Unprecedented blackout in California could make a US$2.6B dent on economy
SAN FRANCISCO/NEW YORK The unprecedented power shutdown by California’s PG&E Corp. has deepened into cities near San Francisco, ensnaring millions of people and raising the prospect that much of a major metropolitan area could go days without electricity.
While about 126,000 customers have regained power, 600,000 remain in the dark — and more will join them Thursday as the bankrupt utility prepares for a third round of power cuts. In all, about 750,000 homes and businesses were expected to be affected by the largest blackout ever orchestrated in the state to prevent high winds from knocking down electrical lines and igniting wildfires. The economic impact may reach US$2.6 billion.
As it grapples with outages, PG&E is being hammered on Wall Street. Its shares plunged as much as 32 per cent Thursday after a judge stripped it of exclusive control over its restructuring. The ruling threatens to puts the company’s fate into the hands of bondholders who are proposing to all but wipe out the stakes of existing shareholders.
After being forced into bankruptcy from wildfires its equipment caused over the past two years, PG&E is using the massive power cuts in an attempt to prevent another deadly disaster. While San Francisco and most of Silicon Valley will be spared, the extensive reach of the outages in Oakland, San Jose and elsewhere threatens to roil the area’s economy by disrupting workers, shutting stores and forcing companies and agencies to shell out for costly backup generators to keep operations limping along.
In Oakland, long strips of banks, pharmacies, delis, coffee shops and other businesses were closed. Trucks arrived on Thursday morning to deliver boxes of fresh seafood to restaurants that had nowhere to store them. Wells Fargo had shuttered some branches as of Wednesday, and a few dozen Safeway supermarkets were affected, with the company supplying backup generators and refrigerated trailers upon availability.
In Southern California, Edison International had cut off about 4,700 customers in counties including Los Angeles and was warning that almost 174,000 customers remain at risk. San Diego’s main utility is also considering cutting service to about 34,000. Altogether, more than three million people may eventually be affected, or almost eight per cent of the state’s population, based on city estimates and the average household size.
Determining just how deep the impact will be is difficult. While PG&E has restored power to some, the company wasn’t saying Thursday when the rest could expect service back. It instead offered this: “The number of circuit-miles requiring inspection includes nearly 25,000 miles of distribution lines and 2,500 miles of transmission lines, a combined distance measuring longer than a trip around the circumference of the Earth.”
Outages could persist into next week as the utility sends crews to inspect all of its lines. Santa Clara County warned a shutoff could last seven days.
Parts of Northern California’s East and South Bays lost power late Wednesday as part of a second phase of shutoffs. PG&E is scheduled to take down 4,000 in parts of Kern County later Thursday. The utility earlier predicted impact to 43,000.
A prolonged blackout will strain the region’s economy, said Michael Wara, director of the Climate and Energy Policy Program at Stanford University. Blackouts lasting hours or a single day close offices and schools, and prompt runs on grocery stores. At five days, cupboards start running bare, diesel for backup generators start selling out and gasoline runs short as stations won’t have power.
“If you lose power for five hours, you may have to throw out some milk,” Wara said. “If you lose power for five days, you need to throw anything that’s perishable away, and you are likely eating out of a can.”
For wineries, the blackout hit at a crucial time: harvest. Michael Haney, executive director of Sonoma County Vintners, said many wineries have either bought or rented backup generators. Some smaller growers have struck agreements to have their grapes stored at other facilities where there’s power.
“Wineries have had to pay out money for backup power,” he said. “The sad thing is some of our smaller wineries can’t afford it.”
The region’s main commuter rail system — Bay Area Rapid Transit, or BART — expected no disruption, in part because the service had already deployed generators, some from PG&E, to vulnerable spots.
The widespread impact angered Californians — and some elected officials.
State Sen. Scott Wiener, a San Francisco Democrat, called the outage “a completely unacceptable state of affairs.” Gov. Gavin Newsom was more measured, saying the blackout was “appropriate under the circumstances,” but added: “No one is happy about it.”