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Understanding how PG&E failed with gas lines and transmission lines

Uploaded: Sep 22, 2022
It is stunning to learn that the part that failed on a Pacific Gas & Electric Co. high-voltage transmission tower to spark the Camp Fire that destroyed Paradise cost about $1.
That’s right—a buck. It also was installed more than 100 years ago in 1921 before the PG&E as we know it today came into existence. The raging blaze that the sparking wires set off killed 85 people and cost $442 billion. It also resulted in felony convictions in Butte County for PG&E.
Just how the utility ended up in this situation is detailed carefully in “California Burning,” a book by Wall Street Journal reporter Katharine Blunt. Blunt had written extensively about the wildfires and utilities for the Journal before doing plenty research to put together the book.
She discussed it on a recent WSJ webinar, laying out her findings including the failures of the company as well as the regulators.
One of the basic challenges is how regulators set rates of return for investor-owned utilities. The returns are based on capital investment, not day-to-day operations. The incentive becomes to drive down operating costs, including maintenance, to maximize capital that provides investor returns. That incentivized the utlilities to limit maintenance expenses. The power lines that sparked the Camp Fire were inspected by helicopter, which is efficient and questionable if you’re looking for small parts. The small parts would have been called out, but that assumed good record keeping for 100 years.
The confluence of a variety of changes and decisions over the last 30 years put PG&E into bankruptcy once and then again after wildfire costs soared. The hastily passed utility deregulation that drove up power costs set up the first one.
When the gas pipeline exploded in San Bruno in 2010, killing eight people and destroying a neighborhood, the investigation revealed just how poor the company’s maintenance was as well as its records. It paid more than $2 billion to settle claims resulting from the deadly explosion.
It turned out, Blunt said, that the same maintenance issues were becoming evident on the electrical site.
Two other trends were making it even more challenging:
1, The state’s increasingly aggressive push for green power---solar and wind—that is significantly more expensive than fossil fuels. The Legislature and regulators pushed the utility to enter into expensive long term contracts.
2. All the responsible parties did not foresee the long term drought that has gripped the state, drying forests and killing trees, as well as the effects of climate change. Regulators and utilities in Southern California had long understood their problem with wildfires driven by Santa Ana winds, but there wasn’t considered much of a threat in Northern California. The last decade has changed that view.
The horrific fire sparked by PG&E equipment now has the company spending millions to underground high voltage lines running through dangerous areas. Undergrounding had been considered too expensive, but it will be a worthy investment to limit wildfire danger and reduce maintenance costs from trimming trees back from power lines.
That’s switch in thinking today’s situation has brought up for PG&E and other utilities.
Local Journalism.
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Comments

Posted by Dirk Svensen, a resident of Country Fair,
on Sep 22, 2022 at 9:34 am

Dirk Svensen is a registered user.

Thanks for providing the costs for these events; I was completely unaware of the numbers. It would be interesting to know how who paid what and to whom in this fiasco. Obviously no (single) corporation or even the State could absorb such a hit.

Clearly those living in these area up and down the state will be paying higher insurance costs for the rest of their life, even though it was not their fault.


Posted by Rich Buckley, a resident of Livermore,
on Sep 26, 2022 at 9:44 am

Rich Buckley is a registered user.

Tim, I notice PG&E is advertising on local t.v. they are starting a high voltage line (main transmission line) undergrounding program to "replace" old lines.

To good to be true?

It would seem to be a rare event if PG&E actually removes old utility systems completely including the towers and new underground cables installed.

I'll have to see it to believe it.


Posted by Rich Buckley, a resident of Livermore,
on Sep 26, 2022 at 9:44 am

Rich Buckley is a registered user.

Tim, I notice PG&E is advertising on local t.v. they are starting a high voltage line (main transmission line) undergrounding program to "replace" old lines.

To good to be true?

It would seem to be a rare event if PG&E actually removes old utility systems completely including the towers and new underground cables installed.

I'll have to see it to believe it.


Posted by jart1, a resident of Another Pleasanton neighborhood,
on Sep 26, 2022 at 10:04 am

jart1 is a registered user.

Dear Tim,
Thanks for the article about PG&E and their safety failures. Unfortunately, this is NOT a new thing. It is known that PG&E was doing an inadequate job even years before the San Bruno gas explosion, especially with inspections, equipment maintenance, tree trimming, and record keeping.
Don't just blame the regulators, and the rate of return structure, there's plenty of blame.
The PUC who are supposed to regulate PG&E bears a lot of responsibility, but didn't do much.

Not only did PG&E fail to allocate much to safety, like inspection, trimming, and maintenance, but much of even those funds were diverted to other uses. Check it out!


Posted by brad, a resident of Birdland,
on Sep 26, 2022 at 11:59 am

brad is a registered user.

A BIG question is " where was the PG&E Board of Directors " on this matters. My thought is they had too many Wall Street financial people and not enough engineers or utility experts.
One of the shames of this disaster is that many PG&E executives got away into retirement with big bonuses and great pensions.
Shame on California PUC Directors and Staff !!


Posted by Long Time Pleasanton Resident, a resident of Mohr Park,
on Sep 26, 2022 at 12:43 pm

Long Time Pleasanton Resident is a registered user.

Thank you for the article. I do hold PG&E responsible for not doing proper maintenance on their equipment. However, there are oversight committees including CPUC and the governor's office. Equipment failure is normal but those who are tasked with that job within PG&E should be help accountable like lowly managers. Furthermore, the failure of the State government to properly manage the public land in terms of forest management should be called out. Repurposing the maintenance budget is normal and every organization and agency do this. Again, this goes down to lowly managers who need to speak up and push back. Look at the Orravile dam problem from several years ago. Who was help responsible for that mess.
I am responding because we love to pick on PG&E and destroy them. We continue to drain their income sources through various means like EBEC and OhmConnect. These type of organizations make tremendous of money without any risks to themselves while PG&E is held holding the bag. We as consumers pay for increased rates. Something is really broken!


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