The future of northern California’s energy supply, and the utility pole routes that support it, will be largely in the hands of federal judges. Pacific Gas and Electric gave notice yesterday that it will, in all likelihood, file for bankruptcy protection in two weeks. The company said that it may have to pay as much as $30 billion in damages stemming from catastrophic wildfires it apparently played a role in starting in 2017 and 2018. That’s about three times more than the company was worth before its stock price nosedived on the news. A federal bankruptcy court will have to decide how to carve up whatever is available, and who gets control of the carcass.
Another federal judge is assuming an oversight role that, in theory, the California Public Utilities Commission is supposed to fill. Last week, judge William Alsup gave PG&E until the end of the month to come up with a plan for inspecting the more than 100,000 miles of electric lines it operates in California before the next fire season begins in June. He’s essentially PG&E’s probation officer, following the corporation’s of criminal conviction related to a natural gas line explosion in San Bruno in 2010.
So far, the CPUC hasn’t made any comment about PG&E bankruptcy plans or Alsup’s encroachment on its turf. Last month, CPUC president Michael Picker launched an investigation that could result in PG&E break up, or a takeover by the state, or any number of other fates. Or could have, before financial markets, trial lawyers and the federal judiciary got tired of waiting. At the time, Picker stated in a press release that “this process will be like repairing a jetliner while it’s in flight. Crashing a plane to make it safer isn’t good for the passengers”.
Yesterday, PG&E said the plane is going down. All we passengers can do is assume the position, and hope for the best.
With liabilities from California wildfires amounting to unknown billions of dollars, Pacific Gas and Electric company announced this morning that it plans to file for bankruptcy as soon as it’s legally able to do so. According to a company press release…
The Company today provided the 15-day advance notice required by recently enacted California law that it and its wholly owned subsidiary Pacific Gas and Electric Company (the “Utility”) currently intend to file petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on or about January 29, 2019.
Governor Gavin Newsom released a statement saying he’s been engaged with the problem over the weekend…
The company should continue to honor promises made to energy suppliers and to our community. Throughout the months ahead, I will be working with the Legislature and all stakeholders on a solution that ensures consumers have access to safe, affordable and reliable service, fire victims are treated fairly, and California can continue to make progress toward our climate goals.
No reaction yet from the California Public Utilities Commission.
Pacific Gas and Electric could be broken up, reorganised or brought under closer control by the California Public Utilities Commission. The decision to launch a broad investigation into PG&E’s future, including the possibility of a public takeover, was made by commission president Michael Picker and released late on Friday, after financial markets had closed and the holiday exodus had begun.
Radical action of this sort, taken against a major utility, is cause for concern by telecoms companies too. Generally, it signals a change to much more aggressive utility regulatory regime in California. Specifically, it increases the threat of future criminal and civil liability, affects management of and access to utility poles and conduit, and puts a major source of independent dark fiber in jeopardy.
All that, just within the past two months. In his decision, Picker said standard remedies aren’t working…
This Commission was, and remains, concerned that the safety problems being experienced by PG&E were not just one-off situations or bad luck, but indicated a deeper and more systemic problem. The fact that imposing penalties on PG&E (the Commission’s standard tool for addressing safety problems) did not seem to change the situation reinforced this concern…
The next phase of this proceeding will consider a broad range of alternatives to current management and operational structures for providing electric and natural gas in Northern California.
Options under consideration include various methods of bringing PG&E’s executives and board of directors under tighter CPUC control, or replacing them altogether, breaking the company up into smaller pieces, on a business line and/or regional basis, and taking over the company and turning it into a publicly owned utility of one kind or another.
Picker’s decision – technically, a “scoping memo and ruling” – comes in an investigation that began in 2015. It’s just another step, albeit in a new direction, in a process that will grind on for many more years.
Turning off electric power lines in dry, windy conditions is one way to reduce the risk of catastrophic wildfires. The California Public Utilities Commission is about to start the wheels turning on an investigation into how and when that should be done. Optimistically, the draft order instituting rulemaking predicts that it’ll be wrapped up sometime next summer.
Last summer, the CPUC allowed Pacific Gas and Electric, Southern California Edison and a handful of smaller “investor owned” electric utilities to do the same kind of proactive de-energisation that San Diego Gas and Electric has been allowed to do since 2008. It’s too early to conclude whether their subsequent efforts did any good, but the hazy picture we have now indicates that there is considerable room for improvement, by utilities and their customers:
SCE made proactive power cuts to a few dozen homes, but not in the Woolsey Fire area. Lines that weren’t de-energised might have been the cause; at least three customers burned to death.
As it’s been doing for several years, SDG&E shut off power to 24,000 homes in November, ahead of the same winds that drove the Camp and Woolsey fires. No wildfires started; no customers burned to death, no complaints were reported.
Turning power off is relatively simple. Turning it back on is not. Lines have to be inspected first, and re-energising has to be done systematically and carefully. Even absent nimby whining, it’s not something to be done casually. But there is a clear contrast between the decisions made by PG&E and SCE ahead of the Camp and Woolsey fires, and the actions taken by SDG&E.
Any help with wildfire liability that major electric companies might be expecting from the California legislature will wait until next month. Assemblyman Chris Holden (D – Los Angeles) didn’t introduce his planned bill when the legislature met briefly to swear in new members and open the new session. Holden had planned to, at a minimum, allow Pacific Gas and Electric and Southern California Edison to add damage costs to customers’ bills for 2018 wildfires. The legislature voted in August to allow them to pass on those costs to consumers for fires in 2017 and 2019 and beyond. But not for this year.
“I’m very concerned,” Holden said. “I think there are a very fragile set of circumstances.”
Critics, however, are poised to pounce. Some believe the timing is inappropriate, so soon after the catastrophic Camp fire in Butte County. Others see the effort as tantamount to punishing utility customers — particularly those of Pacific Gas & Electric Co. — through higher bills.
“All of this conversation is premature,” said state Sen. Jerry Hill (D – San Mateo), a frequent PG&E critic. “There is a major cost to ratepayers that I think is outrageous.”
That cost will run into the billions of dollars, assuming that early indications that point to PG&E electric transmission lines as the cause of the disastrous Camp Fire in Butte County turn out to be true. The way California law works, if a utility – electric or telecoms – is even partly to blame for starting a fire, then it’s responsible for the entire cost. Earlier this year, lawmakers rejected utility requests to change that.
The legislature reconvenes in January, which is the next opportunity for Holden and Hill, who has talked about bringing PG&E’s service territory under direct state control, to move ahead with new bills.
The door has officially closed on expansions of Pacific Gas and Electric’s and Southern California Edison’s telecommunications businesses. It’s a small issue compared to the wildfire disasters that both companies are grappling with, but it could have a significant and ongoing effect on California’s uncompetitive broadband services market.
The CPUC’s decision rewards the efforts of the consumer groups and industry lobbyists who intervened in its review of PG&E request. The decision specifically allows them to apply for “intervenor compensation”, which has to be paid by PG&E, even though no decision was reached on the merits of the case. The decision calls their efforts a “substantial contribution” that expanded “the scope of this proceeding from the usual scope of applications for [telecom company certification]”.
They certainly did that. By making a grab for any likely profits PG&E (and SCE) might make from putting valuable dark fiber on the market and from offering other telecoms services that would offer competition to monopoly model telephone and cable companies, the intervenors and the commissioners who accepted their arguments killed the business case. It’s a victory for the lawyers and lobbyists who can now send their bills to PG&E, and for companies like AT&T, Comcast, Charter and Frontier, who would prefer to keep California’s telecoms market under their control.
Pacific Gas and Electric and, to a somewhat lesser extent, Southern California Edison face the potential of billions of dollars of liability for 1. this year’s wildfires, 2. last year’s wildfires and 3. preventing next year’s wildfires. Someone will have to pay the tab that fires have already run up in California. Under state law, if a utility is even partly to blame it has to bear the full burden, generally. But utilities, even highly regulated ones like privately owned electric companies, can pass some or all of those costs on to their customers.
So we all face the possibility of paying for the damage done, and preventing damage yet to be.
In the final hours of its session, the California legislature passed a law – senate bill 901 – that makes it easier for utilities to increase electric rates to pay for fire liability in 2017, and from 2019 on. But not this year. With PG&E potentially on the hook for the deadliest and most destructive fire in California history, the one-year gap in the law puts a huge cloud over its future. Bankruptcy is a possibility.
One solution is to change the law, which assemblyman Chris Holden (D – Los Angeles) is considering. He’s currently the chair of the assembly’s utilities and energy committee (committee and leadership assignments will be changed to one extent or another when the next legislative session begins next month). According to a story on Bloomberg, his chief consultant is working on a new bill…
Kellie Smith, an adviser to assemblyman Chris Holden, said she is drafting legislation that could be introduced as early as Dec. 3. It may serve as a framework for lawmakers to consider relief for PG&E from the billions of dollars it faces in potential liability for death and property damage in Northern California’s Camp Fire, the deadliest in state history.
“He is concerned about the instability of the utility and the adverse effect it could have on ratepayers, and the ability to deliver services at a reasonable cost,” Smith said by telephone Monday.
A utility bailout bill will face opposition, so there is no guarantee it’ll pass. Senator Jerry Hill’s (D – San Mateo) reaction to Holden’s proposal was “what a sad day this is for California”. He might be PG&E’s most vocal critic in Sacramento, but he’s not the only one by far.
Looking ahead, utility rates – for electricity, broadband and anything else that runs on wires attached to poles – will continue to rise with or without more fires. Before these most recent fires, SCE told the California Public Utilities Commission that it expects to spend $670 million on grid safety over the next three years, and wants to add it to electric bills, raising the average bill by 1%. PG&E and San Diego Gas and Electric have to do the same math, and the equations are likely to change as the causes of the Camp and Woolsey fires are assessed and new rules come into effect.
SDG&E might point the way forward for PG&E and SCE. It aggressively shut off power to 24,000 homes during this latest siege, and has not been implicated in any wildfires. It’s also buried more of its lines – 60% of its route miles are underground, compared to 25% of PG&E’s, according to a story on CalMatters by Julie Cart.
But undergrounding is neither cheap or easy. It costs $3 million per mile on the average, according to PG&E, and can go even higher in urban areas. Any large scale wildland underground program is also likely to face opposition – California environmental law allows pretty much anyone to endlessly challenge any construction project. The prospect of sending bulldozers and backhoes through hundreds of miles of California’s backcountry will spark a rush that makes courthouses look like a Walmart on Black Friday.
At least 71 people are dead, more than a thousand are missing, and the fight to contain the Camp Fire in Butte County continues. As dense smoke settled over its San Francisco headquarters, the California Public Utilities Commission said it will take a hard look at Pacific Gas and Electric, which might have been responsible for starting it.
PG&E isn’t offering any details – or speculation – about what this second report might mean. It’s only saying “Cal Fire has collected PG&E equipment on that circuit” and “secured a location” nearby. All Cal Fire has said about the cause of the Camp Fire is that it’s “under investigation”.
Concow is between Pulga and Paradise. Until now, the publicly available information indicated that the fire started east of Pulga, where it was first reported, then moved west into Pulga, through Concow and then into Paradise. A story in the Chico Enterprise Record earlier this week told of how a zone by zone evacuation plan – previously rehearsed by Paradise officials – was pushed beyond the breaking point by the speed of the blaze. This latest report from PG&E raises the possibility that a second ignition point flared up closer to Paradise, taking everyone by surprise.
At this point it’s just my own speculation. But if something like that happened – two fires beginning so close together, from similar causes – it raises even more questions about how this kind of disaster can be prevented in the future.
CPUC president Michael Picker said in a press release “in the existing PG&E safety culture investigation proceeding, I will open a new phase examining the corporate governance, structure, and operation of PG&E, including in light of the recent wildfires”. He also said that the commission will begin implementing senate bill 901, which was passed by the California legislature earlier this year and allows electric utilities to pass some of the costs associated with wildfire liability on to customers.
The physical damage toll will be in the billions of dollars, beyond the limit of PG&E’s insurance coverage and, maybe, beyond its ability to pay under normal circumstances. Bankruptcy is a possibility, if PG&E is even partly to blame and the CPUC doesn’t offer a sufficient bail out.
Southern California Edison also faces the possibility of a multi-billion dollar damage bill from the Woolsey and Hill fires, which ripped through parts of Ventura and Los Angeles counties. One of its high voltage lines was near the Woolsey Fire’s point of origin, although the cause is yet to be determined as well.
Long term, there are many ideas floating around for reducing the risk of wildfires in California. But for now – for today – the only thing electric utilities can do is turn off power to high risk lines ahead of high wind forecasts.
SCE didn’t proactively shut down any lines before the fires began, but did shut off a total of 85 customers in scattered locations as high winds continued. All were back on line by Wednesday. PG&E warned it might cut off power in Butte and either other northern California counties ahead of the Camp Fire, but did not do so and stopped issuing alerts more than a week ago.
Update, 13:48, 12 November 2018: SCE has begun proactive shutoffs, according to its website “due to dangerous high winds in Red Flag fire areas, SCE shut off power to roughly 50 customers in the Moorpark area at about 10:50 a.m. this morning”.
Much of California is under a red flag warning this morning. High winds and dangerously dry conditions could mean yet more wildfires, and more trouble for the three major fires already burning. The death toll from the Camp Fire in Butte County rose to 29 overnight, with hundreds of people still missing. At least two people died in the Woolsey Fire in Ventura and Los Angeles County. Both of those fires are largely uncontained, with high winds expected today and tomorrow.
A possible link between SCE and the start of the Woolsey fire surfaced yesterday. SCE filed a report with the California Public Utilities Commission on Thursday night, stating that there was an interruption to a high voltage line near the start of the blaze, two minutes before the first report of a fire came in…
Preliminary information indicates the Woolsey Fire was reported at approximately 2:24 p.m. Our information reflects the Big Rock 16 kV circuit out of Chatsworth Substation relayed at 2:22 p.m. Our personnel have not accessed the area to assess our facilities in the vicinity of where the fire reportedly began. At this point we have no indication from fire agency personnel that SCE utility facilities may have been involved in the start of the fire.
That doesn’t necessarily mean that SCE’s incident caused the fire – it might have been the other way around – but it raises the possibility. Cal Fire lists the causes of the Camp, Woolsey and the (smaller and largely contained) Hill fires as “under investigation”.
Beyond the human tragedy, there’s no reliable damage estimate yet. All that’s certain is that it’ll be in the billions of dollars, if not tens or hundreds of billions, range. Under California law, utilities are on the hook for the full cost of the damage, even if the blame is shared with others. A bill passed in the final days of the California legislature’s session in August – senate bill 901 – allowed some of that cost to be passed on to electric customers, but that’s only a partial solution.
The cost of maintaining utility pole routes will climb, which will drive up costs for the telecommunications companies that share those routes. And if telecoms lines are involved in the start of a fire – a loose cable wrapping around electric lines was blamed in a 2007 San Diego County fire – then telephone, cable and other broadband companies would be similarly liable for the damage done.
Governor Jerry Brown said “this is the new abnormal” in a press conference yesterday. That applies as much to California’s telecoms future as it does to everything else connected to these fires.
Three massive wildfires continue to burn this morning in California; one in Butte County, two in Ventura and Los Angeles counties. The cost in human life is immeasurable, with nine people confirmed dead in northern California and many more missing. There’s no way to gauge the damage to property and the disruption to lives: what is the price of a town burned to the ground?
The town is, or was, Paradise, a community of 26,000 people in the northern Sierra Nevada foothills. The Camp Fire disaster is a horrible shock, but it was no surprise. The fire danger was high in California, and local officials and utilities posted warnings.
Last Tuesday, two days before the Camp Fire began, Pacific Gas and Electric issued an alert in nine counties, including Butte, warning that it “may proactively turn off power for safety starting on Thursday, November 8”. By Wednesday night, eight counties remained on the list, with specific communities, including Paradise, called out.
No power was intentionally shut off that night.
Thursday morning at 6:15 a.m., PG&E “experienced an outage on the Caribou-Palermo 115 kV Transmission line in Butte County”, according to an incident report it filed with the California Public Utilities Commission. Eighteen minutes later, more than a dozen fire units were dispatched to the Poe Dam on the Feather River, where, according to radio transmissions reported by the Mercury News, a fire was quickly spreading…
“We’ve got eyes on the vegetation fire. It’s going to be very difficult to access, Camp Creek Road is nearly inaccessible,” one firefighter told dispatch. “It is on the west side of the river underneath the transmission lines.”
As firefighters rushed to Poe Dam early Thursday morning, each truck acknowledged over the radio, “Copy, power lines down,” as part of safety protocol for firefighters…
The first firefighter to reach the Poe Dam area Thursday morning quickly recognized the seriousness of the situation and called for an additional 15 engines, four bulldozers, two water tenders, four strike teams and hand crews.
“This has got the potential for a major incident,” he told dispatch, alerting them to evacuate Pulga, the town immediately southwest, and to find air support.
About six minutes later, another firefighter estimated the fire at about 10 acres with a “really good wind on it,” warning that once it left the “maintained vegetation under the power lines” the fire would reach a critical rate of spread when it hit the brush and timber.
Southern California Edison likewise issued warnings on Tuesday and Wednesday, alerting customers to the possibility of proactive electricity shut offs. None were carried out before the two southern California fires began burning on Thursday.
There’s no indication yet of how the Woolsey and Hill fires started. And there’s no official statements at all regarding the cause of any of the blazes – it will be months before investigations are complete.
Beyond fighting the fires and caring for evacuees, the problem now is how to prevent, or at least reduce the possibility of, more wildfires. Weather conditions are in flux this weekend and the chance of severe winds, high temperatures and low humidity persists.
I’m not going to try to second guess PG&E’s and SCE’s decisions not to cut off power this week. This is new territory for everyone. I can only hope that however the decisions are made, the people making them ignore the self-centered objections and ignorant complaints that erupted from residents and businesses in high risk areas when PG&E proactively shut down power lines for the first time last month.
Yes, it’s inconvenient. Tell that to the survivors of Paradise.