Smokescreen

Posted August 16, 2018

by Jon Conway, Ph.D., Greenpower Senior Research Analyst

Led by PG&E, California’s investor-owned utilities (IOUs) are blaming climate change for the state’s recent record-breaking fires in an apparent attempt to downplay any future role they may play in sparking off future blazes. And who do the IOUs say should pay for fires started by their equipment?

Well, me, for one. You, for two, if you’re also one of their customers.

While there is no question that climate change is exacerbating wildfires, despite the predictable denial of the president and the Department of the Interior, the IOUs claim is suspect considering they collectively face billions of dollars in damages and potential bankruptcy after being implicated for negligent practices that may have sparked multiple fires last year.

This is only the latest strategy taken by PG&E and the other IOUs in their fight against a state policy known as “inverse condemnation,” which requires utilities to pay damages on fires started by their equipment regardless of whether investigators can find them negligent or not. Governor Jerry Brown, whose family has profited from his rulings in favor of the IOUs, is now pushing for a bill that would decrease the utilities’ liability.

"PG&E has been trying to duck responsibility for the fires, blaming everything from climate change to local fire departments and the state’s liability laws. Cal Fire’s report puts the blame where it belongs — squarely on PG&E — confirming it was responsible for many of the fires that devastated so many lives." Patrick McCallum, chairman of Up From the Ashes

The IOUs complain, not without reason, that inverse condemnation puts them at risk for bankruptcy. Indeed, this policy was implemented by the state legislature so that the utilities — who have a history of irresponsible, dangerous, or even criminal behavior — would be incentivized to mitigate that risk as much as possible through activities such as vegetation clearing, equipment maintenance, and burying power lines. The latter is by far the most effective method of preventing fires from grid infrastructure short of shutting it down, but can be extremely slow and expensive to install.

In order to speed up this process, PG&E is allocated tens of millions of dollars by the state each year to bury power lines, but for more than a decade has diverted a substantial portion of those funds to unrelated uses. At the same time, PG&E customer rates nearly doubled while its shareholder dividends reached their highest level since 1984 — right up until the company was forced to suspend dividend payments because of its potential liability for last year’s fires.

To add insult to injury, city and county officials who try to work with PG&E to bury lines are often frustrated by what they see as unreasonable completion times. However, the company has graciously expressed a willingness to discuss the possibility of undertaking power line burial in communities that have already burned down. (No word yet if they will expand the number of staff dedicated to undergrounding PG&E’s remaining 80,000 miles of wires beyond its current six.)

"PG&E has been a slowpoke delivering projects. It’s a very one-sided process where local agencies don’t have much say. PG&E says, ‘It is what it is — take it or leave it.’" Morad Fakhrai, former public works director for the City of Hayward

The rise of Community Choice Energy (CCE) programs highlights how beneficial it can be to have companies that provide essential services like electricity to 1) have competition and 2) operate for the public good rather than for the good of a handful of shareholders. Call me crazy, but, all other things being equal, I would rather be served by a company looking out for the best interests of myself and my community, rather than a company who sees me as an exploitable resource to create shareholder dividends. I’ve already made the easy choice to purchase cleaner, cheaper electricity through my local CCE. Now, as I potentially face significant rate increases, I also find myself wishing for another choice for my transmission provider — preferably one that doesn’t charge me extra for the privilege of watching my home state burn.

It is unthinkable to me that there is no good solution to this problem. Yes, burying power lines is expensive and intrusive. But even through the IOUs’ smokescreen, it should be clear that doing nothing else to prevent the devastating wildfires we will, without question, continue to experience, is even worse. We’ve reached the tipping point in California fire safety. To me, it’s vastly preferable to have higher rates because my utility is taking the necessary precautions to prevent catastrophic wildfires than to have higher rates following a fire because my utility refuses to take responsibility for failing to prevent it.

"Yes, undergrounding is very expensive, but the estimate is $10 billion damage from the fires. Is undergrounding less expensive than that? Probably. And there were (45) lives lost." Sonoma County Supervisor Susan Gorin

And while climate change may be the main factor exacerbating California’s wildfires, its IOUs are not entirely blameless in that, either. Historically, state greenhouse gas emissions from electricity production (nearly all of which has been sold by the IOUs) have been second only to the transportation sector. With California having the second highest emissions in the country, which is itself the No. 2 source of emissions globally, PG&E and the other IOUs have made a substantial contribution to the 407 ppm of atmospheric CO2 currently warming our planet. To paraphrase Uncle Ben, with power comes responsibility, and the IOUs have had access to information on climate change for just as long as the rest of us.

For me, the bottom line is this: One of the core activities undertaken by the IOUs is electricity transmission, and if they are unable or unwilling to provide that service in a way that is safe, reliable, and economical with reasonable support by the state, they have failed as businesses.

"Climate change is no longer coming, it’s here. And we are living with it every day." Geisha Williams, PG&E CEO

PG&E executives claim to understand that climate change is altering the landscapes where they operate — economic, regulatory, and physical; it’s their responsibility to adjust their business model accordingly. Knowing its above-ground power lines are becoming more and more likely to start fires that drive off, harm, or kill the people PG&E serves while consistently failing to make preventive measures a top priority is irresponsible, and a poor business strategy.

The annual increase in climate change-exacerbated disasters is already wreaking havoc on local, state, national, and global economies, and it will only grow worse unless we take steps to adapt. PG&E and California’s other monopoly utilities are feeling the strain of corporate strategies predicated on short-term profitability as we collectively move into the biggest failure in long-term planning in human history.

All this leaves our state legislature with a big choice to make: protecting shareholder dividends for IOU investors, or protecting California. And those of us they are supposed to represent must hold our regulators accountable, especially when they, say, refuse to prosecute an IOU’s criminal collusion in order to curry political favor, resulting in millions of dollars in charges being passed off onto us ratepayers.

As I write this, the largest recorded wildfire in state history is ravaging California’s northern coast, right in PG&E service territory. Take out your phone and call your representatives in Sacramento — or take out your wallet and feel the burn.

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