California utilities Pacific Gas & Electric and Southern California Edison are facing intense scrutiny after reporting that their power lines may have played a role in the deadly wildfires now raging in the state, the Camp Fire in Butte County and the Woolsey Fire in Los Angeles County.
In Friday reports to the California Public Utilities Commission, both utilities described grid outages in the areas shortly before the blazes began. PG&E’s filing stated that on Thursday at about 6:15 a.m., the utility “experienced an outage on the Caribou-Palermo 115 kV transmission line in Butte County,” about 20 minutes before the Camp Fire was first reported.
Later that day, an aerial patrol observed “damage to a transmission tower” on that line, about a mile northeast of the town of Pulga, the utility reported. As of Monday, the blaze had claimed 29 lives and burned 11,000 acres, taking the title of the state’s most destructive wildfire.
PG&E also reported that it canceled a planned outage in the area on Thursday to reduce the risk of power lines starting fires. Last month, the utility cut off power to about 60,000 people in 12 counties as a preventative measure.
The Woolsey Fire has burned more than 90,000 acres, forced more than 100,000 people to evacuate, and is suspected to have killed two people. Southern California Edison reported on Friday that at 2:22 p.m., about two minutes before the fire began, it experienced an outage involving a relayed circuit at a substation in the San Fernando Valley. The report noted that crews have not been able to access the area where the fire began, and have not been able to determine if its infrastructure caused the blaze.
The reports were only preliminary and short on details. Firefighters have not yet determined the cause of either fire. But in a state where utilities are facing massive public scrutiny and potential financial ruin for their roles in wildfires of recent years, they were enough to spook investors. PG&E shares had fallen from about $48 on Thursday to about $33.50 in midday Monday trading, while shares of Edison International, SCE’s parent company, fell from about $69 on Thursday to about $55 in midday Monday trading.
PG&E is facing the most hardship from its wildfire liabilities. On Friday, it saw the biggest share price drop since 2002, wiping out the gains it made so far this year. Last year, state investigations found that PG&E lines were the cause of several fires that killed at least 15 people and razed over 5,000 homes last fall. The company reported a $1 billion net loss in Q2.
PG&E could face bankruptcy if it is found liable for the estimated $15 billion in damages caused by last year’s Tubbs Fire — the most destructive wildfire in California until the Camp Fire usurped that title this week.
California lawmakers addressed the issue of utilities and wildfires this year by passing a bill, AB 901, that gives the California Public Utilities Commission (CPUC) the authority to allow utilities to pass wildfire damage costs on to ratepayers through increased bills — a first for the state, and a move that could allow PG&E to avoid immediate financial stress.
In terms of future wildfire costs, the CPUC would be able to apply a “reasonableness” review to determine which costs can be passed on to ratepayers, versus those that must be borne by the utility’s shareholders.
For PG&E’s 2017 wildfire costs, the CPUC would have the authority to conduct a “stress test” that takes PG&E’s financial status into account, and limit costs to the “maximum amount the corporation can pay without harming ratepayers or materially impacting its ability to provide adequate and safe service.” Any costs over that threshold could be covered through bonds issued by PG&E and backed by increased rates on customers.
Southern California Edison hasn’t faced a financial burden as heavy as PG&E's, but it has been found at fault for some major blazes. Last month SCE reported that one of its power lines was likely an ignition point for the Thomas Fire, which burned more than 280,000 acres and destroyed more than 1,000 structures in Santa Barbara and Ventura counties in 2017.
