This is not a good time to be a PG&E stockholder — or a California Public Utilities Commission apologist for that matter.
Just seven years and a month after PG&E’s questionable natural gas pipeline maintenance and operation led to an explosion that leveled a San Bruno neighborhood killing eight people and destroying 34 homes, the for-profit utility could be on the hook for another “uh-oh” of gigantic proportions.
The California Department of Forestry and Fire Protection is looking into whether PG&E equipment and lines sparked a number of the 17 fires that killed 42 people, destroyed more than 8,000 homes and other buildings, and caused in excess of $3 billion in losses so far in the wine country. Not to diminish the seriousness of San Bruno, but the wine country catastrophe would set a new level for corporate negligence if PG&E is found to be even partially responsible.
When it was first made known PG&E was being looked at a little over a week ago, their stock tanked by more than 10 percent. To be honest, at that point cutting PG&E slack made a lot of sense. If you’ve every hiked in some areas in the wine country mountains and drove on some of the tight and narrow roads that are fairly well populated to reach trailheads you know the terrain is steep and there seems to be no reasonable way to keep power poles away from trees or ridges where dry, howling Diablo winds can raise havoc.
But as usual, PG&E may have shot themselves in the foot with a little help from their chums on the California Public Utilities Commission.
It surfaced over the weekend that PG&E along with other utilities have been successfully delaying a mandate that they map areas where power lines clearly present great risk in triggering wildfires. Utilities secured five delays between 2012 and 2015 because the proposed regulations to deal with areas determined to pose the greatest wildlife risk would “add unnecessary costs to construction and maintenance projects in rural areas.”
Perhaps PG&E might want to take out some billboards in Santa Rosa and Napa with those words emblazoned on them. I’m sure folks that have lost everything including loved ones in the $3 billion disaster and counting will understand it’s unacceptable for PG&E to be burdened with the cost of preventative measures.
And in a stroke of luck for timing, PG&E et al secured another delay from the mapping requirement from the lapdogs at the CPUC two days before the latest fires started.
The proposal would require keeping power poles farther from vegetation and employing poles that can withstand higher wind speeds in areas determined to have either elevated or extreme wildfire risk.
There is little doubt this would be an expensive proposition. PG&E might be right in arguing the cost may be too much to mitigate much of the concern.
But here’s the rub. PG&E and its compadres have labored mightily with the concurrence of the CPUC to avoid simply mapping areas most prone to wildfire risk.
The 2007 San Diego wildfire triggered by downed power lines destroyed 348 homes is what prompted the mapping requirement.
Keep in mind the CPUC hasn’t implemented any rules because for nearly a decade PG&E et al have been stalling and delaying providing mapping information.
PG&E along with Southern California Edison and PacificCorp argued on March 31 that pinpointing vulnerable infrastructure on a map “could present public safety and security issues.”
That may be true, but it is the CPUC that ultimately is supposed to have public safety front and center. And from where most Californians stand, death and destruction is much more likely to rain down on them in a high wind event in the dry fall season than in a terrorist attack. Add up the number of people killed in terrorist attacks in California against the number of people killed in wildfires and natural gas line explosions. Once you do that, you’ll get the picture.
Making all this more absurd is PG&E and other for-profit power firms are guaranteed a rate of return (or profit) on their investment of 10.5 percent via CPUC controlled rate hikes. Any additional costs to the system can and will be passed onto ratepayers. It is why the CPUC — if it ever gets basic information it first started requesting almost 10 years ago — would have to make value judgments.
There are other issues at play here as well. PG&E has some of the most remote service areas in the state in some of the most rugged terrain and weather conditions. As a result a lot of those lines are far from bullet proof. But then again it would be up to the CPUC to zero in on the areas that are the greatest risk to the most property and lives.
The other problem is a utility’s ability to use a slight of hand. PG&E has a habit of squeezing out more than a 10.5 percent return. If it is from more efficient operations than originally outlined in a rate hike, that’s fine. But as deep boring into rate applicantions has shown, it isn’t unusual for a utility to get a rate hike that includes replacing 30,000 power poles and then failing to do so. That prompts them to come back to use the same 30,000 power pole replacement project as part of another rate hike.
PG&E may have no fault in the wine country fires. However, the CPUC clearly is at fault for letting the power companies “map out” how safe the CPUC will keep Californians.