Government needs to be more hands-on when it comes to keeping the lights on and shutting them off.
Last week more than 700,000 homes and businesses, customers of Pacific Gas & Electric (PG&E) in northern California, lost power. Traffic lights went dark causing numerous traffic accidents. People with medical needs struggled to find power for essential devices. Schools closed, requiring parents to scramble to make arrangements for their kids. Power wasn’t shut down by a hurricane or roiling storm. Instead, the utility flipped the switches and shut off power in many areas.
PG&E said the blackouts were necessary to protect public safety. Dry and windy weather threatened to bring electric wires into contact with dry vegetation and ignite wildfires, endangering lives and destroying property.
Now policymakers are questioning PG&E’s actions. But finding a path forward is going to be hard without a much better understanding of the costs of outages, the extent to which de-energizing lines reduces wildfire risk, and a more clear-eyed view of a private utility’s motivations. It’s going to be up to policymakers to work through these challenging issues, not PG&E.
Tallying the Costs
The types of costs caused by the recent outages are numerous and likely very large. There are the costs to prepare for a shutdown, including for back-up generators in some cases. People couldn’t go to work and school. Businesses shut their doors. The list goes on-and-on.
Surprisingly, as important as electricity is, we don’t have a great handle on the costs of outages. This makes it hard for society, and policymakers, to know how much should be invested to avoid outages. And it’s difficult for policymakers to make the right trade-off between keeping the lights on and public safety, which is what these Public Safety Power Shut-off (PSPS) events require.
Tools have been developed to estimate the cost of outages, but further research is needed, especially for widespread outages such as California experienced.
It’s also important to consider who bears the costs. Under current law PG&E bears the costs of starting fires, but not the costs of shutting down power to prevent them, so they have too much incentive to shut off power.
Benefiting from a Blackout
In California, power lines have sparked several of the state’s most devastating fires. The damages associated with these kinds of fires have grown over the years due to widespread development in wildfire-prone areas. Shutting off power could reduce the likelihood of these serious fires. If the massive loss of life and property and widespread air quality problems caused by recent fires is indicative of what future fires could do, then even a small reduction in the likelihood of a fire would be very valuable.
Ideally, shut-offs would be targeted at the highest risk areas. San Diego Gas & Electric (SDG&E) has tackled this challenge by deploying hundreds of weather stations and cameras to monitor weather conditions, and has sectionalized its lines to allow for more targeted shut-offs. These investments could increase the likelihood that a shut-off targets the highest risk areas where the benefits are greatest.
PG&E, in contrast, is receiving scrutiny for shutting off power in lower risk areas, likely because they were electrically connected to higher risk areas and could not be sectionalized. PG&E is planning to follow SDG&E’s example, but is years behind. Policymakers will be asking whether PG&E should continue using broad shut-offs, or only shut-off power in areas where it has the technology to surgically shut-off the high risk zones.
These shut-offs weren’t entirely about benefiting public safety though. They were also about reducing the liability that PG&E faces if its infrastructure triggers a fire. In California, under the legal concept of inverse condemnation, if an electric utility’s system sparks a fire, the utility is liable for the damages, even if the utility was not at fault. PG&E is already in bankruptcy due to past fires. Avoiding further liabilities is a priority for the company if it’s going to re-emerge as a healthy company.
Taking the Switch Away from the Utility
Since privately-owned utilities like PG&E don’t face the full range of costs and benefits associated with keeping the lights on, they may not reach the right conclusion when it comes to shut-offs. More direction is needed from government. Policymakers will need to take a position on the wisdom of a shut-off event, such as last week’s, and revisit the appropriate standards for the future.
Some are calling for public ownership of PG&E. This could better align the utility’s interests with the public’s, but it wouldn’t make it any easier to determine when and where safety shut-offs should be used.
The state government, unlike the utility, is also uniquely positioned to tackle the other issues surrounding wildfire risks in the state and the impact on utilities. A series of laws recently passed by the legislature and signed by Governor Newsom, and recommendations from Commission on Catastrophic Wildfire Cost and Recovery, show that government is developing serious solutions. But the state still needs a sustainable framework for paying for wildfire damages and a focused effort by local governments to address the growth of development in the most dangerous parts of the state.
The utilities can’t do this on their own. It’s time for the state to go beyond criticism of the utilities and take charge of utility shut offs, while continuing to push forward with other efforts to protect the state from catastrophic wildfires.
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Suggested citation: Campbell, Andrew. “Northern California Goes Dark”, Energy Institute Blog, UC Berkeley, October 14, 2019, https://energyathaas.wordpress.com/2019/10/14/northern-california-goes-dark/
Andrew Campbell is the Executive Director of the Energy Institute at Haas. Andy has worked in the energy industry for his entire professional career. Prior to coming to the University of California, Andy worked for energy efficiency and demand response company, Tendril, and grid management technology provider, Sentient Energy. He helped both companies navigate the complex energy regulatory environment and tailor their sales and marketing approaches to meet the utility industry’s needs. Previously, he was Senior Energy Advisor to Commissioner Rachelle Chong and Commissioner Nancy Ryan at the California Public Utilities Commission (CPUC). While at the CPUC Andy was the lead advisor in areas including demand response, rate design, grid modernization, and electric vehicles. Andy led successful efforts to develop and adopt policies on Smart Grid investment and data access, regulatory authority over electric vehicle charging, demand response, dynamic pricing for utilities and natural gas quality standards for liquefied natural gas. Andy has also worked in Citigroup’s Global Energy Group and as a reservoir engineer with ExxonMobil. Andy earned a Master in Public Policy from the Kennedy School of Government at Harvard University and bachelors degrees in chemical engineering and economics from Rice University.