PG&E Neglected Maintenance for Years Despite Known Fire Risk; Judge Demands Prompt and Clear Answers to WSJ Expose

Even though one of our regular lines is that “Everything is like CalPERS,” sometimes “Everything is like Boeing” is more apt. PG&E has become a prime, if not the number one, case study in the human cost of corporate penny pinching. But not only have more people died and been injured at the hands of PG&E than at Boeing, the utility also had a much longer history of regulators choosing to ignore its corners-cuttting. And again unlike Boeing, it’s not as if PG&E was an admired institution in recent memory and could therefore run on brand fumes.

Yesterday, the Wall Street Journal published a major story based on extensive Freedom of Information Act disclosures, providing evidence of PG&E’s systematic, willful neglect not just of maintenance but even of inspections of its transmission lines, despite knowing full well that their decrepit state constituted a serious fire risk. At least some officials appear to have labored under the misapprehension that making a point of not knowing about the condition of many of their assets would somehow absolve them of responsibility.

The raw facts are appalling and led a judge tasked to monitor PG&E after past safety violations to demand answers, pronto. From a Wall Street Journal story mere hours after it broke its account about the PG&E’s willful negligence:

A federal judge on Wednesday ordered PG&E Corp. to respond, “on a paragraph-by-paragraph basis,” to a Wall Street Journal article that said the company has failed to upgrade hundreds of miles of high-voltage power lines despite knowing they could fail and spark wildfires.

William Alsup, a U.S. district court judge in Northern California, is overseeing PG&E’s probation after the company was convicted of safety-related violations following a natural-gas explosion that killed eight people in 2010. After an online version of the article was published Wednesday, he gave the company until July 31 to file a “fresh, forthright statement owning up to the true extent of the Wall Street Journal report” not to exceed 40 double-spaced pages.

“In the past, the offender has responded to some of the Court’s questions by filing thousands of records and leaving it to the judge to find the needles in the haystacks,” the judge wrote.

Now to the account that got Judge Alsup so riled up. From the Journal:

The failure last year of a century-old transmission line that sparked a wildfire, killed 85 people and destroyed the town of Paradise wasn’t an aberration, the documents show. A year earlier, PG&E executives conceded to a state lawyer that the company needed to process many projects, all at once, to prevent system failures—a problem they said could be likened to a “pig in the python.”

Even before November’s deadly fire, the documents show, the company knew that 49 of the steel towers that carry the electrical line that failed needed to be replaced entirely.

In a 2017 internal presentation, the large San Francisco-based utility estimated that its transmission towers were an average of 68 years old. Their mean life expectancy was 65 years. The oldest steel towers were 108 years old.

Even as fire risks increased starting in 2013 due to sustained droughts, it kept putting off upgrading its oldest transmission lines. But at least as bad is that PG&E was grossly, one might even say deliberately, ignorant of the state of its network. How can you be in the business of operating a network and not have basic information about its historical and current condition?

A key paragraph comes in the middle of the account:

Documents show that PG&E is unaware of the exact age of many of its transmission towers and wires. In 2010, PG&E commissioned consulting firm Quanta Technology, a subsidiary of Quanta Services Inc., to assess the age and condition of transmission structures throughout its 70,000-square-mile service area.

The firm was unable to determine the age of about 6,900 towers in the 115-kilovolt system. It found that nearly 30% of the remaining towers in that system, more than 3,500, were installed in the 1900s and 1910s. About 60% of the structures in the 230-kilovolt system were built between 1920 and 1950.

Do a little math. If 3,500 towers = “nearly 30%,” assume 29%, which gives a total of the portion that were dated of roughly 12,100. The formula for the portion that Quanta had to punt on was 6,900/(6,900 + 12,100), for a stunning 40%. Even after hiring a consultant, PG&E didn’t have a clue as to the age of about 40% of its system, and it’s a safe guess that it didn’t know bupkis about its condition either.

And why was PG&E so colossally ignorant about the state of its network? It’s hard to fathom how PG&E wouldn’t have historical records about its assets. And as to keeping tabs on their current, condition, well, that costs money. Again from the Journal:

Until recently, PG&E hadn’t regularly climbed its towers to inspect their condition, despite the suggestion of an outside consultant it hired…It began detailed inspections of its transmission lines only after the Camp Fire that destroyed Paradise.

In addition to those inspections, PG&E said it began using drones and helicopters earlier this year to capture images of its transmission structures to analyze their condition, identify potential points of failure and prioritize repairs.

State fire officials concluded in May that a failure of PG&E equipment on a line known as the Caribou-Palermo, built in 1921, caused the fire, the deadliest in California history…

The company in December began “enhanced inspections” that included climbing towers, some for the first time in decades.

After completing those inspections, the company disclosed June 19 that it needs to make thousands of repairs. And it decided to permanently shut down the Caribou-Palermo line after assessing the amount of work it would take to operate it safely…

Elizaveta Malashenko, the safety and enforcement chief for the California Public Utilities Commission, said that after reviewing the inspection results, she “would not be comfortable making a statement that [the Caribou-Palermo] was an outlier.”

Ms. Malashenko said the CPUC’s safety auditors have historically relied on utility records rather than field inspections, which are far more costly to conduct. After the Camp Fire, the agency has asked the state for $25 million to create a three-year program to put its own inspectors in the field, in part because of the problems PG&E has discovered within its system.

California reader DS added:

This is the sheer idiocy of prosecuting a corporation instead of a person. Someone needs to be in jail (multiple someones). Corporations are people too, my friend. People hiding behind a legal fiction intended at common law to protect them from CIVIL liability, not to immunize their criminal conduct.

The WSJ reports that 30 percent of PG&E’s transmission infrastructure is over a century old, and that 90 percent of the transmission infrastructure is at least 70 years old. They have simply been extracting rents ever since. The executive compensation and dividends should be clawed-back. Shareholders should be stripped of ownership and managers jailed for voluntary manslaughter — or perhaps even murder.

The WSJ might have added a brief refresher on why PG&E no longer has the cash flows that were the basis for the creation of investor-owned utilities in the first place (hint: classic California “soft” corruption):

In the mid-90’s, under Republican Governor Pete Wilson, California began changing the electricity industry. Democratic State Senator Steve Peace was the Chairman of the Senate Committee on Energy at the time and is often credited as “the father of deregulation”. The author of the bill was Senator Jim Brulte, a Republican from Rancho Cucamonga. Wilson admitted publicly that defects in the deregulation system would need fixing by “the next governor”.

The new rules called for the Investor Owned Utilities, or IOUs, (primarily Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric) to sell off a significant part of their electricity generation to wholly private, unregulated companies such as AES, Reliant, and Enron. The buyers of those power plants then became the wholesalers from which the IOUs needed to buy the electricity that they used to own themselves.

So the crown jewels were sold and the utilities were left with sprawling, and in the case of PG&E, old, networks to operate. This program wasn’t quite as balkanized as the deregulation of British Rail, but the sorry effects, measured in death counts and loss of property, have been worse. And who knows how long it will take for PG&E to run a much safer operation.

As former CalPERS board member JJ Jelincic, who lives in PG&E’s service area, said, “As usual, the rate payer will bail out the bad management at PG&E.” But even though this is a sadly predictable result, how bad will the damage be? Californians got a taste during the state’s electricity crisis of 2000 and 2001 of short-lived but severe pain. They now face a long-term choice between paying up and burning up.

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68 comments

    1. ex-PFC Chuck

      Having been a close observer of the electric utility industry for over half a century now while working for three suppliers and two consulting firms, as well as having an interest in the industry’s history, I can see how this ignorance might happen. Most of these large investor-owned utilities were assembled in the early 20th century by acquisition and merger smaller companies, some of which kept better records than others. This became apparent as the industry began computerizing their facilities information with geographical information systems (GIS) during the latter part of the last century.

      Reply
      1. rd

        I deal with legacy facilities for utilities, chemical plants, etc. In many cases our best sources for historical facilities documents are regulatory agencies and sometimes historical societies because the corporate records were never transferred to the purchasing or spun off companies. Every now and then you get lucky and find a treasure trove of old blueprints, but that is pretty rare. So we do extensive geophysical investigations looking for buried utilities so we don’t drill through a gas or electric line nobody knows is there. I had one site where we were doing demolition of the utility building for the industrial plant. The gas company closed off the 4″ gas line feed (a broken 4″ gas line will make the international TV news). We checked the lines and found they were still fully pressurized. It turned out there was a completely separate redundant gas feed that nobody knew about. It took the utility company a full day to find the source and the shutoff valve manhole.

        A lot of our infrastructure is in this state. It is old, poorly maintained, and underfunded.

        Reply
        1. Ron D

          I saw this problem on Van Ness in SF. It took many times longer to work on the street than initially thought because workers kept finding ancient infrastructure underneath that they had to deal with.

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        2. Oregoncharles

          Judging from my son’s experience at an engineering firm, that problem is widespread. Sometimes they had old blueprints to work from when designing renovations; usually they had to use scans or hand measurements and reverse-engineer the original. As a draftsman, that was often his job.

          Maintaining records is overhead, deducted from profit margins.

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    2. Anonymouse

      In this case, PG&E’s ignorance is totally feigned. Until recently they had an enormous warehouse with records of every job order issued since the formation of the company. Amazing levels of micro detail, down to the individual widget. After the San Bruno disaster they hired an outside company to ‘modernize’ their record keeping and fired all the long time archives guys. A lot of records went ‘missing’ when the new computerized record keeping system was ready, and a lot of others were marked for destruction. Given everything that’s come out about the company’s practices since then it’s hard to imagine this is coincidence.

      Reply
  1. Clive

    In a shameful example of how Wikipedia can be “got at”, it lists the 2003 power outage in the North East as being down to a “software bug”.

    It was not. The full report (here is a link, it is a fascinating if a long, long read) confirms it was caused by inadequate maintenance of HV transmission lines, specifically tree canopy clearance and management. The lines sagged under load conditions in a hot spell of weather (the heat and the lack of wind at the time also contributed to the degree of sagging) but this was entirely within normal line sag tolerances, had the utilities concerned done the needed way-leave maintenance.

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    1. lordkoos

      I do not trust Wikipedia for anything but plain vanilla information. Anything that threatens corporate dominance seems to be heavily edited or censored. My personal experience with their editors was quite unpleasant. When I attempted to correct misinformation on an alternative health modality that I have been trained in, I was met with outright hostility, blatant censorship and stonewalling. Among other things, the site is heavily biased towards western medicine, to the point of denying and suppressing legitimate study results that do not support that bias. The gatekeepers seem mostly to be retired physicians protecting the AMA’s turf.

      Reply
  2. anonymous

    IIRC Enron trading on the electrical grid during the 2000 — 2001 crisis cost California consumers $50 billion. Then in the spring and summer of 2008 oil went $140 a barrel through futures speculation. Market efficiency.

    Reply
  3. kimyo

    would anyone care to hazard a rough guess as to the cost of replacing essentially all of pg&e’s transmission infrastructure? they’ll need massive quantities of steel, copper and concrete, scads of engineers and construction workers. an enormous amount of fossil fuel, too, for that matter.

    it seems impossible to me that the ratepayers will be able to cover the cost of this project.

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    1. Clive

      No “one figure fits all” answer. So much depends on the line voltage needs, the installation environment and how accessible it is, or otherwise, for heavy site machinery / plant and people. Plus, if the line is running under a “single circuit risk” operation, then there is a big problem of how you keep customers on supply while doing the upgrades.

      But, for baseline, here is a recent EU benchmarked and validated report for costs https://www.acer.europa.eu/Official_documents/Acts_of_the_Agency/Publication/UIC%20Report%20%20-%20Electricity%20infrastructure.pdf (text and table pg. 11 is pertinent). I chose this because it was reasonably immune to utility cost padding, which is a huge issue when rate commissioners allocate customer price hikes based on CapEx investment (the bigger the stated capital costs, the bigger the allowable “return” the utility can claim is “fair”). There is a big incentive for the transmission operator to exaggerate costs.

      You’re talking between €200,000 and €1,500,000 per kilometre. Which is a huge spread. Note, even for the same line voltage and configuration (single or dual circuits), the wide error or variance bar.

      Reply
      1. Yves Smith Post author

        I was tempted to compare the expense of a real PG&E fix with the Jefferson County sewer mess, where some poor residents have to choose between power and water due to the magnitude of the sewer charges (due to mismanaged projected made vastly worse by bad swaps bets). That now sounds conservative.

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        1. Olga

          PG&E has 106,681 circuit miles of electric distribution lines and 18,466 circuit miles of interconnected transmission lines. Detailed cost estimates would need to be made because of the large number of variables (accessibility and terrain are just some, plus voltage, etc., etc). The good thing is this would be replacement, so there should not be right-of-way costs and battles (i.e., time delays). Per-mile T costs go up to $1.5 million (this is CA, so could be more); distribution system miles should be less. A back-of-the-napkin calculation yields a cost of about $110 billion to rebuild (estimating that D lines cost half of T lines, but that is a very rough estimate, not considering terrain and other variables (since D lines are mostly in populated areas)). A huge number, but certainly not a trillion. Plus, obviously, not all lines/facilities would need replacement. Some lines go through mountains, so that has its own challenges. The cost of necessary outages would also need to be factored in.
          Besides just cost, repairs on such a large scale have a number of other headaches. I shudder to think (It could take up to 10 years).
          Regular maintenance/replacement would have prevented the mess. But I blame CA Public Utility Commission and the legislature. Problems were known, and yet tolerated.
          CA just cannot get its electrical system right; not sure why. Its deregulation in the 1996 was a disaster – a school child could see that serious problems would arise (e.g., a cap on retail rates, but not wholesale). Several billions of ‘stranded costs’ were charged to ratepayers for the two largest utilities; but in 2001, PG&E filed for bankruptcy. The Enron mess came in 1999-2000 (this included creating artificial transmission shortages). Politicians (and customers) paid a price, but the system was still not reformed (or only marginally).
          There is another problem, though. If (or when) significant repair/replacement program is ordered, ratepayers will pay (cost recovery may be spread over several decades to ‘soften the blow’), but still it could make the cost of electric power significantly higher in the northern part of the state. What will be the effect…?
          (To be fair, though, CA is at the forefront of implementing renewables plus storage, so that has some hope for the state.)

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          1. Anon

            So, maybe it’s time to have a more distributed electrical transmission system that accommodates the multiple solar PV centers across the state. Upgrade the towers and lines in a reconfigured system. Coupled with individual solar PV arrays on rooftops and added to new parking lot canopies, maybe there is a way to mitigate the costs of replacing the old system.

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      2. PlutoniumKun

        Yes, the cost is staggering – a major replacement program for somewhere like California could well go into the trillions of dollars if it was done quickly and correctly (i.e. multiple circuits for security, allowances for earthquakes, etc). The cost of networks is often overlooked because historically, like water infrastructure, the investment has been spread over many decades. However, unlike water infrastructure, electricity infrastructure needs replacing on a fairly conventional cycle (usually 30 years or so, I’m astonished at how old the Californian system is). I recall an engineer saying (only semi-joking I think) that the reason why Europe has such a good, resilient infrastructure is that its had regular destructive wars, this has led to the need for more rapid replacement and overlay of power and water lines. The US may well be paying the price for freeloading on lots of 20th Century investment and not updating.

        Without knowing much about California, looking at those raw figures I would suggest that they don’t need a program of updating lines, they actually need a whole new network overlying the older system. This is the only way they could keep everything running while modernising the system. Needless to say, that would be a gigantic project, and hugely controversial as it would mean brand new lines over rich peoples gardens – never a popular thing. Scattering houses randomly over the countryside (i.e. sprawl) is a guaranteed way to raise infrastructure costs.

        Incidentally, in the arguments around de-carbonising the economy, the costs of new electrical infrastructure is often overlooked. The number 1 thing wind and solar operators look for when seeking sites is not wind or sun – its a nearby power line of sufficient capacity. They will happily accept lower output if they can shorten their connecting line by a few km (similarly for server farms). Its also why arguments over wind/solar/nuclear costs are so often very wide of the mark – if you don’t factor in the unique requirements of each, you end up with very distorted results.

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      3. Off The Street

        Rate bases, the gaming opportunity for the enterprising IOU manager. In antediluvian times, the conventional wisdom at IOUs was that a bigger rate base was better because that led to higher allowed regulatory returns. Eight percent, or whatever was negotiated with those Public Utilities Commission servants, was the focal and leverage point for bonuses. That seems so quaint now, post-Enron.

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    2. rd

      Rate payers covered the cost to build it in the first place. it is simply a cost of having the service. If the rate payers are not willing to pay the cost, then they need to be willing to live with the blackouts etc.

      Its the same with highways, bridges, water lines, sewer lines, etc. We have simply de-prioritized them so that it is more important to pay people for instagram posts than to pay for fundamental utilities and infrastructure. The assumption is that the water and electricity will flow at very low cost and you can drive to work over that bridge. That holds true until it doesn’t.

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      1. Jeremy Grimm

        Can I assume you are a rate payer? Are you willing to pay the ‘cost’ [however the utilities might calculate that number and mispend the money] or do you prefer living with the blackouts etc.? I think your simple answer to the problem — essentially people want something for nothing — greatly oversimplifies matters. It confuses victims with actors and ignores the perpetrators.

        I do agree with your conclusion interpreted as a restatement of the French saying “après moi le déluge” as a motto for our Elite. Or as the Chuck Prince says “… But as long as the music is playing, you’ve got to get up and dance.” To add another to this heap … I think we may hear the fat lady sing all too soon.

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  4. none

    I’m stopped by the WSJ paywall but this NYT article from March is pretty good:

    https://www.nytimes.com/interactive/2019/03/18/business/pge-california-wildfires.html

    I’m amazed there aren’t far more California wildfires from natural causes. I bet there will be as the climate keeps getting hotter.

    And from SF Chronicle (https://www.sfgate.com/news/bayarea/article/u-s-Judge-Orders-Pg-E-To-Respond-To-Wsj-Claim-It-14086622.php):

    Alsup also ordered PG&E to state in a separate 10-page response why it distributed almost $5 billion in dividends to shareholders before seeking Chapter 11 bankruptcy protection in January, at a time when it allegedly knew of its backlog of hazardous trees near wires.

    The utility must also say in the second filing how much money it has contributed to political campaigns since 2017 and “why those campaign contributions were more important” than repairing aging lines and removing hazardous trees.

    Lol.

    Reply
  5. 115 kV

    It should be noted that most steel electric transmission towers have a useful life in the hundreds of years, assuming they are regularly painted once corrosion appears. Foundations and grounding need regular inspection and occasional replacement. The weak link are insulators and conductors and associated hardware to keep them secure.

    I was once told by a transmission VP that the bean counters told him to allow steel structures to rust until they fell down, then replace with wood. Steel structures reach a point of no return.

    Nuthin like eating seed corn!

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    1. PlutoniumKun

      He obviously never heard of termites.

      The problem with keeping existing towers is that it means to upgrade the system, you have to shut down the line for days or weeks. Thats fine if you have spare circuits. I suspect that in California thats not the case. This is the reason why its often cheaper to run new lines in parallel with existing lines, before removing the older one in its entirety. Older towers can sometimes be refurbished and reused.

      Incidentally, timber power lines are a major headache for disposal when they are replaced. They’ve usually been intensively chemically treated to prevent rot, which ensures that when it comes to disposal, they are considered hazardous waste.

      I don’t know the relative costing, but many countries use pre-cast concrete. They tend to be pretty ugly, but are cheap and effective. A few architects have designed beautiful ones, but this always raises the costs.

      Reply
      1. The Rev Kev

        Your comment just made we wonder. What is the state of the electricity infrastructure in and around places like Silicon Valley? Is this area under the domain of PG&E? If they have been upgraded to deal with what must be a large strain on the grid, just who paid for it exactly? Something else came to mind. It was mentioned that ‘ It’s hard to fathom how PG&E wouldn’t have historical records about its assets.’ The question arises if the records from the companies that were taken over were kept or perhaps just culled. I have seen with Oz schools how the principals are taught to dump all records after only a few short years so that only ‘operational’ records are kept. I do wonder if this may be true of companies like PG&E as there would be a cost-saving in not storing all those old files in some warehouse. In other words, perhaps the old files are not even there.

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        1. Olga

          Silicon Valley (I do like this new term, Silly-con) is in the PG&E service area. Ratepayers pay for all (very rarely does PUC make shareholders pay). To replace/rebuild/repair on the scale that has been suggested, the co. would have to inspect every inch of its T&D system. Not sure historical records are all that necessary in this case. If the co. does not have up-to-date records on the entirety of its system, that is a problem, of course. (It also does not make a lot of sense; how does one run a system with such gaps? Typically, unless there is an outage, a line is in use 24/7 and data are telemetered constantly to the Independent System Operator. To repair, though, one needs to know the current condition, not necessarily how old the line is (although, that could help with prioritising inspections/repairs.))

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        2. Anonymouse

          The records are all there, I’ve seen them. The service area has been the same since about 1927, and the old job orders for the predecessor companies are available too. The company chose not to maintain these power lines and killed a lot of people as a result.

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      2. upstater

        termites don’t eat treated poles for many decades. but eventually they do and things fall apart. needless to say, the ones making the decisions to let things fall apart are long gone by the time the problems are apparent.

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      3. Oregoncharles

        Why isn’t it possible to just double the lines on the existing towers, if those are still sound? Are the tolerances really that close?

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    2. Bushwood

      I’ve heard similar comments before on rust, and from a utility perspective there is a logical business rationale. Repainting a tower is considered O&M which much be expensed the year it occurs and there is a higher probability that rate payers wouldn’t have to cover the cost. Replacing an entire tower because of rust could be capitalized and thus added to rate base. Down the road during the next rate case filing the utility could then ask for a return on that new rate base and thus earn a return on it.

      Rightly or wrongly, I suspect all public utilities to some degree follow this philosophy.

      Reply
  6. Jeff

    While in Europe people have used the maintenance windows on those HV lines to add optical fiber networks to the electrical infrastructure.

    Reply
    1. ex-PFC Chuck

      Some utilities in the States have done that as well. Some are also leasing leasing use of their overhead transmission rights-of-way for underground comm fiber conduits.

      Reply
      1. Off The Street

        Railroads got into the act years ago, like Southern Pacific with its Sprint (Southern Pacific Railroad Internal Network Telecommunications). Miles of right-of-way might as well be good for more than weeds and illegal dumping, and telegraphs are so last-century.

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  7. taunger

    I can’t imagine that this level of negligence is limited to PG&E, which is terrifying. Not all of us are at wildfire risk, but cascading grid failure …

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    1. Clive

      Yes, it’s not asset quality per se that’s the biggest issue (although it is a significant problem in-and-of-iteself and symptomatic of a management and economic-model industry-wide malaise).

      It is grid instability and resilience. The unique properties of the load profile in California means it is exceptionally vulnerable to wide-scale interruption of supply and the resulting difficulties in restoring service. Very high, by US standards, load densities and a disproportionate amount of reactive loads would mean that, worse-case, some customers would be in blackout for a week.

      Not all generation plant can satisfy reactive loads, such as directly-connected motors like those found in typical pump or air conditioning equipment. Solar and wind use invertors to generate appropriate transmission voltages and for frequency control. They cannot “switch”, as more conventional generators can, to a higher proportion of reactive load output. California has a big reliance on solar and wind sources.

      Major hospitals and critical infrastructure carry back-up generators, but usually only designed for 3-5 days runtime.

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        1. Clive

          No kidding. Naked Capitalism never gives investment advice, but there’s going to be, it’s pretty safe to say, significant demand (not just from PG&E) for electricity distribution grid components (long HV lines, shunt capacitors, transformers…).

          But, but, but… these components don’t install themselves. You need linesmen to run lines. You need HV switchgear engineers to design (or even replace) switching nodes. My dad worked in the U.K. in the old, old CEGB days. There was a small, highly skilled and trained (you needed about 10 years experience to be fully competent) cohort of engineers who knew how to make a distribution grid work, in reality, not just as a computer-simulation desktop on-paper exercise numbering no more than a few hundred.

          I doubt PG&E could lay its miserable corporate hands on the skill sets needed. It probably only knows how to debase, abuse and have HR pee off its staff. Not nurture, respect or, laugh out loud, train a pipeline of new blood.

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          1. Ignacio

            Yes, grid knowhow is costly but valuable. It is stunning to see how PG&E let things degrade to that level. The absence of responsibility this reveals tells a lot on how de-regulation works. Grids should all be public assets.

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            1. Jeff

              Deregulation? Where was risk management for the last 20 years, and why weren’t they doing their job? Perhaps it’s akin to VW’s dieselgate problem where engineers did report the problem but no one at the top wanted to hear it due to the culture.

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          2. MichaelSF

            Institutional memory gets in the way of implementing what the management wants done. I saw that in the US Fed civil service, and towards the end of my career it seemed like there was a definite move towards pushing all the “old hands” who knew what did or did not work into retirement.

            I remember one staff meeting where a study on something was being proposed by management. One of my co-workers pointed out that we’d already tried that in the past and it didn’t work, and he was accused of being cynical.

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    2. Jeremy Grimm

      I believe you have identified the real issue of concern. The wildfires in California are a growing threat with or without the willful negligence of PG&E. The PG&E story should focus attention on the terrible state of our electrical Grid. The Grid supports and couples with many other networks of infrastructure essential to our present way of life. How many people live in all electric homes or apartments and use electricity to meter their gas? How many municipal water towers must be fed by pumps running on electric power? What of the pumps in service stations pumping gasoline and the diesel that enables our extensive trucking networks to maintain their just-in-time deliveries? What happens to traffic signals when the Grid goes down? I’ve only mentioned the few ties between the Grid and other support networks that immediately come to mind. I believe there are second and third and deeper layer couplings that tie our support networks into a giant house of cards.

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      1. Oregoncharles

        F’rinstance: We have a gas furnace, but the fan and the controls, even ignition, depend on electricity. The same goes for the clothes dryer, when we can’t use the sun. As it happens, we’re also out at the end of the line, so blackouts are to be expected. One, after a big storm, lasted over a week, in very cold weather. (Actually, in that one we lost the gas, as well, because a tree fell on the meter. Wild times.) A PV system would make sense just as a backup.

        Incidentally, your point is the reason there was such a panic over the Y2K threat: people were afraid of cascading failures, especially of the electrical grid. Of course, it was a multi-billion $ disaster just to fix enough systems to prevent such a cascade. (I know nothing, but I was told there were indeed failures – they just didn’t cause much damage.) It was an early warning of the kind of IT brittleness that’s been discussed here on NC.

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  8. Ignacio

    When I lived in El Cerrito and Berkeley (Bay Area) in 1996-7 it surprised me how badly kept were the LV transmision lines. If there was a storm, the chance of interrupting electricity supply in some quarters was very high. Having seen this, it doesn’t surprise me that much the findings on quality control and maintenance failure on the HV network. What bothers me is that even if personal responsibilities are identified and fined accordingly the ultimate responsibility lies on the legislators that proceeded with de-regulation, and those won’t be prosecuted. Or will be?

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  9. Tim Smyth

    Interestingly one consequence of electricity deregulation in my neck of the woods(New England) is that the electric utilities were now able to pass their Federal FERC regulated rates(with their significantly higher rates of return than the state PUC’s allow) for their interstate high voltage transmission networks directly to the consumer without state PUC interference. Thus while like in California the IOU’s like Eversource and National Grid USA have sold off all of their power generating facilities to the likes of Calpine, AES, NRG, etc. they have gone on a massive transmission upgrade and construction “binge” all the while locking in the double digit FERC allowed rates of return ford decades to come.

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  10. divadab

    Old infrastructure is everywhere. My cabin is at the end of the line of a New England power line installed in the early fifties. Prior to that, the local farms had no electricity (though they had hydro-electric power in the village in the 1890’s – the cost of extending lines to the farmers was considered prohibitive until rural electrification was made a priority after WW2). To minimise cost, the lines were run across the countryside from farm to farm following the most direct route – across fields and meadows rather than along roads. Now that much of the area’s marginal farmland is returning to woods, most of these lines now are in the middle of trees – which fall on the lines in storms – and in the winter, are hard to access. As a result, electric service is less reliable now than it was 40 years ago – we had no power for three days after a storm last winter and the power company guys said “get used to it”!

    The local utility has a program to move the lines to be along the roads – but they must get landowner permission and many, being weekend and summer residents and not wanting their views spoiled, frequently refuse. SO unreliable power is baked in – and I just bought a generator powered by a 100 lb propane tank. Never needed one before but I don;t need another long period without running water or lights!

    It’s a complicated situation – with new technology, it is possible to revamp the electricity distribution system to be more distributed so that there is more distributed resilience. But this requires strategic thinking and leadership from entities not showing much of either.

    Reply
  11. Carolinian

    Thanks for the post. However electric lines are but one of many potential fire hazards and the Paradise tragedy may still have happened if PG&E had been more diligent. There is currently a fire east of Phoenix that was possibly caused by that fire lore fave, the cigarette butt out the car window. It seems humans in general and not just corrupt corporations are now a threat to the flammable West.

    We have our own struggles with the public/private scam here in SC and Duke Energy was threatening a large rate increase to pay for an abandoned nuke plant boondoggle. Here the regulators mostly said no.

    Reply
    1. Oregoncharles

      Amazing how often you see scorched areas along the road, evidently caused by the same discarded-butt scenario. If that happens in the woods, you have a major fire.

      Of course, the Willamette Valley has a long history with fire: the natives used to burn regularly, to keep it in grassland.

      Reply
  12. EoH

    Looks like willful ignorance and reckless disregard. Does normal D&O and liability insurance cover that? Punitive damages in a civil trial would be routine, were it not for the bankruptcy.

    As others have said, the loss of life and damage to property argues for prison time for executives. I would also seek to prohibit its senior executives and board members from holding those offices for any SEC issuer. Executive bonuses and payments to shareholders would appear to be fraudulent.

    Needless to say, none of these managers is so “essential” to operations that they should continue to serve during and through bankruptcy, let alone at a higher, “we’ve gotta keep ’em” compensation. Didn’t they just argue that themselves, contending that they, like Sgt. Schultz, know nussink.

    If monopoly utilities are to be this poorly run and regulated, and yet the public cannot do without power, it would be cheaper for the state to operate the utility itself.

    Reply
  13. Skip Intro

    The asset-stripping sale of the generating facilities sounds like the standard Sopranos’ bust out private equity ‘op-co / prop-co’ scam. All they need to do is load the operating company with debts, start a fire, and go bankrupt… oh wait

    Reply
  14. Bushwood

    Not to excuse PG&E, but the blame for this goes well beyond just them. The California ISO, CPUC, and current/former governors who appoint commissioners to the CPUC have all had a hand in the current state of the grid in California.
    At the end of the day if they’re priority had been safety, they would have pushed PG&E to build out new lines or fix the existing transmission lines. But they likely didn’t do this because they would had a good idea to how much this would have cost (hundreds of billions).
    Because PG&E is a regulated utility they would have been then able to turn around and bill their customers for the new rate base (rate base = cost of new lines – depreciation) and customers’ bills would have skyrocketed. PG&E of course would be fine with this scenario as it’s a great way to grow their earnings as they would get to earn a return on all this new rate base.
    But at the end of the day, no one wanted to be the one to go out and push for all this new spend because they knew stakeholders (large customers, consumer rights groups, environmental groups, etc) would have thrown a fit.
    And as with many other topics that NC covers one of the most popular options for tough issues is to just kick the can down the road and let someone else deal with it.
    Yes, if PG&E was a more responsible company they would have been kicking and screaming in front of the commission that that hundreds of billions needs to be spent, but until something like the fires happened all parties would have just likely balked at actually doing anything.

    Reply
    1. JBird4049

      The PUC has been a corrupt cesspool for at least forty years and from I have read it, and its antecedent agencies, has been that in some form since before the Second World War. The differences have only been of degrees and not of kind. Other areas and levels of Californian government including regulators and law enforcement have meandered among good, bad, and indifferent but not not them. Which explains why so much of the infrastructure has not been maintained in nearly a century.

      I really should do some serious research on it. It would be entertaining at least. Rather like Tammany Hall was.

      Reply
    1. Carl

      Reading all this, I was thinking of the nukes. What burned up Fukushima Daiichi? Loss of off-site power. What caused the tsunami? An earthquake. What has a high likelihood of happening in Cali? A big one.

      Reply
  15. flora

    Until now, the following would be dismissed as hysteria or hyperbolic ranting. Now, it’s undeniable.

    Deregulation kills.

    Reply
    1. Clive

      Yes indeed, the irony being that a) you (“you” being state or federal government) could pick up PG&E’s now sadly crappified distribution assets at knock-down prices (in part dur to their dilapidated condition) and b) the funding to replace or repair them is currently, as we here in England, cheap as chips. The fixed income bond market is crying out for modest but predictable return-bearing investments.

      There is simply no excuses now for the deregulated “because markets” nonsense.

      Reply
    2. Jeff

      CA ISO wasn’t doing it’s job, PG&E risk management wasn’t doing it’s job and PG&E execs didn’t do their job. None of that has to do with deregulation. That’s a whole lot of people not recognizing the risks of them not being good at their jobs.

      It’s akin to GM’s ignition switch problem, VW’s dieselgate, bank bailouts, etc. It’s people in companies allowing bean counter arguments to supercede risk to human life because quarterly bonuses are on the line.

      Reply
  16. David in Santa Cruz

    TRIGGER WARNING: Scores of horrible deaths.

    Stop for a moment to imagine the horrible deaths suffered by each person killed by the 2018 Camp Fire in Paradise. Think about the suffering of those burned to death in the 2010 San Bruno pipeline explosion. The moments of searing pain before your skin begins to crisp and your body fat starts to melt and sizzle. Scores of human beings, not fighting a war, but sitting in their homes. Then, think about this:

    A convicted federal felon donated more than four million dollars to influence California politics and the money was accepted by California Gov. Gavin Newsom the vast majority of members of the state legislature, and both major political parties.

    …Newsom, a Democrat, received more than $200,000 from the federal offender. The Republican and Democratic parties of California each took more than $500,000.
    https://www.abc10.com/article/news/investigations/governor-newsom-most-state-lawmakers-took-money-from-convicted-felon-pge/103-2414790f-3a19-4411-92c2-fe23b519d646

    The greed and callousness of “Everything is CalPERS” is enabled by the comprehensive corruption of our political system.

    Reply
  17. heresy101

    There is one solution to PG&E that works – a Constitutional Amendment to form a State utility to condemn all PG&E assets and then turn them over to the CCAs (https://cal-cca.org/about/). Pay PG&E salvage value for transmission assets and possibly as high as depreciated book value for distribution and generation assets (after all they are basically garbage).

    Rebuilding all the 18,466 miles of transmission line at $2M per mile would be $36.9B. Over 30 years at 7% interest (what CALPERS needs), this would be about $0.037/kWh for 80B annual kWh sales.

    If distribution were treated separately – power costs, labor, materials and services, A&G, asset payment, high voltage replacement, and fire fund would be about $0.20/kWh, which is the current average PG&E rate.

    It is time for PG&E to die!!

    Reply
    1. Jeff

      You should search Dept. of Water and Power and look at what happens when a government entity owns a utility.

      Careful what you wish for.

      Reply
      1. Briny

        {Mentally flipping a coin} Between historical experience and recent, this glibertarian opts for gubbmint owned utility, thank ye very much.

        Reply

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