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Contrasts of competence as California assesses power cuts and utility pole route management

by Steve Blum • , , , ,

Pge outages 9oct2019

California’s privately-owned electric utilities and their regulators have a long and difficult job ahead as they try to figure out what was good and what was bad about last week’s massive wildfire prevention power cuts. Their eventual conclusions will have a significant impact on how utility pole routes are managed in California, including possible new, and more costly, design standards, and budgets for maintenance and wildfire prevention. Those costs will ultimately be shared with telecommunications companies that also use those poles.

The only major private electric utility that appears to be squarely in the good column is San Diego Gas and Electric. They shut off power to 395 customers, had them restored by Friday afternoon and did not start any fires. An excellent article in the Los Angeles Times by James Rainey and Joseph Serna details the operational, grid design and maintenance decisions SDG&E has made, and successfully implement, over the past decade.

The contrast with Pacific Gas and Electric is stark…

San Francisco-based PG&E is struggling to catch up with San Diego Gas & Electric Co., which has become California’s recognized leader in forecasting fire danger, tailoring narrow outages for the most endangered neighborhoods and communicating the emergencies with the public, a top state regulator said.

“Those have been three pillars of success for SDG&E, and they are currently sources of failure for PG&E,” said Elizaveta Malashenko, deputy executive director for safety policy at the California Public Utilities Commission.

PG&E took a much blunter approach, cutting power to 738,000 customers in 34 counties across northern and central California. A customer is reckoned as a home or business – at least two million people were affected. Two dozen or more transmission lines – major, high voltage lines that feed regional and local distribution grids – were shut down. Full service wasn’t restored until late Saturday.

Whether or not it was necessary to cut off so many customers is a question that will be debated for months, if not years. What’s not in doubt is that PG&E completely fumbled public communications and poisoned relationships with the public, as well as state regulators and elected officials. Both CPUC president Marybel Batjer and California governor Gavin Newsom excoriated PG&E’s management and performance, even while conceding the necessity of “public safety power shutoff events”. The PG&E website was largely useless, and in some cases completely unavailable, and much of the information that did get out was inaccurate.

On the other hand, PG&E has not been implicated in any of the (relatively) small wildfires that broke out during the days of high winds and low humidity. To that extent, PG&E’s wildfire prevention efforts were successful.

Southern California Edison might not be as lucky. Although SCE won qualified praise for planning and executing its wildfire prevention program last week, its equipment might have been the cause of a major fire that began on the northern edge of the City of Los Angeles, and had spread through nearly 8,000 acres as of last night. Eyewitnesses said the Saddleridge fire began at the base of an SCE transmission tower, on a line that was still electrified. The LA fire department is treating those reports as credible, but its arson investigators have not reached any conclusions about the cause.

SCE shut off power to 24,000 customers, and restored power to all but four last night.

Broadband deployment will be more rigorous and costly in California, following U.S. supreme court ruling

by Steve Blum • , , , ,

Southern California Gas and Electric can’t pass on wildfire costs to ratepayers. The federal supreme court declined to hear SDG&E’s appeal of a California Public Utilities Commission decision that put some of the burden of a 2007 series of wildfires on company shareholders. California’s strict “inverse condemnation” law requires utilities to bear the full cost of any damage when their pole routes, or other equipment in the right of way, is even partially to blame. Monday’s decision lets that principle stand. As a result, electric utilities will spend more on pole route maintenance and be tougher on inspections and standards enforcement.

Some of those additional costs, and all of the added rigour, will land on telephone, cable and other broadband companies that occupy space on utility poles.

According to a Los Angeles Times article by Rob Nikolewski,

Investigations into the causes of the Witch, Guejito and Rice fires — three of the worst wildfires in a devastating firestorm that befell San Diego County in October 2007 — found they were sparked by SDG&E equipment that had not been properly maintained.

The three fires combined to kill two people, injure 40 firefighters and destroy 1,300 homes…

SDG&E spent $2.4 billion to resolve more than 2,000 lawsuits related to the 2007 wildfires, but it insisted the blazes were ignited by factors it could not control — including extreme Santa Ana winds, a lashing wire owned by Cox Communications that hit an SDG&E power line and a tree limb that fell onto an SDG&E line due to high winds.

Properly maintained or not, SDG&E’s equipment was in the chain of events that led to the Guejito fire. So was Cox’s line, but even though it was the trigger, the California Public Utilities Commission tagged SDG&E with responsibility: it should have known that the cable company’s line was too close to its electrical line. According to investigator’s measurements, the two lines were separated by a bit more than three feet, instead of the six feet required by CPUC rules.

Cox ended up reimbursing SDG&E for a relatively small fraction of the $2.4 billion in liability claims that were paid out as a result of the three fires. But that was between the two companies; as applied by the CPUC and courts, California’s law put the liability burden on SDG&E.

The same legal principles apply to Southern California Edison and Pacific Gas and Electric, California’s other two major investor owned electric utilities. They’ve lagged behind SDG&E’s wildfire prevention efforts, and are now playing catch up. The result will be higher levels of maintenance work and more rigorous inspections of pole routes, among other things. The cost of all of that – time, effort and money – will eventually be shared with telecoms companies. Deploying and maintaining broadband infrastructure in California will only become more expensive.

Electric utilities will decide when to cut power in the face of fire threats

by Steve Blum • , , , ,

Californian electric utilities will have clearer guidance on how, if not when, to shut down – de-energise – local power lines when the danger of sparking a wildfire is at its peak. That’s assuming a decision drafted by California Public Utilities Commission president Michael Picker is approved later this month. It’s not the full and final instruction manual, but it’s a start. The new procedures will be in place for this year’s wildfire season and can be improved as time goes on.

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.

SCE asks court to extend wildfire liability to cities and counties, too

by Steve Blum • , , , ,

santa barbara county flood map

If a local government allows homes to be built in high risk communities and doesn’t build or manage infrastructure in a way that mitigates that risk, could it be as responsible for disasters as an electric company that similarly installs and operates electric lines to serve those areas? That question was handed to a Los Angeles County superior court judge on Friday by Southern California Edison.

SCE’s wildfire liability problem isn’t as apocalyptic as Pacific Gas and Electric’s, but by any other measure it’s bad. The damage from 2017 and 2018 wildfires linked to SCE’s equipment is well into the billions of dollars range. That’s because utility companies – electric or telecoms – that take advantage of the right of way privileges granted by California law are responsible for paying the full cost of any damage that results – by “inverse condemnation” – even if they’re only partly to blame.

As are government agencies, that likewise use private property for public purposes.

With that in mind, SCE filed a complaint against Santa Barbara County, a couple of local special districts and Caltrans. They are accused of improperly allowing homes to be built in a disaster prone area, and otherwise mismanaging flood control responsibilities, road and bridge design and emergency evacuations.

The specific issues in the case involve the deadly and destructive mudslides in Montecito in 2017, that followed the massive Thomas fire that, in turn, was allegedly caused by SCE’s equipment. But if courts eventually accept SCE’s logic, then cities and counties could also be held responsible for wildfire damage if they make poor decisions about where homes may be built. According to SCE’s filing

Santa Barbara County was…obligated to appropriately restrict development and redevelopment in unincorporated areas, including Montecito, where improper developments could risk diverting and exacerbating floods and debris flows and would face increased risk of themselves succumbing to natural disasters. However, the County failed to comply with its own obligations or adequately enforce its own ordinances, as Montecito continued to develop quickly. By 2018, the open agricultural areas that once dotted Montecito had largely disappeared, replaced by densely packed residences, commercial buildings, bridges, roads, and other structures that encroached upon the natural floodplain and floodway, often in violation of the County’s Floodplain Ordinance…

The development and associated infrastructure constructed or permitted by the County in these areas created obstructions that exacerbated damages from debris flow events and placed area residents in harm’s way…

Where, as here, the public entity “has made the deliberate calculated decision to proceed with a course of conduct, in spite of a known risk,” just compensation is owed.

SCE is pushing back in other ways against the inverse condemnation principle, and the strict liability that results. It’s asking the California supreme court to limit the way the principle is applied and, along with PG&E, jumping in on a similar case brought by San Diego Gas and Electric. Lower courts have not been sympathetic to SCE’s arguments, but the magnitude of the problem and the diversity of possible contributing causes – climate change, demographics and land use policy, for example – could convince the California supreme court to consider whether current practice does sufficiently “socialise the burden” of wildfires, as California law presumes.

More people, more fire hazards, more damage costs for utilities, at least for now CPUC says

by Steve Blum • , ,

San Diego Gas and Electric’s shareholders will have to pick up the tab for $379 million of the $2.4 billion worth of damage (and legal fees) caused by a series of wildfires in 2007. Yesterday, the California Public Utilities Commission unanimously approved a draft decision by an administrative law judge that assigned the blame to SDG&E because, as commissioner Carla Peterman put it, SDG&E “failed to meet its burden to prove it was a prudent manager”.

That means SDG&E can’t pass the cost on to ratepayers, via a proposed $1.67 per month add on to bills for six years.

There was some discomfort with the decision, though. Some commissioners believed they were put in a straightjacket by California law and court decisions, and suggested the legislature could, or should, act to give them more discretion. Commission president Michael Picker said that while yesterday’s decision was about a particular set of circumstances, the real problem is much larger…

The number of people who are choosing to live in areas that we now know to be elevated fire hazard or extreme fire hazard is growing. That area is actually growing as we get more information about the impact of climate change. The fuel area has grown from about 31 thousand square miles of California to 77 thousand square miles of California. That’s almost 42% of the state’s landmass. Add to that the fact that as people move into these areas which are growing in terms of the severity of the hazard and we see more and more severe wind storms and lightning storms, happening more frequently here in California, we also know that those people demand and have a right to have both electric and telecommunications as they move into those fire hazard areas. So this is becoming an increasingly complex area for us.

Here, the decision that we have to make is about whether the utility or the ratepayers should be responsible for the financial cost associated with these very specific fires. What we talk about here may or may not have any precedence on any future fire issues that come before us.

This fall’s wildfires were even more destructive and, particularly, have put PG&E in the crosshairs. No causes have been established or blame assigned yet, but there’s a clear possibility that PG&E will take the hit for billions of dollars in damages. Particularly if the same law, logic and court decisions that drove yesterday’s decision are applied.

California wildfires are everyone’s problem, regardless of who’s at fault

by Steve Blum • , , , ,

The recent wildfires that struck seemingly everywhere all at once, but particularly hard in the northern California wine country, might have been caused, in part, by wind whipped electric lines surrounded by a canopy of dense, dry trees. If that’s what happened, then electric companies, and particularly PG&E, could be liable for billions of dollars worth of damage.

It poses a difficult public policy question: who pays? Ratepayers, shareholders or taxpayers?

Coincidentally, the California Public Utilities Commission is due to decide that question at this week’s meeting, at least in regards to a series of wildfires in San Diego County in 2007. San Diego Gas and Electric, Cox Communications and contractors who worked on utility pole routes had to pick up a $2.4 billion tab for damages and legal fees. SDG&E is asking the CPUC for permission to pass $379 million in costs on to ratepayers, at the rate of $1.67 per month for six years.

As written, the draft decision on the table for the CPUC would deny the request, because “the costs of the 2007 Wildfires were incurred due to unreasonable management by SDG&E”.

If commissioners go along with it, SDG&E shareholders will absorb the immediate cost, in the form of lower dividends or a depressed share price.

The immediate cost.

Long term, it’s a more complicated question. If more money has to be spent on tree trimming, wind loading mitigation and similar measures, it’ll change the maintenance cost calculation that determine how much telecoms companies have to pay for the right to attach their fiber and copper to utility poles that are primarily designed to support electric service.

Going forward, someone will have to pay. Whatever the immediate decision, that someone will be the people who live in SDG&E service area, directly via higher electric rates, indirectly to meet return on investment goals necessary to attract investment or via higher broadband rates driven by the cost of maintaining joint pole routes.

With the cost of rebuilding after the recent wildfires not even calculated, and a future with even bigger disasters looming as a real possibility, the CPUC has hard choices to make. Simply kicking the cost of the San Diego fire back to current investors is tempting, but a nuanced solution with a statewide mandate – including electric and broadband customers as well as investors – is needed.

Clearing the way for better infrastructure in California

by Steve Blum • , , , ,

It costs more here.

California’s infrastructure was “designed for 25 million people”, state treasurer Bill Lockyer told an opening breakout session at the California Economic Summit in Los Angeles. The problem, he said, is that California will have 50 millon people before there’s a fix in place.

The focus was on roads and water – publicly funded projects – but it’s equally true for infrastructure that’s supported by private capital, such as telecommunications and energy.

That conversation was mostly about ways to funnel more tax dollars towards road maintenance and construction but as the conference moved on, the cost side of the equation took center stage.

The president of San Diego Gas and Electric, Mike Niggli, told how his company spent $100 million and five uncertain years working through regulatory obstacles, particularly environmental clearances, to get permission to build new transmission lines. The irony was that the lines were needed to connect San Diego’s electric grid to renewable energy sources advocated by environmentalists.

It’s a problem shared by broadband projects. The 500-mile Digital 395 middle mile fiber build down the eastern edge of California saw costs jump by $25 million due to the complexity of satisfying the requirements of four dozen different federal, state, local and tribal agencies.

Many ideas for fixing problems were put on the table, and the legislators and other elected officials, who came and went during the two days of the meeting, politely nodded their heads. The question is whether that’s enough to drive change in Sacramento.

“We have requirements that are overly burdensome, overly difficult and a barrier to investment in our state”, said Kish Rajan, the head of governor Brown’s business and economic development office. “This has to get translated into concrete action”.