concow Rd. and Rim Rd. The cause of the second fire was determined to be vegetation into electrical distribution lines owned and operated by PG&E.
That conclusion is backed by a full report, but consistent with past practice it’s been forwarded to the Butte County district attorney’s office for use in the ongoing criminal investigation into the blaze.
That doesn’t necessarily mean that Cal Fire thinks PG&E broke the law. Butte County DA Michael Ramsey started his own criminal investigation last November, and the full report was sent to him. According to a Bay City News Service story, he won’t release it “until a final decision is made on whether to file criminal charges”.
Cal Fire’s conclusion comes as no surprise to PG&E, which has been working under the assumption that it will be held responsible for the Camp Fire, given the way California utility liability laws work. Even if PG&E (or any other electric or telecoms company that uses utility pole routes) did everything it was supposed to do, if its equipment started the fire, it has to pay the full damages.
San Francisco’s options, according to the report, range from continuing to arm wrestle with PG&E, to building some limited extensions of existing city-owned electric distribution lines, to simply taking over PG&E assets and operations…
The City can completely remove its reliance on PG&E for local electricity services through purchasing PG&E’s electric delivery assets and maintenance inventories in and near San Francisco, and operating them as a public, not for profit service. The City will pay PG&E a fair price for the assets that reflects asset condition. In this option, the City will also offer jobs to PG&E’s union and other employees who currently operate the grid.
This option would also involve bundling in the City’s limited municipal electric system and customers from the City’s community choice aggregator, one of many such county and regional-level agencies created in California to serve as a middle man between investor-owned utilities, such as PG&E, and electric customers.
The three biggest questions – how to convince PG&E to sell, how much would it cost and how would it be paid for – are left hanging. Presumably, the federal bankruptcy judge in charge of PG&E’s restructuring will have something to say about it all. The price of a buyout is described as “dependent on fair market value analysis; could be a few billion dollars initially”. The report is even more opaque about what happens after “initially”.
The money “would be revenue bond‐funded by the SFPUC using its borrowing authority”. That means that the City would repay bond obligations with the revenue collected from electric customers, after it pays its own expenses. The report estimates that gross revenue would be in the $500 million to $750 million range, but doesn’t try to figure out how much of that would be available to pay back the “few billion dollars” it would have to borrow.
Broadly speaking, there are two kinds of revenue bonds: those that are backed by taxpayer money and those that aren’t. If the former, any shortfall in revenue (or cost overruns) would come out of the City’s budget. If the latter, the bondholders could, ultimately, be stiffed. Which might seem like a fine thing to some, except that the greater risk is offset by higher interest rates on the money that’s borrowed, which in turn will be paid by electric customers through higher rates. Although it would technically be a not-for-profit business, it would have to generate a sufficient surplus – a profit in everything but name – to make those payments.
This is the second time in as many years that the City and County of San Francisco has looked at operating a major utility. Last year, the City floated a proposal to build and operate a citywide fiber to the premise broadband system, that would have cost a couple of billion dollars. That project was shelved shortly after Breed won the mayor’s job in a special election.
As currently written, the CPUC wouldn’t give public safety agencies veto power over de-energisation decisions. They can ask for a delay, but “the electric…utilities retain ultimate authority to grant a delay and responsibility to determine how a delay in de-energisation impacts public safety”.
One question left for later is how, exactly, electric utilities will decide whether to cut off power to “transmission lines”. Those are the high voltage lines that are typically strung on tall, steel towers that march across the landscape. Shutting off a transmission line – as opposed to, say, a neighborhood “distribution line” – could impact hundreds of thousands, perhaps millions, of people. For now, electric utilities have the authority to shut down transmission lines as they see fit. That’s a good thing – last year’s deadly Camp Fire in Butte County, which killed 86 people, was apparently sparked by a transmission line.
That aside, most of the draft decision focuses on communication, with the public and with public safety agencies. Electric companies would have to create clear, 24/7 lines of communications with public safety agencies and anyone who operates “critical facilities and infrastructure”, which includes broadband and phone systems.
Electric customers “should understand the purpose of proactive de-energisation, the electric..utilities’ process for initiating it, and the impacts if deployed”. The burden of making sure that happens would be placed on electric utilities, who would have to “reach customers no matter where the customer is located and deliver messaging in an understandable manner”.
Particular attention would be paid to “vulnerable populations”, which includes disabled people, children, the elderly, low income people and pregnant women. Whether reckoned vulnerable or not, everyone “within the boundaries of a de-energised area (and potentially adjacent jurisdictions)” would have to notified in advance. Responsibility for that would be split between the utilities and local governments. Public safety agencies – state and local – would get “priority notification” ahead of a proactive power cut.
Notification would, if possible, begin 72 hours before de-energisation happens. That would be a heads up warning, based on current and forecasted conditions.
Pacific Gas and Electric and Southern California Edison put out those kinds of alerts last fall, but didn’t actually shut off electric lines until the fires began and people started to die. San Diego Gas and Electric, though, followed through on its warnings and turned off power to tens of thousands of customers: no fires, no deaths.
California governor Gavin Newsom’s wildfire “strike force” published its findings on Friday. The report offers suggestions for preventing, or at least reducing, catastrophic wildfires, and for paying for the damage when they do happen. The short answer is spread the costs around.
One of the central concepts floated by the report is to change California’s strict liability standard, which requires electric and telecoms utilities to pay for all wildfire damages if their equipment is involved in starting a fire, whether or not they did something wrong. Instead, the report suggests moving to a “fault-based standard”, where “utilities pay for damage if caused by their misconduct”. If there was no bad behavior on the part of a utility, though, the cost would shift to “insurance companies and uninsured or underinsured property owners”.
Another idea is to have all investor owned electric utilities, and possibly municipal ones, to pay into a fund that would act as an insurance policy of sorts by covering catastrophic wildfire costs. One issue is that the shareholders and ratepayers of lower risk utilities, such as San Diego Gas and Electric, would, in effect, subsidise those served by utilities with higher wildfire risks, such as Pacific Gas and Electric – assuming that a post-bankruptcy PG&E can even afford to participate.
Part of the solution, the report says, is to take advantage of the “opportunity to build a new, responsible, and accountable utility for northern California” created by the bankruptcy proceeding. Although the report mentions breaking up PG&E into smaller regional companies or municipal utilities, it doesn’t say how that can be accomplished, given that federal judges – bankruptcy and criminal – will be making those decisions for the time being. The only suggestion is for the state to “actively monitor and appear in the bankruptcy proceeding” and “be heard”. So far, that seems to be having little effect.
There’s more. Besides the obligatory nod toward cutting greenhouse gas emissions, the report also outlines some obvious measures: reduce wildland fuel loads, improve emergency planning and education, and upgrade firefighting technology and manpower. And it takes a welcome swipe at the predatory bar, listing “attorneys representing victims” as stakeholders who need to bear some of the burden of wildfire damages, presumably by reducing the “substantial” cost of legal fees and expenses.
The CPUC’s decision gives PG&E 45 days to approve or deny Crown Castle’s pole attachment requests. If the shot clock expires, Crown Castle can move ahead without permission and install fiber lines on PG&E poles. It also requires PG&E to keep Crown Castle informed of other attachment requests, but allows Crown Castle to work on its own lines without giving PG&E advance notice, so long as no electrical shutoffs are needed. A few days after the commission unanimously approved those new contract terms, PG&E asked for a rehearing, citing safety concerns.
The decision gave PG&E two weeks to sign the deal, which are long gone. Crown Castle wants the commission to forget about any rehearings and “take all enforcement measures possible, including penalties and other measures” to force PG&E to get on with it. Which is what, it seems, PG&E will have to do. Wednesday’s letter from CPUC executive director Alice Stebbins said there will be no delay because “merely making a general statement of irreparable harm and referencing the filing of an application for rehearing are insufficient grounds for me to grant the requested extension”.
PG&E doesn’t like the pole attachment terms Crown Castle was granted by the California Public Utilities Commission, and is asking for a do-over. At its recent meeting, commissioners unanimously approved contract terms decided by a CPUC administrative law judge who was acting as an arbitrator in a dispute between the two companies.
It’s more than just a simple contract dispute, though. Pole route management policy is getting a hard look by the CPUC and by federal courts that are dealing with PG&E’s bankruptcy filing and criminal probation in the wake of deadly fires sparked by overhead lines. PG&E argues that piecemeal decision making will only make things worse.
Crown Castle wanted to attach fiber optic cables to PG&E’s poles, and buy the necessary space instead of leasing it, as PG&E prefers when a company only wants to occupy one vertical foot of pole space. It claimed that being able to buy the space gives it comparable privileges to big incumbents, such as AT&T, that typically buy all of the pole space available – the communications zone – and then manage attachments for all telecoms users.
Both the speed and the substance of the CPUC’s action didn’t sit well with PG&E, which filed a request for a rehearing on Friday. Many of its objections revolve around what it regards as conflicts with the CPUC’s basic rules for managing pole attachments by telecoms companies and other issues involving the use of the public right of way by utilities, which were laid down in a 1998 decision.
Those rules are being reexamined in excruciating detail in a separate CPUC proceeding involving all of California’s major electric and telecoms companies, and many smaller ones. PG&E told the commission that this is a bad time to make decisions on the fly…
In the current environment of the ‘new-normal’ and the imperative to maintain the safety of PG&Es infrastructure these increased and expedited access and attachment terms are imprudent. Such increased access affects safety, which is a concern of the public, the CPUC, and both electric and telecom utilities. All parties need time for full exploration of requirements and risks that would be the outcome of such changes.
Pole route safety is a complicated, high stakes issue in California right now. After two years of massive wildfires started by overhead electric lines that killed dozens of people and caused billions of dollars of damage, everything is on the table, including a possible state takeover of electric utilities. At the same time, fiber construction is accelerating to support upgrades of residential, commercial and mobile broadband service. Speed matters for both, but optimal decisions for either often run in opposite directions. Ad hoc tinkering, like the PG&E/Crown Castle decision, will make the problem worse. The better course is for the CPUC to focus its resources on the bigger proceeding and wrap it up in a timely manner.
Pacific Gas and Electric won’t face criminal charges for its role in starting several northern California fires in 2018. District attorneys in Sonoma, Napa, Humboldt and Lake counties announced that they can’t prove a case. According to a press release from Sonoma County district attorney Jill Ravitch, the necessary evidence burned up along with everything else…
The cases that were referred for prosecution all required proof that PG&E acted with criminal negligence in failing to remove dead and dying trees. Under California law, criminal negligence requires proof of actions that are reckless and incompatible with a proper regard for human life, and any charges must be proven unanimously to a jury beyond a reasonable doubt. Proving PG&E failed in their duty to remove trees was made particularly difficult in this context as the locations where the fires occurred, and where physical evidence could have been located, were decimated by the fires.
Last year, Cal Fire determined that some of the many fires that roared through California’s wine country began when trees or other vegetation came into contact with PG&E electric lines. The deadliest fire – the Tubbs fire – which killed 22 people and spread as far as city neighborhoods in Santa Rosa, was not linked to PG&E’s equipment according to Cal Fire. That one was apparently started by electric lines strung across private property by the landowners.
So far, prosecutors in other counties affected by fires linked to PG&E infrastructure have declined to charge PG&E with crimes. But that’s cold comfort. Ravitch was careful to point out that “PG&E remains on federal criminal probation and is a defendant in many private civil cases arising out of the wildfires”, including one that the County of Sonoma is pursuing. The combined liability PG&E faces from those fires as well as last year’s even deadlier Camp Fire is expected to top $30 billion. Who gets paid and how much is now in the hands of a federal bankruptcy court.
An administrative law judge gave Crown Castle a victory of sorts in a dispute over terms for attaching fiber optic cable to utility poles that Pacific Gas and Electric owns. Assuming the California Public Utilities Commission signs off on the finding, the arbitrated decision by ALJ Patricia Miles leaves PG&E’s leasing model and most of its standard terms in place. But, in effect, it also establishes a 45 day shot clock for responding to attachment requests and allows Crown Castle to do some work on poles without notifying PG&E and to be notified, in some circumstances, if work affecting its cables is planned.
Originally, Crown Castle wanted the CPUC to force PG&E to sell space on utility poles by the foot. Typically, PG&E either sells all the space available for telecoms cable attachments – the communications zone – to one company, such as AT&T, and then relies on that company to manage attachment requests by other carriers. Or it will lease out space by the foot to telecoms attachers, such as Crown Castle, and manage the communications zone itself.
The rent versus buy financial analysis aside, the main operational difference between owning and leasing space is that pole space owners can add cables and maintain them with less administrative overhead, and can expect a greater degree of coordination from PG&E. Crown Castle wanted those privileges, but didn’t want to – perhaps legally couldn’t – take on the responsibility of owning and managing the entire communications zone.
Using an expedited arbitration process established by the CPUC, Crown Castle challenged PG&E’s standard procedure, but Miles rejected its argument that state law and CPUC rules require by-the-foot sales of attachment space. She then told the two companies to negotiate an agreement on that basis.
Crown Castle needs written permission to attach cables to PG&E owned pole space, “unless 45 days have run from the time of request of access and Company has provided no response”. Neither the ruling or the contract define what, exactly, constitutes a response, but silence certainly doesn’t qualify.
Crown Castle does not have to give PG&E 48 hour notice if it’s doing routine repair or maintenance that doesn’t require electricity to be shut off.
PG&E has to notify Crown Castle when another telecoms company wants to attach to a pole that Crown Castle is already occupying.
When that happens, PG&E needs Crown Castle’s permission to rearrange cable attachments or replace poles if needed.
Since this was a one-off arbitration of a particular dispute between two companies, the decision won’t affect any existing pole attachment contracts or necessarily serve as a template for future ones. But it might.
The CPUC is scheduled to vote on the draft decision at its 14 March 2019 meeting.
Cal Fire’s official investigation isn’t over, but Pacific Gas and Electric has concluded that it was at least partly to blame for the Camp Fire in Butte County in November, which killed 86 people. In a financial filing yesterday, PG&E laid out the evidence from the transmission tower where the fire began, and the financial consequences…
The company believes it is probable that its equipment will be determined to be an ignition point of the 2018 Camp Fire…
On November 14, 2018, the company observed a broken C-hook attached to the separated suspension insulator that had connected the suspension insulator to a tower arm, along with wear at the connection point. In addition, a flash mark was observed on Tower :27/222 near where the transposition jumper was suspended and damage to the transposition jumper and suspension insulator was identified…
Based on these facts, the company is including a $10.5 billion pre-tax charge related to third-party claims in connection with the 2018 Camp Fire in its full-year and fourth-quarter 2018 financial results…
The company has taken a total of $14.0 billion in pre-tax charges related to the 2018 Camp Fire and the 2017 Northern California wildfires to date, which reflects the lower end of the range of estimated losses the company faces from such wildfires. The charges represent a portion of the previously announced estimate of potential wildfire liabilities, which could exceed more than $30 billion.
The bottom line: PG&E’s management and auditors believe there is “substantial doubt” about its and its parent corporation’s “ability to continue as going concerns”.
If indeed there is evidence that PG&E was negligent, or even simply made poor choices, the company faces a triple whammy. It’ll be blood in the water for the predatory bar, which no doubt expects to get the shark’s share of $30 billion plus, and it’s sure to test, if not break completely, the patience of the federal judge who is supervising PG&E probation, which stems from an earlier criminal conviction for deadly safety lapses.