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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Looking at the causes of the historically biggest wildfires in California, a good many of them are power line related, so it sounds as if that’s just something that comes with the territory…
Most utilities have been pinching pennies in terms of upkeep for a long time now, I don’t know much about PG & E in that regard.
For what it’s worth, the wine country fire of September 1964 was huge as well, but hardly anybody lived there, so losses of homes were minor, less than 200.
> just something that comes with the territory
That’s like saying trees taking down power lines in ice storms comes with the territory. It surely does, if you cut your budget by 15.9% and don’t trim the trees!
Like I mentioned, don’t know much about it in terms of upkeep, but the idea that it happened all over the place in a fashion that almost looked as if a arsonist/terrorist with 20 road flares, a car and full tank of gas-might’ve been responsible, means to me that Mother Nature might’ve been the cause more than man’s inability to be proactive, combined with ridiculously low humidity levels, i.e. bone dry.
It was a disaster in search of a spark, or in this case, dozens.
Exactly, corporations whose only and single motive is to transfer as much money as possible to their shareholders regardless of their disastrous cutting of public safety and customer service reliability, not to mention neglecting any sane provision for major public damages, including to agriculture and private property; not only should be fined out of existence, their senior executives should be in jail for several decades.
These fires are a direct and specific result of corporations cutting out and severely cutting back on maintenance that they knew was necessary so that wealthy shareholders could get higher and higher returns on their money – private property, public property and lives be damned.
I’m not smart enough to figure out who owns the equities of PG&E. But I ran across this little discussion on how PG&E has “reinvented the utility business model.” https://seekingalpha.com/article/4052400-pacific-gas-and-electric-reinvents-utility-business-model
I guess the smart thing to do is to figure out how one can force one’s way into the snarling gaggle of carnivores eating away at the carcass of the last prey animal on the veldt… I’m sure that image ought to give the “successful” people reading this a reason to hoot.
Little side note: I worked for a big law firm whose name, after much chopping and changing, devolved down to “Preston Gates & Ellis” as in “PG&E” (The Gates was William Gates Sr., father of THE William Gates. The firm went big into Intellectual Property a couple of years before that plunge. Well over 100 Really Smart Partners, all into “eat what you kill.” So it was decided to revise the firm’s logo and letterhead and all that. Those Smart Fellers came up with a consultant-generated graphic, subjected to all kinds of partner-level review, that looked a whole lot like the one used by none other than mega-utility Pacific Gas and Electric. Strong letters followed. PG&E the law firm is now a small part of a much bigger shark — the firm was eaten in 2007, by a supranational firm, merging with Kirkpatrick & Lockhart Nicholson Graham to form K&L Gates (preserving the Gates Brand…)
Gotta pay those dividends!
https://finance.yahoo.com/quote/PCG/history?period1=76230000&period2=1508050800&interval=div%7Csplit&filter=div&frequency=1d
By not paying taxes (p. 4, physically p. 9),
https://itep.org/wp-content/uploads/35percentfullreport.pdf
No. Just no.
HV power line design inherently precludes the possibility of random arcing. The cables are held sufficiently away from terrain with a big margin of safety carefully calculated according to the voltage rating. The insulated cable carriers are able to swing in high winds and the lateral cable movement should be within the allotted tolerance for nearby objects like trees. The pylons should be designed to withstand predictable and expected meteorological or seismic events. The wind speeds seen in Wine Country were not exceptional for the region and have a return period of a decade or so.
If a cable grounds to earth via vegetation, that is either poor design or poor maintenance (or both). It is never, ever, “just one of those things”.
The pylons should be designed to withstand predictable and expected meteorological or seismic events
You mean like at Diablo Canyon?
If I’m reading the rules from the 2015 “STATE OF CALIFORNIA RULES FOR Overhead Electric Line Construction” correctly (section 35 in combo with tables 1 & 2), the rules REQUIRE radial clearance of just 18 inches to just over 3 feet maintained, depending on voltage (and more for certain high risk areas). And for weather conditions the language reads (emphasis mine) ” Clearances in this case shall be maintained for normal annual weather variations.” The suggested guidelines go from 4 feet to 20 feet.
And they are required to fix any situations when notified (may only apply to dead parts of trees?)
“When a supply or communication company has actual knowledge,
obtained either through normal operating practices or notification to the
company, that dead, rotten or diseased trees or dead, rotten or diseased
portions of otherwise healthy trees overhang or lean toward and may fall
into a span of supply or communication lines, said trees or portions
thereof should be removed. ”
I wonder what an afternoon spot checking a few poles would turn up compliance wise. And picturing/documenting/notifying non-compliant upkeep.
source:
http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M146/K646/146646565.pdf
I’ve worked for a co that only exists to be a subcontractor of pg$e. Our scope of work was pretty limited, and the ‘problem trees’ that we discovered were then taken out by another subcontracted tree trim co. A lot of our work was/is used to prove pg$e not negligent and/ or not responsible once the lawsuits start coming…
Also, the companies often work in tandem to take advantage of any tragedy whether drought or fire to get ’emergency funding’ from the state to pay for the work that they are ultimately responsible for.
Circa 1995 to 2005, I noticed that whenever a small blackout or small fire came about because of PG & E power lines, the newspaper doing the reporting was always careful to mention that a squirrel or some other wildlife was blamed. But like you say – a properly grounded power line will not be affected, simply because some risk happy rodent seeks to run across a utility’s power wires.
I’ve lately been wondering why downed power lines don’t automatically turn themselves off. They should be dead before they hit the ground. Is it that hard to install a fiber optic with the line to trigger a deadman switch when the signal breaks?
The PG&E substation attacks (yes, plural) are also odd in the extreme. I agree with the assessment these were a pro job. Firing at random into a substation is pretty futile. Unless you know exactly what to hit, you’ll likely just make a lot of harmless noise.
But whoever took out the PG&E facility knew precisely where to aim.
The only question is motivation. I suspect Homeland Security got fed up of waiting for the company to act and harden strategically important distribution nodes like this one is. It, or another government agency, organised the hit to make a point. If my guess is correct PG&E have made some enemies of people they don’t want to be making enemies of.
(The WSJ coverage is the most comprehensive I’ve come across, but if you’ve not got a subscription the Wikipedia version is reasonably okay if read in conjunction with this NYT piece)
A couple of years ago, my town was blacked out because some idiot shot out a power station insulator in a neighboring town. Just plinking, you know.
I’m not convinced it’s so difficult.
Localised effects which merely impact a town or a suburb are easy to achieve just by taking out a section of the transmission grid which is either due to design or maintenance reasons running on a single circuit risk.
Taking out an installation like Metcalf cannot be done by firing off some pot shots and getting lucky with what you hit. Whoever perpetuated it knew exactly where the vulnerabilities are and had sufficient numbers of riflemen to cover the targets in a fairly short amount of time. These installations are several acres in area and just getting around on foot means it cannot be done by a lone gunman in an hour or two.
I hadn’t heard about those attacks – it would be really interesting to know what was behind it. Whoever did it obviously didn’t mind everyone knowing the attack was co-ordinated with military competence.
I once saw the aftermath of a transformer attack in Ireland. Back when the price of copper spiked a few years ago members of the *ahem* travelling community would regularly find isolated 32kv transformers, usually located in quarries, and spike their bases to release the insulating oil. Once drained of insulating oil, the transformer would short (in what I was told would be quite an impressive fireworks display) allowing them to remove the copper safely. One such attack led to a blackout in a local town with 20,000 people.
One of my favorite authors is George R. Stewart, who was an english professor @ Berkeley, and a pair of books of his make for interesting reading about right now…
“Fire” from 1948 is a tale of one of our conflagrations as told from the perspective of dozens of people so effected.
“Storm” from 1941 is a tale of a cyclone that originates in Japan and makes it’s way into a blizzard that hits the Sierra Nevada. This was the book responsible for the naming of storms that was to follow it’s publication. In this tome, the storm is called Maria.
There are many other works of his that are frankly outstanding.
His book on the Donner Party: “Ordeal By Hunger” is a classic treatise on the subject, and “Earth Abides” is one of the 1st post apocalyptic novels, and perhaps the best. “Not So Rich As You Think” is an early essay on the ecology movement and how we trash our country.
The Kinston Trio “they call the wind Maria” circa 1959
https://www.youtube.com/watch?v=H1eQo_ygSCw
I expect PG&E is in deep trouble here – lots of upper-middle class homes destroyed, wineries favored by the 0.1% damaged… this one won’t be easy to downplay.
Deep trouble? Do you have a sliver stake in your pocket, or….?
As of this time, forty people have died in this fire, not to mention people hospitalized. That is what should put them into deep trouble. You can rebuild a building, but you cannot resurrect the lives that were lost.
Mopes, especially old mopes, and even 0.01 percenters, that get offed by the effects of neoliberalism, simply do not count. Remember, it’s competition. Zero sum game is the model. So sad that retired corp looters running hobby wineries, and the Old Families that were featured in serial soap opera TV programs of the past, got burnt out and injured and killed. A certain amount of killing has always been an element of bidness… Just part of the process…
In 1994 or was it 1993? Google sucks.
In the wee hours a main gas valve for the city of Alameda failed and natural gas pressure in hundreds of homes increased ten to twenty fold. This caused gas leaks inside homes and pilot lights to flare like blow torches. Hundreds had to evacuate their homes, dozens of fires were caused, 25 of them major. Our home was gutted, most of our possessions were destroyed. We barely escaped with our lives. The psychological trauma was serious, especially so for our 7 year old son. My wife developed a serious case of bronchitis from smoke inhalation. PG&E paid up and their adjuster was a decent fellow. But before they did we had to document not only all things major but all our chard bits and bobs as well. There were things beyond price, like family photographs, art work by artist friends who had yet to achieve noteworthy status. The last entry in the list of priceless things was our son’s beloved cat that died trapped in the basement.
PG&E was self insured at the time. Some years later they went through bankruptcy, I believe, and rose again from the dead. I also believe they have a special waiver that provides ridiculously low limits on their liability in the event of nuclear disaster. We knew someone on the inside at that time, but that was long ago and she has since passed away.
Sorry for this, and that’s interesting about the waiver.
Perhaps the waiver is the Price Anderson Act, which applies to all nuclear power plants in the United States.
The same holds for some of the worst fires in recent memory here down under e.g. privatize or sell to off shore investors, cut maintenance costs – labour hrs, extreme heat events, high demand pull, breaking point.
One would think with the increasing knowlage about and the increasing likelihood of climate related weather events prudence would dictate that such intrinsic infrastructure would be hardened, as well, as maintenance programs reflecting the operational necessities required to preserve such assets, as well, as insure other assets are preserved i.e. its one thing for PG&E stuffs value to go to zero but taking everything else with it thingy… not to mention life.
> prudence would dictate that such intrinsic infrastructure would be hardened
And it’s not clear to me that a private utility can exercise such prudence, Fable of the Bees-style.
But as OregonCharles and others point out, the alternatives are not so easy to structure.
Undergrounding would seem to be the answer.
“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.”
(Repeating a point from yesterday, since it’s now even more apropos.) This is awkward for making utilities “public,” if that ties their budget to the state’s. California isn’t monetarily sovereign, either, so budget problems could easily impact maintenance.
There are a couple of proven solutions available here on the West Coast: One is PUD’s, Public Utility Districts. These are local governmental bodies, formed by initiative, that act as utilities; their budget is separate from the state’s. There are also customer-owned co-ops, like the one in Philomath, OR. I wish we were on it, but we’re outside its area. There’s one for the phone, too. These are private and, obviously, locally owned. The practical difference between the two should be small, since virtually everyone in the area would be a customer.
Both of those are localized, which has advantages. To replace PG&E, you’d need to break it up into local utilities and create a wholesale utility, in charge of generation and long-distance transmission, owned by the local entities collectively. I’d separate out the gas company, too: too much concentration of power, so to speak.
That’s a big order; I’m not familiar with Cali law or politics, bu tthey don’t seem real promising from here. OTOH, PG&E may be available at a bargain.
We have a couple of these -SMUD is the biggest – can definitely be done.
In 2006, the citizens of Davis, CA voted to leave PG&E and join SMUD. Folks in Sacramento had to vote too (expand SMUD territory into Yolo County). PG&E spent millions on that local initiative successfully scaring Sacramentans that their historically lower rates would soar. From Cosmo Garvin in the Sacramento News and Review:
> PG&E may be available at a bargain.
Never let a crisis go to waste!
That’s an interesting idea about the co-ops. I’m sure there’s a literature on utility regulatory reform in California (which is the size of a country, after all) but I have yet to connect to it.
Our electricity is municipalized. We still get our natural gas from PG&E.
In addition to the risk of maintenance budgets suffering from fiscal austerity – or simply low prioritization by clueless politicians – there’s another peril of making utilities public: the blatant cronyism already evident in the current regulator/regulatee relationship could get even worse if the utility itself is public, and its management appointed by hacks.
One other problem with the current for-profit utility approach is that there’s not enough risk of going out of business (and taking down the careers of management in the process), so there isn’t enough incentive to take care of the business.
I am more appreciative today of the non-profit co-op approach, although that might suffer over time from a lack of incentive to modernize / improve.
PG&E and the PUC seems a classic case of regulatory capture, and the local papers have an article on the problem every few years, though the exposure doesn’t seem to cause any change.
I would like very much to know if the new personnel at PUC have made a difference in performance*, or whether it’s just public relations. Our experience with CalPERS would seem to indicate the latter, but that’s not evidence.
* The personnel change happened after San Bruno, when new pipeline regulatory mandates were put in, like mapping all the pipelines, but they seem to have borne fruit after five years. Senator Hill got legislation passed that imposed requirements on PG&E to report on “vegetation maintenance,” but reports are pretty weak tea.
SB 1463 had been introduced in last year’s legislative session by Sen. John Moorlach, R-Costa Mesa.
The bill would have required the state to identify the places most at risk for wildfires and would have required the CPUC to beef up plans to prevent fires sparked by power lines
including moving lines underground if necessary.
One thing to remember is that PG&E has been an outlaw utility since at least 1923, when they began blatantly violating the Raker Act that created the Hetch Hetchy reservoir by buying the power from Hetch Hetchy and then selling it at a profit. That violation continues to this very day as they continue to illegally profit from public resources obtained within a national park. Their attitude than, as now, was “the law is for little people, not for us.” And despite the window dressing from the PUC, they continue to be basically owned by PG&E, they’re just less blatant about it now.
> PG&E has been an outlaw utility since at least 1923
Now that’s the kind of detail I’m looking for, that on Hetch Hetchy. Seems like I have to go read LA Confidential again, to refresh my sense of California politics. Is there a San Francisco equivalent?
> they continue to be basically owned by PG&E
I don’t understand this. “They” is PG&E, right? So they own themselves, like Terry Pratchett’s golems?
I read it that Badtux meant the PUC is basically owned by PG&E.
Please remember that California, under GOP Governor and former US Senator Pete Wilson, abetted by State Senate GOP Leader Jim Brulte, was a leader in Thatcherite “privatization” of power generation during the 1990’s, forcing utilities to sell-off subsidized generating infrastructure but to still deliver gas and electricity to consumers. It was insane, and gamed heavily by Enron (and others) during the early 2000’s, leading to the recall of Wilson’s Dem successor and replacement by the ineffective narcissist Schwarzenegger. Vertical integration had sustained the infrastructure for disaster-avoidance, and the current system only works to kill consumers and enrich executives and shareholders.
Corporations are people too, my friend. Those people need to GO TO JAIL and have their multi-million dollar compensation confiscated. Unfortunately, California’s pervasively corrupt political and legal systems lack the integrity to so honor the dead and maimed.
> a leader in Thatcherite “privatization” of power generation during the 1990’s
I didn’t work the privatization angle, because it seemed that PG&E had always been private.
> Vertical integration had sustained the infrastructure for disaster-avoidance
Vertical integration would seem to be a requirement, then. I’m not sure how to think about a solution involving co-ops, then.
> gamed heavily by Enron
I looked briefly for evidence of collusion between the Enron traders and PG&E, didn’t find it. Perhaps there was no incentive for it?
> California’s pervasively corrupt political and legal systems
So what’s the biggest ongoing story of PG&E corruption, out of curiosity? (And dinging PG&E’s stock price, in a just world)
No collusion with Enron — PG&E got screwed and passed-on the costs without batting an eye and increased the compensation of the executives who had been asleep at the switch. The collusion with their ostensible regulator was notorious:
http://www.sfgate.com/business/article/PG-E-agrees-to-86-5m-penalty-in-San-Bruno-11036666.php
I believe that another member of the PUC (Mike Florio, formerly of TURN, a ratepayer advocacy group) got busted because he was helping PG&E obtain a favorable judge to hear the San Bruno case. If it turns out that these fires were caused or that PG&E’s lack of maintenance contributed to this nightmare, then I expect the PUC will somehow gloss over and try to minimize the monetary damages. If so, there will be huge public outrage, in my opinion.
Re Enron traders and PG&E, the latter was the patsy and was driven into bankruptcy by the former. If you’re looking for corruption in the classic sense, consider the revolving door between industry and the PUC. A cognitive capture along shared neo-liberal principles.
What Enron did was was to convince regulators that splitting electric utilities into separate generation and distribution companies would be a big savings for the consumer. What they actually wanted to do was to buy power from the generators, and resell it to the distributors. This moved a system which had one company making overhead and profit to a system with infinite numbers of additional middlemen with essentially no risk. Although Enron is long dead, the system they set up nationwide is still chugging along, generating profits for the rentiers.
Key quote related to the San Bruno explosion: “On January 13, 2012, an independent audit from the State of California issued a report stating that PG&E had illegally diverted over $100 million from a fund used for safety operations, and instead used it for executive compensation and bonuses.” (Eric Naider, SF Chronicle “PG&E diverted safety money for profit, bonuses” 1/13/12)
It’s Neoliberal rent-extraction pattern-and-practice across the board — Jerry Hill, in particular, led the political side of the fight against PG&E after the 2010 San Bruno pipeline explosion because he was then the state assemblyman for the district. He parlayed major and persistent headline coverage into a state senate seat when the incumbent retired. And his key message throughout the election campaigns was that PG&E was not sufficiently overseen by the PUC, in particular with regards to deferred or diverted maintenance funds (pipelines, power lines, control systems) and shareholder payments / executive compensation.
Ooooh, that’s an awesome quote! Thank you. And 2012 is not long ago, really, so presumably the same players are safely ensconced in their little rental extraction niches.
So how is Hill? I’m cynical enough to worry that he’s talking a good game, and selling us all out on the other. It looks like he’s pushing some good legislation, though.
In particular, Jerry Hill used to be a registered Republican. After the Iraq invasion, he registered as a Democrat and CYA’d with “I didn’t leave the party, the party left me” etc. The pipeline explosion “focused” his political election rhetoric, but he’s always been “pro-business.” He won a coveted state senate seat which are strongly pro-incumbent. He’s now tied to his anti-PG&E rhetoric back in the district… I suspect he’s more conservative in his instincts than the local headlines suggest.
I’m in San Diego for the weekend, and I picked a bad one in that it’s 99 degrees here-25 degrees over an average temp for this date. The humidity is quite low @ 17% and it’s a bit windy as an added bonus. I took a hike this am and the vegetation is bone dry, if a lit cigarette butt was tossed carelessly the place would burn like a hell spawned perpetual motion machine, not much to stop it…
These are classic California fire conditions, but more than likely nothing will happen, as usually is the case~
…the winds were around 80 mph in the wine country when the fires started there, to put things into perspective
That’s a class 1 hurricane for those of you playing @ home.
There’s another hurricane heading for Ireland. Check it out on VentuSky: https://www.ventusky.com/?p=47.5;-14.3;4&l=wind
> the winds were around 80 mph in the wine country when
Not what meteorologists say (though it is what PG&E’s flak says)
Correct me if I have my PG&E’s wrong, but I recall while living in SD, that PG&E brought down its governor who sat on his hands while ENRON of corruption fame, jacked prices way above that in other states.
In other words, this ain’t news, just another chapter.
Well yes and no.
It wasn’t PG&E who brought down Gray Davis. It was skeevy known-criminal Daryll Issa who got the ball rolling to recall Gray Davis. Issa had the vainglorious notion that HE could become Governor, but his dream was crushed with Ahhhnold Schwartzenegger ran and managed to grab the brass ring. So Issa spent a boatload of cash to boost himself into Sacramento, and all he got for his “pains” was Ahhhnold.
The impetus for Issa to do that had little to do the Enron debacle. It was because there was a budget deficit, and Davis invoked a law to raise DMV fees. Of course, wealthy Republicans in CA – most of whom were driving new-model Hummers back in those days – screamed bloody murder. NO NEW TAXES, they shrieked! Unfair! Trow da bum out.
So it was all about DMV fees, which, if Davis had been left in office and been able to legitimately raise those fees, CA wouldn’t have faced as massive of a budget deficit as it did after the 2008 crash. But I digress.
Around the same time, Enron jacked up energy prices by saying that they needed to improve facilties or some such nonsense. So they took facilities off the the grid for “upgrades,” and that forced rather steep price increases, which hurt a lot of citizens who aren’t wealthy.
Schwartzenegger, who ran partly on the notion that bc he’s already rich he cannot be “bought off,” won the election. One of the very FIRST things that happened was that he was called to Wash DC where W told him to lay off Enron, even though CA citizens were begging Ahhnold to get our money back.
Never happened. Ken Lay allegedly “died,” and CA never got any reparations.
But oh well, Ken Lay’s widow is suckingly RICH RICH RICH, so that’s all that matters.
But it wasn’t PG&E that brought down Gray Davis. And surprise, surprise, Republican Governor Schwartzenegger did bupkiss to get our money back. Guess he got bought off, after all. Surprise, surprise…. NOT.
https://www.wsws.org/en/articles/2002/05/enro-m10.html
> Around the same time, Enron jacked up energy prices by saying that they needed to improve facilties or some such nonsense. So they took facilities off the the grid for “upgrades,” and that forced rather steep price increases, which hurt a lot of citizens who aren’t wealthy.
I thought Enron were brokers, or middlemen. They owned facilities?
We were living in Los Angeles County at the beginning of the 2000’s. As I recall, with a little help from Google, Enron was gaming the Western electricity distribution system by creating artificial shortages. Utilities, including PG&E and Southern California Edison, were forced to buy their electricity at increasingly insanely high rates. Meanwhile, rates to consumers were capped at really low levels. Expenditures rapidly exceeded income.
So, PG&E declared bankruptcy and SoCal Edison was near bankruptcy. Rolling blackouts became standard. The state of California, in the person of the hapless then-governor, Grey Davis, stepped in as the buyer of last resort. I remember watching this slow motion disaster-in-the-making as it unfolded; the LA Times produced excellent coverage in real time. As Enron increased its charges for the spot rates of electricity, Davis kept on buying, finally putting the state on the hook for millions of dollars in debt. His reputation as a big-spending liberal sunk him, as forces on the right used this to push a recall election that resulted in Arnold S. becoming governor. I thought at the time that the entire recall campaign was a coup; it wasn’t until I read Naomi Klein’s “Disaster Capitalism” a few years later that I recognized the pattern of never letting a crisis go to waste. In a small way, it was a precursor to our current national nightmare. I would wake up each morning and remember, oh god, The Terminator has just become our governor.
But, the really interesting lesson from this debacle is that Los Angeles Water and Power, the LA publicly owned utility, continued to putter along during this time, reliably supplying electricity (they never had to impose rolling blackouts) and not getting caught up in Enron’s tentacles.
At one point they owned a lot of assets including the utilities Portland General and Thames Water in the UK. But it was Enron traders mastery and control of power transmission lines out of, and then back into into Calif. that proved key. The state’s pricing scheme differentiated between electricity generated in state vs out of state. The out of state power was permitted a far higher price and the state’s utilities were compelled by law to pay it. The Enron traders simply looped power out of state and then back in a far higher price. Reminds me of the Cab Calloway lyric, “He’ll trade you dimes for nickels.” And they were making that trade a billion ir so times a day on every kilowatt they sold.
There is a Wikipedia article on the ~2001 California electricity crisis,
https://en.wikipedia.org/wiki/California_electricity_crisis ;
it was caused by a botched deregulation, which did not give any power to a local regulatory authority, but instead relied on Bush’s FERC (Federal Energy Regulatory Commission), which, of course, was filled with Bush’s Enron cronies, and was happy to cause problems for California (by not acting).
From Wikipedia: “California had an installed generating capacity of 45 GW. At the time of the blackouts, demand was 28 GW. A demand supply gap was created by energy companies, mainly Enron, to create an artificial shortage. Energy traders took power plants offline for maintenance in days of peak demand to increase the price.”
This eventually lead to rolling blackouts.
“The crisis cost between US$40 to $45 billion.” (That’s about 1300-1500$ per California inhabitant.) Schwarzenegger’s election then made sure the state would not attempt to recover any moneys from the Enrons and similar.
(One FERC action is described by Krugman in this column:
http://www.pkarchive.org/column/090203.html recovering 3 cents per 250$ lost per California resident in a particular case).
What is so perverse here is that there is no reason for any corruption in either banking or utilities. Utilities, like banking, used to be places that could simply charge whatever was needed to cover costs and make a return that would justify the market’s allocation of capital to the enterprise. They were completely safe, predictable businesses; growing with population growth; taking no chances. If costs go up, just apply for a rubber-stamp rate increase. And then, the boomers start their competition for limited resources, and the result is the collapse of virtue and the unleashing of narcissistic greed.
A utility should be the perfect “public-private partnership.” That is one reason that PUC’s are so captured; often there is little for them to interfere with, sitting at that interface.
Cases like this are more and more common, because utilities have been forced into some kind of short-term commoditization over the last thirty years.
Still, as suspicious as I am of corporate America now, I’m not sure that the cut in the trimming budget was nefarious. With the severe drought, wouldn’t it makes sense that they would not need to do so much trimming? And then, with rapid growth after the rain, they would need some time to catch up? Those trimming squads–are they unionized in California?–don’t grow on trees.
Even during drought conditions prevalent in most of the state Sonoma County gets plenty of rain between November and April. We are at the ‘gateway’ of the Pacific Northwest. We have a bit of ‘scrub’ here and there but are by and large a fairly wet county during the winter/spring months. Otherwise we wouldn’t have the wonderful micro-climate for growing world-class grapes.
Not to mention the very large amount of new growth, which as usual died back, because of all the heavy rains that ended the drought. So while one could take long showers again, there’s all that extra fuel out there.
It’s something that has given me nightmares. The nimbys in Marin are against controlled burns, because they look ugly and it’s so much better to surprise fires when there are no fire trucks than when there are at a preplanned burns. And of course too many want to live amongst the untrimmed forest along single lane roads. Idiots.
Even Redwood forest can burn. It takes doing but there is a reason Redwood bark is sometimes inches deep and can become ablative (heat reflecting) to a large degree in fires. Unless there’s a firestorm due to multi year(decades?) brush build up. It’s really hard to kill trees that live over 2000 years and over three hundred feet tall and ignore fires but out right firestorms with crown fires can do it.
If you think I’m being hyperbolic just read on the 1991 Oakland Hills Fires, then on the Mill Valley/Mount Tamalpais Fires of the early 20th Century, then think on the fact that Mill Valley’s and West Marin population was less, much less for Mill Valley, and I have done a lot of driving around there to know all it takes is one bad tire or one small tree on one of those narrow curvy roads with their blind corners to kill a neighborhood.
Sequioa cones also need fire to germinate so the piles of bark are a reproductive strategy. In 20 years’ time there will be a lot of redwood trees growing in these fire-ravaged areas.
Last winter was one of the wettest on record in California
Thanks so much for this! I hope everyone affected can read this report…
The Quickest way to increase profits is to cut maintenance.
PG&E could increase revenue y running fiber optic cable everywhere, but that would not increase profits for the, very important, next bonus cycle.
Once again, the problem is not the executives, its the reward system.
If the reward system was tied to the corporate charter, we’d get different (maybe better) results.
Note that fires in San Diego a couple of years ago were caused by San Diego Gas and Electric power lines during a wind event. And even the great eastern blackout a couple of years ago was caused by vegetation growing high tension line corridors. further of course in parts of the country with ice storms trees also bring down power lines, as well from wind storms. So trees and overhead power don’t coexist well. It is an interesting question of would it cost more to underground the lines, or just ban trees within 50 foot of distribution lines, i.e. cut down one time all trees in that swath and forbid folk to plant new trees in the swath, and the like.
Every tree? Within fifty feet of every distribution line? It would be better just to build Thunderdome and outlaw life beyond it.
lyle
Do you mean “cut down one time all the trees and forbid NATURE to plant new trees in the swath?” Grammar aside, I think NATURE is a lot more stubborn about that than FOLKS. Of course one could always spread massive doses of Roundup or some other plant poison, as most utilities already do, and those damn trees wold still find a way to grow.
“Maintenance” is not a one-time application of some kind of war weapon. it is an ongoing process, meaning it requires hiring people, which costs money, which reduces profits which a company really wants to use for paying its executive bonuses, or for buying its own shares. Such practices as “maintenance” practices are thereby verboten.
> those damn trees wold still find a way to grow.
Yep. And IIRC, encouraged by all that nice fresh CO2 in the atmosphere….
Seeing the role trees played in “sharpening the contradictions” in both Puerto Rico and California is enough to make me consider becoming a Druid. Because the trees are gonna win…
Actually first year trees are easy to cut down with mowers. So once a year (or more if need be) mow the area where the trees were cut down, and you won’t have many trees to deal with. In particular the tractor mounted mowers that would be used. But this only works for transmission not distribution lines. Distribution lines are generally run in easements typically in back yards so it would then be the home owners responsiblity to keep the trees down.
I am eyewitness – wish I had got pictures of the severe tree overhang present for years – to the neglect by PG&E with regards to tree overhang on Bennett Valley Rd in Santa Rosa. There is also a transformer at the end of Bethards Rd at Bennett Valley Rd which services our residential area. We residents have experienced numerous power outages in our neighborhood in recent years due to malfunctions of and/or drunk drivers plowing into transformer resulting in a least two outage incidents, if not more, each year. Thank you, Lambert, for covering this story.
Our state government is so very captured by corporate interests that I am not as hopeful as I would like to be with regard to a ‘fair’ resolution to the cause(s) of this devastating fire. My community will likely never be the same. Tens of thousands of folks are without homes, people who have jobs in our community and who make Santa Rosa a great place to raise families.
Please contact Gov. Jerry Brown and the PUC and help us hold PG&E’s feet to the fire since they likely started this mess.
Thanks for posting this Lambert. The comment about PG&E paying no taxes and background on other fires is enlightening and useful.
PG&E will likely file real bankruptcy (not like the phony Enron bankruptcy) in about five years and this fire disaster will only be the first ember. There are about 40 municipal and public agencies (such as SMUD, LADWP, irrigation districts, etc) that provide 25% of the power delivered in California. In California’s push for more renewable power, 2002 state law allows counties and other entities to provide the power in their jurisdiction. Already, there are Marin, SF, Peninsula, Sonoma, Redwood Community Choice Aggregation (CCA) districts and new ones are forming Yolo, Alameda, Placer, Monterey, San Diego, LA County and others. CCAs only provide the power (usually 50% and 100% renewable) and do not own or manage the lines, transformers, or distribution system – that is left for PG&E to screw up. http://cal-cca.org/
While I haven’t seen the Integrated Resource Plan (IRP) that PG&E must file, former young coworkers who went to PG&E for the big bucks (and bonuses), tell me that PG&E expect to lose 10,000 MWs of energy delivery. While PG&E claim they don’t make any money from energy delivery, its loss will force management to cut back more on maintenance expenses (ie tree trimming and pole replacement) to keep the stock price up and profits flowing. As PG&E’s private stock based model collapses, the CCA’s will be forced to become a full service utility, ie a municipal utility responsible to its citizens rather than Wall Street. PG&E will not be mourned!
Three or four years ago as part of the effort of the South San Joaquin Irrigation District to take over PG&E’s electric service, their head made the point that they could do a much better job. PG&E had claimed they were going to replace some 10,000 poles in their rate case but only replaced some 1,000. This was probably the same situation in Napa and Sonoma.
Looking at the drone footage, what is striking is the fire taking out the houses and cars but not green grass or the oak trees. The homes were not built, sited or maintained to fend off brush fires. Like Puerto Rico houses were not built to withstand 150 mph winds. The prognosis for Wine Country is not good. Climate change is real. Bad air from BC to LA is not happenstance. Neither are four hurricanes hitting the USA in Donald Trump’s first year, so far.
There only way to ameliorate a future of very bad things is spending money now on neglected infrastructure, safe homes and green energy. Also, there is regulating corporations for the public good.
Yes, these houses were not built to thwart brush fires – they are built in the urban core. The houses are 10-feet apart tract homes. My little cousin got evacuated twice this week from two different homes in separate parts of suburbia. These are different than hillside homes on the edge of open spaces. There is the possibility of fires like this in these neighborhoods, but it has historically been very low probability.
> these houses were not built to thwart brush fires
But I bet every one of them has granite counter-tops!
The houses in the Anaheim fire did have tile roofs which prevent embers falling on the roof from setting the house on fire, but the fire was strong enough to break the windows and the fire got inside from the broken windows. But fire resistant windows and doors do cost more and folks would rather have quartz counter tops than fire resistant windows. Just like they would in general rather have a cheap shingle roof over a tile or metal roof
The fire reached into downtown Santa Rosa. I’ve seen plenty of concrete and asphalt. That is what makes it so scary.
Links on the drone footage?
https://youtu.be/zxFHMNtQ3zg
Did PG&E have a relationship with Enron about the same time as Ms Brockovich’s investigation? That might be worthy of enquiry too.
btw, this isn’t the first time PG&E power lines have been accused of causing Napa county wildfires in the fall:
“PG&E will pay $400,000 to settle a lawsuit filed by CalFire for the Hopper Creek Fire, which burned 387 acres west of Yountville in Napa County in September 2006. A broken tree limb was found lying across utility power lines, said the state’s suit filed in Napa County Superior Court. The fire began either from a ‘hot particle from the arcing power lines or falling embers from the tree limb on the power lines, which fell and ignited the dry vegetation beneath the power lines,’ the suit said.”
“PG&E ends state’s wildfire suits for $2.5 million” (Henry K. Lee, San Francisco Chronicle 12/3/10)
The “Hopper Creek fire” is a fire that didn’t even come up early in the search results, which goes to show.
It looks to me like PG&E just looks at the payouts for fires as a cost of doing business. That will work until it doesn’t.
Lambert: You are, as usual, insightful in this post – particularly with regard to “a cost of doing business.” During the Enron debacle when several of us inside the Legislature were attempting to have the state buy out PG&E (in its bankruptcy), the issue of transmission lines loomed large; which, in turn. led us to see opportunities with promoting community ownership of utilities and distributed generation (e.g., solar and wind). The latest fires, which are literally in my neighborhood, could spark a renewed movement away from PG & Eʻs monopoly and associated costs of doing business, but this will take a concerted political campaign. For some more on this backstory see Chapt 5 in my recent book, The War on California – and I apologize for the appearance of shameless self-promotion, but most readers have probably moved on. Keep up the good work !
As Bruce Jennings points out, that 2001 PG&E *utility* bankruptcy (Chapter 11) was a critical moment, and the state wound up paying out around $45 billion to keep *utility* operations running…
However, that was *not* the bankruptcy of the parent holding company… which the *utility* eventually had to pay $10 billion using inflated charges from… rate payers and customers.
Those upper middle class still alive from the fire can rebuild, and everyone who has insurance with the same vendors in California is paying for it through their premiums, subsidizing their lifestyle.
Those poor lower income sods downstream from any ash pond failure are going to be dealing with toxic issues that won’t get any coverage. Dry ash toxins travels on every breeze.
http://appvoices.org/2010/09/29/coal-ash-pond-failure-in-wimington-nc/
https://www.yourlawyer.com/accidents/tva/tva-fly-ash-pond-had-failure-in-80s/
and the list goes on and on.
Yeah, it looks like regular maintenance was sacrificed for profits here – as of course elsewhere where power/electric has been privatized.
Ian Welsh said something on a recent post that came to mind when I read this: “Capitalism, as the standard saying runs, is a good servant, and a terrible master. Only fools let capitalists actually control anything in their society that truly matters.”
Welsh mentions healthcare and education; I would add utilities and the environment, but that’s just me.
From the San Jose Mercury:
http://www.eastbaytimes.com/2017/10/12/california-fires-pge-power-lines-fell-in-winds-that-werent-hurricane-strength/
Don’t forget the fine reduction that occurred during jury deliberations during the criminal neglect pipeline maintenance trial that followed the San Bruno explosion–from potentially half a billion to $6 milion. Basically, when it was clear the jury was going to convict, the US Attorney’s office reduced the fine.
http://www.mercurynews.com/2016/08/02/pge-trial-prosecution-unexpectedly-drops-maximum-potential-penalty-to-6-million/
A large part of the problem with PG&E is the standard regulatory capture issue, where the PUC officials view PG&E as an extra paycheck and a revolving door opportunity. The San Bruno disaster brought a lot of this out.
http://www.mercurynews.com/2015/01/31/san-bruno-disaster-pge-wields-pervasive-influence-at-puc-now-described-as-a-rogue-agency/
http://www.mercurynews.com/2017/10/03/puc-reforms-approval-san-bruno-explosion-pge-caused/
Kudos to all commenters and nakedcapitalism staff! These are some of the most thoughtful and intelligent commenters I’ve ever encountered on the Web, especially in the political arena.
Your postings aren’t too shabby either:)
Well done, everyone!
. .. . .. — ….
Above and beyond P G & E – there is a specific reason why this one of my 37 published articles went viral and stayed viral. Specifically the article was about New Age weaponry. It can be read here http://visionary-knowledge.com/HAARP/Barium%20Blues.pdf
One of the few politicians to come out against geo engineering is Dennis Kucinich. He wanted a ban on all such modification. It is a tragedy that his vision did not come about, and instead his career as a champion of the people was destroyed. Among currently trending topics of devastation that resulted from our HAARP and chem trail programs to alter our weather and cause Agenda 21 style catastrophes would be the total stall of a weather system over Houston, resulting in the massive flooding as aftermath of Harvey. This summer in Calif., there were at least four occasions when weather systems should have resulted in rain. This dismissal of rain is including a weather system less than a month ago that might have offered up three or even four days of rain. All this rain was prevented by the fact that a drying agent of siliconates are added to the usual toxic materials like barium and aluminum that the black op planes overhead are spraying. Additionally on Sunday October 8th, unusually heavy winds came about across Northern California, with gusts up to 60 mph. I have no idea if those were natural or induced.
But today, i woke to find a bright and deep blue sky above my home in Lake County CA. Now some four hours later, chem trail activity has made the sky into a herringbone pattern. So I can tell from comparing Saturday’s barometer readings of 15 to 16 in humidity with today’s of only 8 or 9 that the planes are doing their work. Additionally the way the herringbone cloud pattern is arranged, the rainy weather system that should come about later this week will be locked out of my County. We in Lake County are the next target for them.
The sparrow flies in the deep moonlight, proceed with plan #48593854
Relevant as to why PG&E , along with other Energy Malfeasors still exist, a continuation of a response to Yves’ question on the October 14th Links:
more on the California Public Utilities Commission [CPUC] and BIPARTISAN CORRUPTION in California (oopsie, Hadn’t realized that Ex Governor, Gray Davis, is legal counsel for Occidental Petroleum – and he’s not even a Republican – California is so bizzy with the Free Markets!™ and BIPARTISAN power and corruption):
As I linked to on Yves’ October 14th Links page, Consumer Watchdog’s CPUC tag is one of the good places to start as to current California PUC corruption.
Lastly, I also hadn’t known, till a few days ago, that one of Governor Brown’s most powerful appointees, Nancy McFadden , was a Vice President at PG&E prior to her appointment as Brown’s Executive Secretary. You’d think he might have thought of that knowing that his sister Kathleen (look up Alviso Canyon Methane Link Kathleen Brown) might – and certainly did, for millions of California Residents – end up tarnishing ‘Jerry’’s Green Badge.™ An Illustrious History:
Working on a, Kamala Harris and the CPUC, followup to my above comment, so those interested, stay tuned.
Once again, the corruption is utterly BIPARTISAN.
I’ve never, and will never, voted Republican/Libertarian/Bircher in my life, I so wish I had been so wise about Democrats.
Kamala Harris, as California’s Attorney General, and the California Public Utilities Commission:
More: