The Wine Country Fires: Is Pacific Gas and Electric (PG&E) a Rogue Utility?

October 16, 2017
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By Lambert Stether of Corrente.

Pacific Gas & Electric (PG&E), the publicly-traded California utility of Erin Brockovich fame, has a market capitalization of $29.6 billion dollars and took $1.41 billion in profits for 2016, up 58.4 percent from profits in 2015. Amusingly, PG&E’s WikiPedia page has a separate heading for “Disasters,” although even a cursory search shows the list to be less than complete.

In this post, I’m going to expand on that list, starting with the San Bruno Pipeline Explosion, and then moving through fire after fire until we get to the Wine Country Fire currently ravaging Northern California. We will see that there is a common factor to the fires, a factor that (teaser alert) is shared with the Puerto Rican disaster “caused” by Hurricane Maria.

I hope California readers will chime in with PG&E disaster stories of their own, with lots of additional detail. I know very little about PG&E as a corporate entity and even less about the California regulatory environment, and I’m by no means an expert on California politics (except insofar as I follow the CalPERS story, of course).

I’ll start with the San Bruno Pipeline explosion, because that tells a story about the regulatory environment, and then move on to the fires.

San Bruno Pipeline Explosion (2010)

Eight people died in the ginormous fire that followed the explosion of a PG&E natural gas pipeline in San Bruno, California. The USGS reported that the shock wave was similar to a 1.1 magnitude earthquake. In 2016, a Federal jury found PG&E guilty of misleading investigators “and five of 11 counts of pipeline safety violations, including failing to gather information to evaluate potential gas line threats and deliberately not classifying a gas line as high risk.” Investigators found that “the explosion was caused by a combination of PG&E’s shoddy maintenance and flawed record keeping, along with lax oversight of PG&E by the state PUC.” in 2017, “A federal judge Thursday sentenced PG&E for crimes linked to the deadly San Bruno pipeline explosion, imposing the maximum fine of $3 million and branding the utility as a convicted felon.” And: “Federal investigators have harshly criticized the [California Public Utilities Commission (PUC)] for nurturing a cozy relationship with PG&E that led to lax supervision of the utility.”

Now, to be fair to the PUC, they did fine PG&E $1.6 billion, and (at least as of 2015) new President President Michael Picker was said to have set a new tone. But remember those “cozy” relationships? San Jose Mercury News, “Whistleblower complaint targets PUC, PG&E” in 2017:

[Karen Valentia Clopton,] the former chief administrative law judge at California’s powerful utility regulator said Tuesday she was fired for cooperating with investigators looking into collusion between regulators and executives from Pacific Gas & Electric.

Clopton alleges her dismissal was retaliation for cooperating with investigators looking into the commission’s actions and for telling her subordinates to do the same. She says she objected to the appointment of an administrative law judge with alleged ties to PG&E and told commissioners not to interfere with the assignment of specific judges to cases.

Now, the matter has yet to be adjudicated, but the (alleged) fact set does seem rather familiar, doesn’t it?

With that, let’s move to the fires. (Apparently, important, really bad fires have names, like hurricanes do, but based on their location, so I’m not going to give details on the damages the fires caused.)

Sierra Blaze (1994)

From the San Francisco Chronicle: “PG&E Guilty In 1994 Sierra Blaze / 739 counts of negligence for not trimming trees.”

A Nevada County jury found Pacific Gas and Electric Co. guilty yesterday of a pattern of tree-trimming violations that sparked a devastating 1994 wildfire in the Sierra.

… During the three-month trial, a prosecution expert testified that PG&E bilked its customers of nearly $80 million by diverting funds from its trimming program into shareholder profits.

Pendola Fire (2009)

From the Sacramento Business Journal: “PG&E to pay $14.75M for Pendola fire damage.” We don’t have an explicit mention of the profit motive, but we do have the pattern of inadequate tree-trimming:

Since the fire, the utility company has stepped up its vegetation management and inspection program, monitoring every mile of transmission line at least once a year as opposed to every three or four years at the time of the incident.

Butte Fire (2015)

From the Sonora Union-Democrat: “Cal Fire confirms PG&E caused Butte Fire.” Again we have the pattern of inadequte tree-trimming. Cal Fire’s incident investigator Gianni Muschetto report said the fire was sparked when a Gray Pine touched a PG&E power line. As I read it, PG&E “vegetation management” removed some trees near the line, exposing other trees, which it then did not maintain:

Failing to identify the potential hazard of leaving weaker, inherently unstable trees on the edge of the stand, without maintaining them, ultimately led to the failure of the gray pine, which contacted the power line conductor operated by PG&E, and ignited the Butte Fire, Muschetto’s report stated.

Wine Country Fires (2017)

And now we come to today’s fires, the Wine County Fires. Right before they started, we got this report from the San Jose Mercury-News: “PG&E profits nearly double after customers’ utility bills jumped”, with this little nugget:

PG&E slashed its spending on operations and maintenance during the second quarter to $1.55 billion, the utility reported. That was 15.9 percent below the company’s spending on maintenance and operations during the same period the year before.

Followed, apparently without irony or any sense of contradiction, by this:

“This has been a strong quarter,” [PG&E’s Chief Executive Officer Geisha Williams] said during the conference call. “We continue to make steady progress on our safety culture.”

I’m going to, er, go out on a limb here and speculate that tree-trimming is part of the operations and maintenance line item, meaning that Williams’ “steady progress” could well have progressed in a straight line to the Wine Country Fires. PG&E claimed that its lines went down because of hurricane-force winds. Since that was not true[1[, we can look for other explanations: From the Mercury News:

[R]eports of the power equipment failures began to turn the spotlight on PG&E, the giant San Francisco-based utility, raising questions about how well it maintained its equipment in the area and whether it adequately cut back trees from power lines to reduce fire risk — as required by state law.

From the Times-Herald News, we get the hopeful sign that the relation between the PUC and PG&E is less cozy that it was: “Regulatory agency launches investigation into California wildfires; probes PG&E activities in fire zones”:

Thursday, Elizaveta Malashenko, director of the PUC’s safety and enforcement division, sent a letter to Pacific Gas and Electric ordering it to “preserve all evidence” regarding the string of devastating fires

PG&E’s market cap promptly tanked, losing $3.5 billion. Meanwhile, state Senator Jerry Hill (D-Redwood City), a PG&E critic, said that if tree-trimming — and let’s not forget that 15.9% cut in operations and maintenance — turned out to be the problem, again, “that should signal the end of PG&E.” More from Hill:

“If it turns out that PG&E is responsible for this fire and negligent for not putting in the resources or for diverting the resources then I will be the first one to stand up and say we need to dissolve PG&E as a private company and form a public utility.”

Conclusion

I did mention a resemblance between the disasters of Hurricane Maria in Puerto Rico, and the Wine Country fires in California. It’s tree-trimming, of course:

Holy moley. In words:

This week, for the first time since the storm, electrical crews began appearing not just in the capital, but in neighboring Carolina and Rio Grande. Faced with a tangle of downed poles, lines and transformers on nearly every street, it wasn’t clear how much progress they were making.

So, the wires are all down. And why? Deferred maintenance demanded by austerity. Buzzfeed:

In recent years, as part of sweeping cuts to the government budget, many public services were slashed, including preventative maintenance of the electricity network. That meant trees were left untrimmed and allowed to intertwine with power lines — with disastrous results. After a big storm in the United States, the power company may have one break in the lines every few miles from a downed tree. In Puerto Rico today, the lines are broken every few yards.

In Puerto Rico, lack of tree trimming caused by an austerity regime imposed by the Obama administration acting on behalf of Wall Street caused the complete collapse of Puerto Rico’s grid. In California, a pattern of lack of tree trimming caused by the profit motive led to collapsed power lines and fires in the Sierra Blaze, the Pendola Fire, the Butte Fire, and quite possibly the Wine Country. If the relation between the PUC and PG&E is as cozy as the San Bruno Pipeline Explosion and Clopton’s whistleblower suit suggest, the truth of the matter may be hard to come by. But maybe we’ll get lucky! Then again, perhaps Senator Hill is right, and PG&E needs to become a public utility, rather than the incorrigible rogue utility it seems to be. Readers?

NOTES

[1] Here is PG&E spokesperson Matt Nauman in action. From the Times-Herald:

PG&E officials issued a statement Tuesday evening, acknowledging the equipment troubles even as a company spokesman called the questions about maintenance “highly speculative.”

Only if we don’t combine the profit motive with past patterns of behavior. And more:

“The historic wind event [no] that swept across PG&E service area late Sunday and early Monday packed hurricane-strength winds in excess of 75 mph in some cases. These destructive winds, along with millions of trees weakened by years of drought and recent renewed vegetation growth from winter storms, all contributed to some trees, branches and debris impacting our electric lines across the North Bay. In some cases, we have found instances of wires down, broken poles and impacted infrastructure. Where those have occurred, we have reported them to the CPUC and CalFire. Our thoughts are with all those individuals who were impacted by these devastating wildfires.

I’ve read that at least twice, and what I get out of it is that vegetation was too close to the power lines.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered.
To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

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