Wildfires – PG&E’s latest $90 million problem

The rising costs of wildfires – can PG&E continue to adapt and be part of the solution?

instaAs California contends with climate change, residents and businesses are adjusting to the new reality of extreme weather events, drought, wildfires and increased water scarcity. In 2015, out-of-control brushfire charred 3,500 acres, jumping across the I-15 freeway during rush-hour traffic and setting cars ablaze[1]. A few days later, the region was pounded by intense, virtually unheard-of summer rains[2]. California’s PG&E, one of the largest combined natural gas and electric utilities in the United States, faces multiple challenges to energy production and transmission given the impacts of climate change. Wildfires have been a rising concern in recent years – based on a Fox News report, wildfires led to six deaths in Northern California and damages exceeded $1 billion in September 2015 alone[3].

Wildfires: a rising threat

Source: Union of Concerned Scientists
Source: Union of Concerned Scientists

Wildfires occur at the “intersection of dry weather, available fuel and ignition sources”[4]. In California, rising temperatures have been conducive to insect infestations, resulting in large areas of dead and highly combustible trees[5]. Drier conditions have increased the frequency of wildfires, leading to greater fire-related outages in PG&E’s service areas.  The threat can also contribute to increased maintenance costs and reduced operating efficiency[6]. In addition, wildfires increase the need for emergency PG&E crews to restore services and may severely damage transmission and distribution lines, gas infrastructure and hydroelectric assets[7].

PG&E has responded to this rising threat by sending crews to pre-treat infrastructure with fire retardant during wildfires to mitigate losses from damage[8]. They are currently using state-of-the-art weather forecast model data to evaluate short- to medium-term fire weather risks across the company’s service areas[9]. The company has also developed a multi-year program to identify and minimize failures of its electrical distribution system, which can cause lines to separate and cause fires[10]. In addition, the company has partnered with CAL FIRE on its “One Less Spark, One Less Wildfire” public safety campaign to increase public awareness and minimize the frequency, size and cost of wildfires started by human ignition[11].

Has PG&E responded adequately to the threat?

PG&E appears to be the poster child for sustainability – a study by the Sustainable Investments Institute examined the policies of top 25 electric utilities in the U.S. and noted that PG&E was the most inclined to adapt to climate change risk[12]. However, the company still has a long way to go. Recently a Cal Fire investigation concluded that PG&E was responsible for the 2015 Butte Fire, the seventh largest in state history that spread to more than 70,000 acres[13]. According to the report, PG&E crews did not properly prune a pine tree which leaned on a power line and ultimately sparked the fire[14]. PG&E was accused of negligence and Cal Fire is seeking over $90 million in damages[15].

From a corporate standpoint, the company has made significant progress in preparing for the potential impacts of climate change. However, they need to devote more resources to mitigate the threat of wildfires. Prioritizing the management of vegetation under power lines is key. This includes regular trimming, clearing and herbicide application on vegetation surrounding electric poles. Replacing wood pools with steel ones would substantially reduce the risk of fire. Steel poles are capable of carrying thicker lines that can be spread farther apart, minimizing the chance of a tree limb sparking a fire[16]. PG&E could also use technology as a risk mitigation tool, e.g. by using robotic sensors to detect obstacles such as overgrown trees and to check for faulty connections that cause sparks. Lastly, PG&E could conduct a study to determine the costs of relocating its power lines underground. The last step would undoubtedly be a significant capital expenditure but, as lawsuit expenses mount, the company needs to consider if drastic changes are necessary.

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[1]  “Brush fire jumps I-15, sets cars ablaze at Cajon Pass in California,” July 15, 2015, Fox News, http://q13fox.com/2015/07/17/brush-fire-jumps-i-15-sets-cars-ablaze-at-el-cajon-pass-in-california-video/, accessed November 1, 2016.

[2] Eric Holthaus, “The Point of No Return: Climate Change Nightmares Are Already Here,” Rolling Stone, August 5, 2015, [http://www.rollingstone.com/politics/news/the-point-of-no-return-climate-change-nightmares-are-already-here-20150805], accessed October 2016.

[3] “Northern California wildfires cost more than $1 billion,” January 25, 2016, Fox News, http://www.foxnews.com/us/2016/01/25/ap-newsbreak-1-billion-insured-losses-in-california-fires.html, accessed November 2, 2016.

[4] http://www.nature.com/articles/ncomms8537#ref10

[5] “Global Warming and Wildfires”, National Wildlife Federation, http://www.nwf.org/wildlife/threats-to-wildlife/global-warming/global-warming-is-causing-extreme-weather/wildfires.aspx, accessed on November 3, 2016.

[6] Pacific Gas and Electric Company, “Climate Change Vulnerability Assessment” (PDF file), downloaded from PG&E website, [http://www.pgecurrents.com/wp-content/uploads/2016/02/PGE_climate_resilience.pdf], accessed October 2016.

[7] Pacific Gas and Electric Company, “Climate Change  Vulnerability Assessment” (PDF file), downloaded from PG&E website, [http://www.pgecurrents.com/wp-content/uploads/2016/02/PGE_climate_resilience.pdf], accessed October 2016.

[8] Pacific Gas and Electric Company, “Climate Change  Vulnerability Assessment” (PDF file), downloaded from PG&E website, [http://www.pgecurrents.com/wp-content/uploads/2016/02/PGE_climate_resilience.pdf], accessed October 2016.

[9] Pacific Gas and Electric Company, “Climate Change  Vulnerability Assessment” (PDF file), downloaded from PG&E website, [http://www.pgecurrents.com/wp-content/uploads/2016/02/PGE_climate_resilience.pdf], accessed October 2016.

[10] Pacific Gas and Electric Company, “Climate Change  Vulnerability Assessment” (PDF file), downloaded from PG&E website, [http://www.pgecurrents.com/wp-content/uploads/2016/02/PGE_climate_resilience.pdf], accessed October 2016.

[11] Pacific Gas and Electric Company, “PG&E, CAL FIRE and California Fire Safe Council Join Forces to Reduce Wildfire Risk”, downloaded from PG&E website, [https://www.pge.com/en/about/newsroom/newsdetails/index.page?title=20140925_pge_cal_fire_and_california_fire_safe_council_join_forces_to_reduce_wildfire_risk], accessed October 2016.

[12] Sustainable Investments Institute, “The Top 25 U.S. Electric Utilities: Climate Change, Corporate Governance and Politics”, downloaded from IRRC Institute website, [http://irrcinstitute.org/wp-content/uploads/2016/04/FINAL-Climate-Change-Corporate-Governance-and-Politics.pdf], accessed October 31, 2016.

[13]  Brad Brannan, “Cal Fire blames PG&E for Butte Fire, will seek $90 million”, Sacramento Bee, April 28, 2016, [http://www.sacbee.com/news/state/california/fires/article74496267.html], accessed November 1, 2016.

[14] Jaxon Van Derbeken, “PG&E Negligence Over Pine Tree Started Butte Fire in Sierra: CalFire”, NBC News, April 28, 2016, [http://www.nbcbayarea.com/news/local/PGE-Negligence-Pine-Started-Butte-Fire-in-Sierra-CalFire-377467081.html], accessed November 1, 2016.

[15] Brad Brannan, “Cal Fire blames PG&E for Butte Fire, will seek $90 million”, The Sacramento Bee, April 28, 2016, [http://www.sacbee.com/news/state/california/fires/article74496267.html], accessed November 1, 2016.


[16] J Harry Jones, “Power lines and poles to be replaced throughout Cleveland National Forest,” Los Angeles Times, October 5, 2016, [http://www.latimes.com/local/california/la-me-forest-power-poles-20161005-snap-story.html], accessed November 1, 2016.


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Student comments on Wildfires – PG&E’s latest $90 million problem

  1. This is a very relevant matter for California and, as you have noted, it seems that PG&E have taken the first steps and initiative towards tackling this. However, if the rate and risk of climate change increases, this may prove to be woefully inadequate. It would be great to see the company work with experts to understand the best practices to mitigate and prevent issues and also to understand patterns of climate change and local impact. This would allow them to better decide how to spend their resources.

  2. As a native San Diegan, I really appreciate you bringing light to this issue. While perhaps the industry leader or “poster child for sustainability,” PG&E is not yet a frequently praised household name in the area.

    I think cost transparency for any measures taken is a huge opportunity for PG&E. From the public perspective, it can help them justify changes in prices. For example, if they can quantify the risk mitigated (and potential lives saved!) from some of the initiatives you mention, it would be a easier bitter pill for consumers to swallow on their monthly statements. Also, they cost analysis may help bolster government funding support.

    Another angle to consider if their partnerships. They are already working with fire fighters in Alameda Country (among others) [1]. Not only are these partnerships publicly popular, they offer a ton of useful information shareing for both parties to prevent and control files in Califronia.

    [1] https://www.pge.com/en_US/residential/in-your-community/your-community/your-division/east-bay-division/alameda-county-pge-digs-deep-to-assist-fire-department-rescue-training.page

  3. The impacts of climate change on utility companies is definitely a large one and I think something that can even be considered outside of California wildfires. Utility companies around the world are going to have to deal with more extreme weather and ways to adapt without needing to make unsustainable infrastructure changes, and it seems like PG&E is trying to think proactively about it. For example, according to one report (http://www.ucsusa.org/global_warming/science_and_impacts/impacts/effects-of-climate-change-risks-on-our-electricity-system.html#.WCFLLfkrI2w) 8 million people lost power due to Hurricane Sandy in 2012, and events like that are expected to continue to rise. With rising sea levels, reduced water availability for cooling processes, and increasing water temperatures problems electricity companies are facing are likely to be real problems for more than just risk, but for being able to successfully deliver their product to customers. Interested to see how other companies may adapt what PG&E is thinking about!

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