Fires a cautionary tale about deregulation
There are many tragic tales in history of California utility firm
It’s a corporate story now, which is a tough thought to lay down among the incinerated bones and wrecked metal and numbed landscape.
But that was the narrative turn taken early this week in the search for the cause of the horrific Camp Fire in northeastern California.
At time of writing, as the death toll surpassed 60, it wasn’t yet known if San Francisco-based Pacific Gas and Electric Co. is culpable, and the point of ignition had not been confirmed, but the unearthing of clues and an exhumation of the company’s history reveals numerous tragic tales and the caution, I’d argue, around deregulation, the privatization of essential services and the primacy of equity markets.
The known facts include a Nov. 8 fire department dispatch recording of a downed power line by Camp Creek Road, across from the Poe Dam, an early morning outage on a nearby PG&E transmission line, and the decision taken by the same company on the same day not to proceed with a forewarned public safety power shutoff.
To get a sense of the range and reach of PG&E’s operations, coverage extends along the Pacific Coast from Santa Barbara County in the south all the way north almost to the state line then east to the Sierra Nevada Mountains, a service area that exceeds 180,000 square kilometres. Butte County, home to the Poe Dam and the town of Paradise, is nestled in northeast Butte County, alongside Plumas and Sierra and Yuba and Nevada and Placer counties. All had been put on notice by the company that a forced outage might be imminent.
Keep your gas tank full and your cellphone charged. That was the advice given by Pat Hogan, PG&E’s senior vice-president of electric operations, in a corporate video posted to the company’s Twitter feed Nov. 7. Hogan explained the primary considerations in assessing the fire risk fore-
cast. “What does the dry fuel look like?” (Vegetation, in other words.) “What’s the wind speed look like? What does the humidity look like?”
In the end, the decision was taken to keep the power on.
The following day, as wildfires raged, Butte County Supervisor Doug Teeter offered this piece of advice: “Don’t die.”
Ontario residents will relate to the old PG&E. Prior to 1996 it was a vertically integrated company with generation, transmission and distribution assets. (Remember the old Ontario Hydro?) In September, 1996, the U.S. Electric Utility Restructuring Act forced the separation of generation from transmission and distribution. Promises were made about cheaper rates and more efficient service. (Sound familiar?) Residents “can now compare deals and pick the one which fits their needs,” promised the U.S. Energy Information Administration, referring to the generation side of the story.
Competition was the magic word. PG&E spun off most of its generation plants and is today principally a transmission and delivery company. And it is huge, servicing close to 16 million Californians. (The bust-up of Ontario Hydro, separating transmission assets from generation, occurred in 1998, followed by the partial privatization of Hydro One — transmission and distribution — in the early winter of 2015.)
The obvious question that arises: to what degree have the residents of California emerged as winners as a result?
You know the answer, don’t you?
I spent too much time this week reading through lawsuits and filings by the California Public Utilities Commission (CPUC) and investigations by SED (the safety and enforcement division at CPUC) and external reviews of the company by independent experts. I thought this exercise would end, but it didn’t.
Imagine the dinner hour on a September evening in 2010 when, as an investigation would conclude, “a large segment of pipe literally blew out of the ground in an urban neighbourhood and the residents were generally unaware of the proximity of a highpressure natural gas transmission system to their homes.” Eight residents of San Bruno died, 66 were injured, 38 homes were levelled, another 18 left uninhabitable. In April 2015, the company was ordered to pay a $1.6-billion (U.S.) fine. Other related penalties would follow, including, last April, a further penalty of $98 million.
In April 2017, the company was fined $8 million for failing to prevent contact between a pine tree and an overhead conductor.
The Butte fire burned approximately 71,000 acres and destroyed 921 structures, including 549 homes.
In June 2018, California’s Department of Forestry and Fire Protection found evidence that 12 of the California wildfires that broke the previous October — the Bay fires — were the result of PG&E’s inadequate clearance between trees and power lines or, in the case of the Blue Fire, a conductor falling to the ground and starting a fire. Cal Fire noted 18 deaths. More than 3,000 structures were destroyed.
Lawsuits started landing soon thereafter. Erin Brockovich, who famously fought PG&E over alleged water contamination in Hinkley, Calif., in the early ’90s, winning a $333million settlement, has joined the cause.
There isn’t enough space to cite further disasters, or dig into the company’s declaration of bankruptcy in 2001, or the state’s first failure at deregulation. But it is important to note that the National Transportation Safety Board deemed the catastrophic San Bruno explosion an “organizational accident.” Prior explosions, including the 2008 death of a homeowner in Rancho Cordova, had put the company on notice to take steps to improve operational and safety controls.
After the San Bruno catastrophe, an independent study into the company’s safety culture was ordered by the utility commission. The final report, delivered in May 2017, runs to more than 300 pages and allows that while PG&E has made some “fragmented progress” in developing a safety culture, the initiatives “do not yet add up to a consistent, robust, and accountable corporate wide safety program.”
It was due to the “persistence” of safety incidents that the investigation was ordered. The culture was deemed “dysfunctional,” hosting an “appearance-led strategy” and an “insularity that impeded its ability to judge its effectiveness.” And this: the company was found to have “an overemphasis on financial performance.”
Testimony on the report was given by PG&E executives last January. The ultimate outcome of the proceeding was not yet known. And then came the Camp Fire.
On Thursday, Michael Picker, president of the utility commission, announced the opening of a “new phase” in that investigation, “examining the corporate governance, structure, and operation of PG&E, including in light of the recent wildfires, to determine the best path forward for Northern Californians to receive safe electrical and gas service in the future.”
The lawsuits are landing in a flurry over the cinders of the blaze, over the lost lives of Californians, lost time and time again.